Among the sites available at auction on Flippa at the time of writing was The Rocking Chair Company. Despite the fact that the site’s ultimate buyer will surely have been required to perform substantial due diligence, the site’s seller, known as Flippa as BeanieWeanie, reported $3,335 in May earnings on revenue of $14,351.
Google Analytics information for the site reveals 6,664 unique traffic, seeing 30,897 pages, in May 2015. And when BeanieWeanie’s assertions are true, the site has had over half a million dollars in earnings because 2012.
The Rocking Chair Company supposedly had half a million in earnings since 2012.
While only time will tell if The Rocking Chair Company is a fantastic investment, it’s a good illustration of the type of ecommerce site available at auction on Flippa.
Unfortunately, there are also many ecommerce sites for sale on Flippa that are not likely to be a wonderful investment. Occasionally these websites don’t have any real revenue or traffic, or, worse, the vendor has falsified traffic or revenue data.
As with any investment, be cautious.
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Ask Yourself if You Can Build It
Perhaps the first question to ask about any record on Flippa is,”Can I build it myself for less or about exactly the same investment?”
If your answer yes, it might not be worthwhile bidding.
By means of example, more than one site listed on Flippa in early June 2015 was described as an affiliate ecommerce store or similar. These sites list a lot of merchandise, but ultimately link to Amazon or other stores. These kinds of sites are very simple to replicate and are, generally, worth very little.
Find a Website That Suits Your Skills and Experience
Ecommerce website auctions on Flippa might include companies from any range of industry segments. Examples of websites recently available on Flippa include NewPhotoGear.com, PremierGunCabinet.com, TopMolds.com, BeachWear.net, and ApplicancesNow.com.au.
With this much choice, it’s sensible to begin searching for a company that matches your skills and interests. After all, if you are starting a new ecommerce site, you probably wouldn’t choose products that you did not understand or care about.
Double Check Traffic and Financial Data
If you discover a web site that peaks your interest, make certain to double check traffic and financial information. Flippa does a rather good job of providing basic information regarding the site. By means of instance, plenty of the sites selling on Flippa include a snapshot of Google Analytics data. But don’t just take the advice provided at face value.
Flippa does a wonderful job of providing basic site details.
Get in touch with the sellers and ask confirmation. If you will pay a thousand or a couple thousand bucks for a site, it is extremely reasonable to request a vendor for read-only access to analytics accounts or perhaps financial advice.
Flippa, which publishes an superb buying guide, also indicates a Skype call with a vendor, and looking at financial data in real time.
Have the vendor explain any changes in traffic, or profits.
In April, the Flippa blog interviewed Christopher Tracy, who had just purchased Trampolines.com at auction for $81,500. That is exactly what Tracy had to say about due diligence.
“I believe good investments come from disciplined decisions. The best means to do it would be to have a framework in place to evaluate an opportunity well before you see it. This helps to remove the emotion from a determination. Web properties and internet companies have loads of information and buyers should always use that information (both quantitative and qualitative) within their investment choice. All that said, it’s rare that all the numbers will line up or even be available. In which case, an investor must also trust their [sic] instincts. Second, always assess the vendor and their [sic] motives for selling. Reach out to the vendor and have discussions about the organization.”
Assess Your Risk
If you built an ecommerce site from the bottom up, you would have some quantity of risk. Likewise purchasing an ecommerce site on Flippa will, almost by definition, include some quantity of risk. Before bidding, attempt to ascertain how much you will be risking.
First, do you trust the seller? Does the seller have a profile picture on Flippa? Does the owner respond to questions?
Next, try to discover how the site generates its sales. What ad campaigns are used? Are you able to replicate or improve those promotions? Were the earnings in any way dependent on the current site owner’s skills, knowledge, relationships, or personality?
You will want to learn how much the site costs to maintain. What are the hosting fees? Will you want to move it? Are there any drop shipping charges? Are there any monthly payment gateway fees? Is there a monthly fee for the ecommerce platform?
Finally, think about what could go wrong with the web site. Does the current site operator have the right licenses? Are there any possible copyright violations? Can the website be sued?
In case you’ve obtained your own risk, and you still believe they website represents a chance, bid.