Buying an Amazon Fba: Due Diligence Checklist & Red Flags (2026)

Red flag: Seller provides only self‑generated P&L statements and refuses to share read‑only Seller Central access; bank deposits don’t match net disbursements.

Ask: Will you grant view‑only access to your Amazon Payments reports for the last 24 months so we can reconcile every disbursement line‑item against the P&L?

Red flag: Add‑backs exceed 20% of total SDE or include one‑time Amazon reimbursements that are treated as recurring earnings.

Ask: Can you walk me through every add‑back on the SDE calculation — personal vehicle, health insurance, owner’s payroll — and confirm which will truly cease at closing?

Red flag: Refund rate above 5% for the primary category or a sudden spike in A‑to‑Z claims that has resulted in a performance notification.

Ask: What is the trailing‑12‑month refund rate and A‑to‑Z claim count, and have returns been trending up?

Red flag: More than 15% of inventory is stranded or in ‘reserve’ status with no plan for removal; long‑term storage fees are eating 3‑5% of revenue.

Ask: What is the current breakdown of sellable vs. unsellable FBA inventory, and can you provide a stranded‑inventory report for the last 90 days?

Red flag: Seller claims an email list of 10,000+ but cannot show a time‑stamped export from a compliant ESP, or 30% of revenue is from a channel they cannot prove you’ll keep.

Ask: Do you have a verified email list with documented opt‑ins, and does any material revenue come from Shopify, Walmart, or wholesale?

Red flag: Multiple intellectual‑property complaints, even if ‘resolved,’ or an Account Health Rating below 190 showing chronic late‑shipment or defect risk.

Ask: Please open the Account Health dashboard and screen‑share every notification, including ‘resolved’ ones, from the last two years — what triggered them and how were they fixed?

Red flag: Largest supplier accounts for >70% of COGS with no written contract and the same supplier sells on Amazon under a different brand name.

Ask: Who are your top three suppliers, what share of COGS does the largest represent, and do you have written agreements with minimum‑volume commitments?

Red flag: TACoS is >20% and rising quarter‑over‑quarter, or the seller refuses to disclose which high‑spend keywords produce the majority of sales because ‘the algorithm will optimize itself.’

Ask: What is the trailing‑12‑month TACoS (Total Advertising Cost of Sale) per ASIN, and can we audit the exact campaign structure, negative keywords, and bid history in Ad Console?

Red flag: No safety‑stock formula; chronic stockouts in the last 12 months that caused the listing to lose Best‑Seller Rank and organic placement for 4+ weeks.

Ask: What is the average lead time from PO placement to ‘check‑in’ at Amazon, and show me the last six inbound‑shipment reconciliation reports.

Red flag: Everything ‘lives in the owner’s head’; the seller cannot introduce the virtual assistant who actually manages ads or claims they will ‘train’ without written process documents.

Ask: Are there documented SOPs for listing optimization, PPC management, and supplier quality audits, and can I speak with the VA or agency doing the work?

Red flag: Top ASIN generates >60% of revenue, or Q4 contributes >50% of annual profit, making the business a seasonal gamble that collapses in January.

Ask: What is the revenue split among the top 3 ASINs, and how much does Q4 revenue swing relative to the monthly average?

Red flag: The majority of organic keyword rankings are on page 2 or lower, and the seller has never maintained a page‑one position for more than 90 consecutive days.

Ask: Show me the organic rank history for the top 5 money keywords (via Brand Analytics or Jungle Scout) for 24 months — how often do you drop off page one?

Red flag: Three or more copycat listings with similar reviews have appeared in the past quarter, and the seller’s response is only ‘we will just lower price.’

Ask: Which competitor has launched a near‑identical product in the last six months, and what is their growth trajectory in both units and reviews?

Red flag: The business relies on grandfathered ungating that Amazon recently stopped granting; a re‑verification during transfer could permanently bar the account from the category.

Ask: Is the primary product in a gated category, sub‑category, or brand that requires Amazon approval, and can that approval survive an ownership change?

Red flag: Average rating below 4.3 with several recent 1‑star reviews mentioning the same defect; review velocity has halved in the past 60 days with no injection of Vine or organic growth.

Ask: What is the exact star‑rating distribution, total review count per ASIN, and how many new organic reviews do you average per month?

Red flag: Account is under a sole proprietorship or individual’s name without a distinct legal entity; Amazon will not permit a simple ‘transfer’ of an individual account without triggering identity verification.

Ask: Is the Seller Central account owned by a U.S.‑registered LLC or C‑Corp that we can acquire through a stock‑purchase agreement, and will you provide the operating agreement and EIN letter?

Red flag: Brand Registry is pending, the trademark is a ‘wordmark’ only without a design, or the seller admits they ‘bought’ the brand registry from someone else and never filed the assignment with USPTO.

Ask: Is the brand enrolled in Amazon Brand Registry, do you own the live U.S. trademark registration number, and has any third‑party filed an opposition or cancellation?

Red flag: No sales‑tax registrations despite inventory stored in multiple states (Amazon FBA creates nexus automatically); the business faces retroactive tax liability with penalties.

Ask: In which states are you currently registered for sales tax, and can you provide the last four quarterly filings along with proof of payment?

Red flag: Product is in a consumable, baby, or health‑adjacent niche with zero liability insurance; one lawsuit could pierce the corporate veil and reach personal assets.

Ask: Do you carry a current product‑liability policy naming Amazon as an additional insured, and has any claim ever been filed against the product?

Red flag: Any critical contract is non‑assignable by its terms, and the counterparty has written that they will not honor existing pricing for a new owner.

Ask: Do your key supplier contracts, freight‑forwarder agreements, and agency retainers allow assignment upon a change of control without consent or repricing?

Red flag: Seller insists on an asset sale that would force creation of a new Seller Central account, destroying the account’s history and almost certainly getting the new account blocked.

Ask: Will you entertain a stock‑purchase agreement rather than an asset sale, and who is the escrow agent with experience in e‑commerce entity transfers?

Red flag: Seller offers ‘unlimited’ email support but refuses to record Loom videos or schedule live screen‑shares; training is open‑ended with no deliverables.

Ask: Are you willing to commit to a 30‑day, structured transition with defined hours (e.g., 20 hours total) covering supplier handoff, PPC architecture walkthrough, and account‑health dashboard review?

Red flag: Seller wants to hand over a list of contacts but ‘doesn’t want to bother the suppliers’ — leaving the buyer to restart the relationship from scratch with no leverage.

Ask: Will you personally introduce me via email/Zoom to your top two suppliers and the freight forwarder, and have you already secured their implicit consent to continue terms under new ownership?

Red flag: Seller plans to drain inventory before close to maximize short‑term cash, or a key ASIN is out of stock with a 60‑day lead time and no order placed.

Ask: What open POs are currently in transit, at what inspection stage, and can we include all in‑transit inventory and work‑in‑progress in the purchase price at cost?