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

Red flag: Significant discrepancies between Amazon's reported sales/costs, bank deposits, and declared income on tax returns, or inconsistent profit margins month-to-month without clear explanation.

Ask: Please provide your Seller Central Transaction Reports, bank statements, and tax returns for the past three fiscal years. Can you explain any material variances between these documents?

Red flag: High percentage of sales from one-time deals, coupons, or advertising that isn't sustainable; escalating FBA storage fees due to stagnant inventory; or lack of detailed ad performance data.

Ask: Can you walk me through your Amazon Seller Central performance and financial dashboards? Specifically, I'd like to review FBA fees, advertising spend, and inventory age reports for the last 12-24 months.

Red flag: COGS that are not clearly documented, reliance on a single supplier without backup, or supplier pricing that is not fixed or subject to frequent increases.

Ask: Please provide detailed supplier invoices and freight forwarder bills for your top 5 selling SKUs over the last year. What are the payment terms with your primary suppliers, and do you have alternative sourcing options?

Red flag: Excessive or unsubstantiated add-backs that artificially inflate SDE, or personal expenses commingled with business expenses that are difficult to disentangle.

Ask: Please provide a detailed reconciliation of your SDE calculation, with supporting documentation for each add-back. Which of these expenses would a new owner realistically be able to eliminate or replace proportionally?

Red flag: Excessive dead stock or slow-moving inventory, frequent out-of-stock situations for top sellers, or lack of a clear inventory management system leading to high storage fees.

Ask: Can you provide a complete inventory report detailing current quantities, sales velocity for each SKU, and any aged inventory? How do you manage your reorder process to prevent stockouts and overstocking?

Red flag: Lack of written agreements with critical suppliers, long and unreliable lead times, or frequent quality issues not effectively resolved.

Ask: Describe your relationships with your main suppliers. Are there written contracts in place? What are the typical lead times from order placement to FBA warehouse receipt, and what QC measures do you have in place?

Red flag: Generic or unoptimized product listings, lack of Brand Registry 2.0, or unprotected intellectual property making products vulnerable to hijackers.

Ask: Please provide access to your Amazon product listings. What strategies have you employed for keyword optimization, and what is your status with Amazon Brand Registry and any relevant trademarks?

Red flag: Consistent negative seller feedback or product reviews, high return rates for specific SKUs, or slow response times to customer inquiries.

Ask: How do you handle customer service inquiries and returns? Can you show me your Seller Feedback and Product Review performance history, and what steps do you take to address negative feedback?

Red flag: Declining market, intense competition with lower-priced alternatives, or an inability to differentiate products among numerous generic listings.

Ask: What is your assessment of the growth potential and competitive landscape for your primary product categories? Who are your main competitors, and how do you differentiate?

Red flag: Amazon's official private label brands directly competing with the business's top-selling products, or rumored entry into the niche by Amazon.

Ask: Have you seen Amazon launch any private label products that directly compete with your SKUs, or are there any indications they might enter your niche?

Red flag: Extreme seasonality leading to unpredictable cash flow, or a business entirely reliant on a single seasonal peak without year-round stable products.

Ask: Can you walk me through your sales performance broken down by month over the last 2-3 years, highlighting any significant seasonality? How do you manage inventory and cash flow during peak versus off-peak seasons?

Red flag: No brand presence outside Amazon, sole reliance on Amazon's platform, or a brand name that is easily confused with competitors.

Ask: Do you have any sales channels outside of Amazon? What efforts have you made to build brand awareness and customer loyalty independent of the Amazon marketplace?

Red flag: History of multiple policy violations, recent account suspensions, or unresolved intellectual property complaints that threaten account stability.

Ask: Please provide screenshots of your Amazon Seller Central Account Health dashboard and detail any past policy violations, intellectual property complaints, or account suspensions, along with their resolutions.

Red flag: Lack of necessary safety certifications for products, products with a history of safety complaints, or non-compliance with specific Amazon product regulations.

Ask: Do all your products have the necessary safety certifications and compliance documentation for sale in all relevant regions (e.g., US)? Can you provide copies of these documents?

Red flag: Non-assignable contracts, high cancellation fees, or critical services tied to an individual rather than an enterprise.

Ask: Please list all third-party service providers (e.g., accountants, VAs, software). Are these contracts assignable, and what are their terms and costs?

Red flag: Lack of registered trademarks for the brand, reliance on generic imagery or listing copy, or disputes over IP ownership.

Ask: Can you provide documentation confirming your ownership of all brand trademarks, patents, and copyrights associated with this business? How will these be transferred upon sale?

Red flag: No documented SOPs, or SOPs that are outdated, incomplete, and highly reliant on the seller's institutional knowledge.

Ask: Do you have written Standard Operating Procedures for daily, weekly, and monthly tasks such as inventory forecasting, product launches, advertising management, and customer support?

Red flag: Seller unwilling to provide full, verifiable access to critical accounts, or passwords not documented in a secure manner.

Ask: Please provide a comprehensive list of all accounts and platforms necessary to operate this business. What is your plan for secure transfer of access credentials?

Red flag: Seller unwilling to commit to a reasonable transition period, or offering only minimal, unpaid training.

Ask: What kind of post-sale training and support are you prepared to offer a new owner, and for how long? Will this be included in the sale price or negotiated separately?

Red flag: Seller unwilling to make direct introductions to critical contacts, potentially severing key relationships.

Ask: Can you facilitate direct introductions to your primary suppliers, freight forwarders, and any other critical operational contacts to ensure a smooth continuity of business relationships?