Buying Websites for Sale on Flippa? Dont get excited. Yet.
I've been buying websites on Flippa for nearly a year now and actually been quite successful doing so, however, my first purchase was an absolute disaster.
Buying a website on Flippa is not like something you buy from your nearest Walmart and don't have to think twice.
Flippa brings us a lot of options and at first hand one can be amazed by the seer quality and competitive price. Be aware because these options are not all real.
Sometimes people manifest their product (just like anything else on the internet) in such a way that if you buy them only by judging their face value, without thorough knowledge of the kind of business your dealing in, there is a possibility that you will simply get robbed.
In this post I want to discuss it in full in the interest of helping other potential first time buyers.
Due to the amount of information I have created a quick check list just to focus on things you need to pay attention to and things you need to shun away from.
The Original Listing
I had been looking around for an appropriate website to buy on flippa for about a month before this caught my attention.
In a nutshell, the website is a social marketing business that sells “real” Facebook Likes, Youtube Views, and Twitter Followers. Yes, you can buy those things.
It some ways it really did fit with what I was looking for. It was related to social media which was different from what I was currently making money on but also not that much of a departure from us being bloggers and working online.
It was something I knew a little bit about. It also was something that I thought could be easily outsourced going forward.
Still, I'd imagine that an experienced buyer can look at that listing and poke a dozen holes in it. Needless to say, I was not (and still am not) an experienced buyer.
In fact, these websites are quite common to see on Flippa, even nowadays, and they are quite popular too.
Perhaps some people are getting them to work, or there are just a lot of suckers out there (as the old adage goes – “a sucker born every minute and two to take him”).
Generally, they were all selling for around $1k, which was just out of my price range.
The fact that so many people were buying them convinced me even more that it was something valuable.
When I saw this one that looked largely unbid on, I decided to make a move.
Before long, the listing was cancelled, and I was contacted by the seller through email asking if I would be interested in working direct.
I could have the website for $500, and he would set everything up.
Based on what I had seen from the other websites that were selling on Flippa, this seemed like a good deal, so I agreed, and as promised the seller set up the website and handed over the marketing strategy as well as a few other things like a customer email list, after which I paid him $500.
I quickly found out how this business works.
You directly market people your services and then, once they agree to buy, you have a few suppliers (contact names who were given by the seller) who can get the likes.
The contact names, in all honesty, are not so important. There are actually a lot of sites, Fiverr.com, for example, that offer these services for very cheap.
You simply price your services higher, and use direct marketing to seal the deal.
Now you might be wondering, why would someone buy from you when there are clearly other people who are offering the same service for cheaper?
The answer, I think, is that they are too lazy to do the research to find these sites.
In fact, at the time, I didn't even know much about Fiverr and that I could get the same things from them for a fraction of the cost.
After it was transferred I set to work implementing the marketing strategy, which was essentially to cold email people/companies from various websites and forums with my services.
The website doesn’t receive any natural organic traffic so you have to use direct marketing.
And as you might have guessed, I wasn’t having any luck.
Changing My Approach
I had tried just about everything that the seller had told me to do, and for the most part wasn't even receiving any replies.
I decided to reevaluate my strategy and see if I could come up with my own marketing strategy; pretend for a minute that I hadn't been handed this "guide" - what would I do?
I had a few ideas.
The first was that I would contact other people who were selling similar sites on flippa and see if I could get any insight into their marketing strategy.
I emailed them disguised as a customer interested in purchasing their website, but wanting to learn more about it.
If they could share some of the marketing techniques, I could use them for my own business – they were my competitors after all.
Basically, I was doing competitive research but trying to see if I could exploit the situation (them selling the website) to get more than the basic information.
After a few attempts, however, I found that just about everyone refused to provide the marketing strategy until after the purchase was made – smart.
Next, I thought a bit more about the business, and realized that there were some obvious gaps in the marketing strategy I had been handed.
For example, I was a business selling FB likes, but didn’t have a FB page myself.
How then, was I expecting my customers to trust the services I was offering, if I was not able to directly show them the end result?
So, I set about making a FB page for my website and then buying my own likes for it.
Then, I decided to message business pages on FB. This way, I knew that they would be able to see my FB page and that they had one as well. I felt by doing so I was honing in on my customers.
I took it a step further and started to think about who might be interested in this service.
I decided to target Etsy sellers, since I thought small businesses would be the perfect target for this service.
They are a business and presumably have money to spend on marketing, but might be small enough to not really have all of these things set up.
