Practical Ecommerce

How to Buy a Small Ecommerce Business on Flippa

Flippa is a leading marketplace for buying and selling websites, including active online stores, those with established site traffic, revenue, and profit.

One of the sites available at auction on Flippa at the time of writing was The Rocking Chair Company. Although the site’s ultimate buyer will certainly have had to do significant due diligence, the site’s seller, known on Flippa as BeanieWeanie, reported $3,335 in May profits on revenue of $14,351.

Google Analytics data for the site shows 6,664 unique visitors, viewing 30,897 pages, in May 2015. And if BeanieWeanie’s assertions are accurate, the site has had more than half a million dollars in revenue since 2012.

The Rocking Chair Company reportedly had half a million in revenue since 2012.

The Rocking Chair Company reportedly had half a million in revenue since 2012.

While only time will tell if The Rocking Chair Company is a good investment, it is an example of the kind of ecommerce site for sale at auction on Flippa.

Unfortunately, there are also many ecommerce sites for sale on Flippa that are not likely to be a good investment. Sometimes these sites have no real revenue or traffic, or, worse, the seller has faked traffic or revenue data.

As with any investment, be careful.

Ask Yourself if You Could Build It

Perhaps the first question to ask about any listing on Flippa is, “Could I build it myself for less or about the same investment?”

If your answer yes, it might not be worth bidding.

For example, more than one site listed on Flippa in early June 2015 was described as an affiliate ecommerce store or similar. These sites list lots of products, but ultimately link to Amazon or other stores. These sorts of sites are very easy to replicate and are, generally, worth very little.

Look for a Site that Fits Your Skills and Experience

Ecommerce site auctions on Flippa might include businesses from any number of industry segments. Examples of sites recently available on Flippa include NewPhotoGear.com, PremierGunCabinet.com, TopMolds.com, BeachWear.net, and ApplicancesNow.com.au.

With this much variety, it makes sense to look for a business that matches your skills and interests. After all, if you were 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 find a site that peaks your interest, be certain to double check traffic and financial data. Flippa does a pretty good job of providing basic information about the site. For example, many of the sites selling on Flippa include a snapshot of Google Analytics data. But don’t simply take the information provided at face value.

Flippa does a good job of providing basic site information.

Flippa does a good job of providing basic site information.

Contact the sellers and ask for confirmation. If you’re going to pay a thousand or several thousand dollars for a site, it is very reasonable to ask a seller for read-only access to analytics accounts or even financial data.

Flippa, which publishes an excellent buying guide, even suggests a Skype call with a seller, and looking at financial data in real time.

Have the seller explain any changes in revenue, site traffic, or profits.

In April, the Flippa blog interviewed Christopher Tracy, who had just purchased Trampolines.com at auction for $81,500. Here is what Tracy had to say about due diligence.

“First, I believe good investments come from disciplined decisions. The best way to do this is to have a framework in place to evaluate an opportunity well before you see it. This helps to remove the emotion from a decision. Web properties and online businesses have lots of data and buyers should always use that data (both quantitative and qualitative) as part of their investment decision. All that said, it’s rare that all the numbers will line up or even be available. In which case, an investor needs to also trust their [sic] instincts. Secondly, always evaluate the seller and their [sic] motives for selling. Reach out to the seller and have conversations about the business.”

Assess Your Risk

If you built an ecommerce site from the ground up, you would have some level of risk. Similarly, buying an ecommerce site on Flippa will, almost by definition, include some level of risk. Before bidding, try to decide 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? Will you be able to replicate or improve on those promotions? Were the sales in any way dependent on the current site owner’s skills, knowledge, relationships, or personality?

You’ll need to understand how much the site costs to maintain. What are the hosting fees? Will you have to move it? Are there drop shipping fees? Are there monthly payment gateway fees? Is there a monthly charge for the ecommerce platform?

Finally, think about what could go wrong with the site. Does the current site operator have the proper licenses? Are there any potential copyright violations? Could the site be sued?

If you’ve accessed your risk, and you still believe that they site represents an opportunity, bid.

Armando Roggio

Armando Roggio

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Comments ( 3 )

  1. Joseph Carroll June 15, 2015 Reply

    Hi Armando, Joseph from Flippa here, just wanted to drop in and say great article! Solid information, keep up the good work!

    • Armando Roggio June 16, 2015 Reply

      Thanks for the kind words.

  2. Ricky A June 16, 2015 Reply

    Great insight and info, Armando! It’s so important to learn as much as possible about what it takes to develop and sustain a successful website well before making a investment decision. Knowledge is the best (free) investment, really. Your article really guides folks the right way. One alternative to buying a site is to find an active partnership. I recently was able to partner on https://www.purepirate.com/ (with just sweat equity) on an ecommerce site that needed some work, but has great opportunity. Hope that everyone who is interested in developing internet businesses is able to find a way to do so! Thanks again, Armando.