I also crafted some different versions of my pitch, and had them sent out in different batches so I could keep track if different approaches got better or worse responses.
In fact, I did find that I got a slightly better response when I approached it from the angle as not "buying Facebook likes" but "investing in your marketing" as well as a few other nuances.
Inevitably, I didn’t capture a single customer and I lost about $650 in the process ($500 for the website, $150 for the attempted direct marketing efforts + Facebook Likes).
Yes, I was unhappy, but it’s important to delve into the successes and failures as lessons for going forward and future purchases.
What Did I Do Right?
It is true that in this particular project there were not a ton of successes, but it would be unfair to say that I did nothing right. Here are a few things I credit myself with.
Attempting Something – This might sound silly, but I believe too many people talk about doing this or that but few actually take action.
This has rarely been my problem, though sometimes it is a problem of mine to take action on too many things.
We were making money and I think it was the right move to attempt to reinvest some of that into a new project that I thought had potential.
More often than not this pays off, in this case it didn't.
Keeping my initial purchase low – At the time of purchase we were earning around $3k - $4k/month, which is by no means a huge income BUT it was leagues above what we ever expected to be making.
We were about break even on the trip, and we felt we had some spare cash to invest in a project.
On Flippa, there are hundreds of websites you can potentially buy and many of them sell for thousands.
Now, it might be fair to say that the good websites are what are selling for a lot and the bad ones are in the $500 or less range, still, I think it’s important to keep your first purchases low so that you get a better understanding of how the process works and most importantly, don’t take yourself out of the game with a major loss.
Losing $650 is a damn shame, that’s for sure, but considering we made $18k in December 2013, it’s by no means game over.
Even now when I feel more comfortable, I still keep my purchases under $1k until I get more experience.
Diversifying a little bit – It’s true that we have no experience marketing social media packages, but we are bloggers and connected with lots of people online.
It’s not crazy to think that this is something we could have done.
At the same time, it was entirely different from how we were earning our money before, and had it worked out, we would have nicely diversified our income.
Thinking about outsourcing from the beginning – Ever since I read Tim Ferris’ Four Hour Work Week I have made outsourcing a cornerstone of any project I undertake.
Although I don’t think you should jump to outsource a project right from the beginning, I think it’s important to be able to look a few steps ahead and see where an assistant could come in and take over the work.
Based on my understanding of this website, it was something that would be clearly outsourceable.
Changing it up – I think it was the right move to try something altogether different from the marketing strategy I had been handed once I had tried it an seen it was not working.
A lot of people would have just gone ahead with what had been recommended, despite the fact that they themselves had not earned any money doing so.
Assume nothing and think for yourself.
Knowing when to call the quits – It’s important to know when enough is enough.
I had expended considerable resources on the project and was not seeing any results.
I tried a few things of my own, separate from the marketing strategy, but nothing worked.
It was time to admit that in all likelihood I had probably been swindled.
Now, the question is, how could I have avoided it?
What I Didn't Do Right
Not doing my due diligence – I believe any experienced website buyer who looks at that listing will be able to notice several red flags that should have stopped me from making this purchase.
- The seller had no reviews and no picture.
- The website claimed to have been making $1k a month with very little time investment, but the seller was willing to let it go for a fraction of the monthly profit.
- There were hardly any other bidders on the website, and the bid ended at $125 when the listing was cancelled.
And that’s just the tip of the iceberg.
Had I had the network that I do now, I could have more easily asked someone with experience what they thought, and they probably would have told me to stay away.
Working outside Flippa – It was a poor decision to work with the seller outside Flippa.
When the listing ended unsuccessfully that should have been my queue to leave.
Moreover, settling at $500 was also outrageously gracious on my end (I had the other sales I had seen in my mind at the time).
I realized later on that because I was working off Flippa I had no chance to protest or at least leave a negative review if something went wrong.
It isn’t much but it’s something.
Not coming up with my own marketing strategy from the beginning – If I wanted to run a business selling social media packages, I should have tested out my own marketing strategy. Just because I didn’t own such a business and didn’t know where I could get suppliers would not have stopped me from directly marketing to people/companies and simply claiming that I was the CEO of quickmarketingpackages.com and seeing if they were interested.
It’s called selling something before you own it, and it’s an age old strategy.
It’s a lot easier to find the suppliers later (i.e I could buy the website or simply make an order from it), what’s hard is finding the customers.
If I had done that, I would have found out that it was a lot more difficult to sell this stuff than I realized and maybe second guessed the whole purchase.
Getting jaded – After this I didn't buy from flippa for another six months.
Since then I've had great success with my purchases (though they are in a completely different market that we are much more familiar with).
After what happened I got a bit jaded with buying websites and sort of forsook it altogether.
In reality, I just missed out on six months of potential website buys for a business that I did know a lot more about.
Ask The Experts
I always like to take some time to ask the experts (people more experienced than I am) for some tips.
Lewis Ogden is the author of Cloud Income, a blog focused on what's working now in the world on SEO and Online Business. You can follow Lewis on Twitter @CloudIncomeUK.
If you are considering buying an existing business, before I take a look at the individual business, I look at the market.
The market will make or break your business, regardless if you buy existing or start anew.
Look at what is trending in the market, who is the target customer and what do they want.
Is there any legislation you need to follow or recent shake ups which could cause potential problems for you?
If you are happy that the market is here to stay and offers the potential you are looking for, you now dive in to due diligence.
One of the main things I look for with existing businesses that I am potentially interested in is, how are they making money?
That is above all THE most important thing when buying a website.
There are a million and one questions you could ask the seller;
How does it make money now? What are the marketing methods? What are the biggest monthly costs?
How can I reduce them? How much time is required each day/week/month?
Write them down and ask them before you buy. Once the deal is done, there is no going back.
As you will see in my story below, I failed to plan the actual process of owning a website I bought and quickly fell out of love with it.
There is a lot of truth in the old adage "failure to prepare, is preparing to fail".
If you don't prepare you plan of attack ahead of time, you are setting yourself up for a fall.
You may come through unscathed, but why make it harder on yourself?
My First Major Venture
My first major venture into purchasing an existing business online was actually due to a strange twist of fate.
As an internet marketer I am always researching niches and potential markets to enter, finding the low competition areas and exploiting them.
This time the topic of my research was supplements (I know not exactly low competition!).
I had what I thought to be a pretty solid set of products and keywords I would target, however I just couldn't find decent enough commissions to make it worth my time.
So I set about looking into an ecommerce model, either purchasing physical products or a drop shipping solution.
Being based in the UK I was looking for a distributor/wholesaler who could give me what I wanted.
After a couple of days of research I happened across a site that provided exactly what I was looking for.
Dropship products with discounted wholesale options to boot!
After yet more research (are you sensing a theme here?) I discovered that the owner of the website had a current customer who wanted out of the supplement business and was looking to sell their existing PR2 website along with remaining stock....I was immediately interested.
I would be getting a nice boost from an existing aged domain and website that had already made sales.
I jumped in with the asking price and I was the proud new owner of a supplement business!
My imagination ran wild with the possibilities, I had Tri-athlete friends who I could sponsor, I could have my own supplement range, protein powders, creatine the whole shebang!
Time To Pivot
I did get a little carried away and before I knew it I had purchased supplement business insurance (very hard to find and get cover for in the UK).
My initial plan, with the little traffic the site was getting, was to sell on Amazon. This is where I hit a brick wall.
With all the research that I did, I didn't research my sales outlet.
Getting permission on Amazon to sell in the health and beauty section is hard, let along supplements.
I had to have 75+ SKU's in my store and I only had 7. Time for a rethink.
I took a look at Ebay and could see it was an easy way to make some sales, although the margins were tight, I decided to go for it.
After just 4 weeks of selling on Ebay I had doubled my money....a success you might say. However I wasn't happy.
The main reason I made back my money, plus profits was that I negotiated a ridiculous bargain on the sellers existing stock and was making a killing on that stock.
The main product (a custom blend) was selling at break even...not what I had hoped.
What I also didn't pay much attention too was distribution.
The physical act of picking, packing, print labels and heading to the postal office was TEDIOUS.
You may be saying "suck it up and get on with it" and I wouldn't blame you.
It's just all these years of making money online I just felt wrong and I didn't enjoy it one bit.
Competition was also very strong for these products.
There was little hope of selling outside of Ebay as the SEO competition would take far too long and too much time, which I was short of at the time.
If I had included a 'plan of attack' in my initial research, then I probably wouldn't have bought the business.
Still, everything happens for a reason and I did learn A LOT from buying this website.
I was lucky that those lessons didn't cost me anything and I came out in the black.
Please don't let this story put you off buying websites online, I have continued to buy after this experience and will continue to do so, when the market and the price is right.