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How to buy eCommerce sites

Discussion in 'Making Money' started by nickeberle, Oct 28, 2014.

  1. nickeberle

    nickeberle Regular Member

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    Over time, I have moved into ecommerce sites. You might think it's because I want the whole pie but really it is just less thinking.


    It also opened me to some serious opportunities for buying websites.


    I didn't want to release this while I was buying sites because the less bidders there are on a site the cheaper I get them. This method is how I have bought low maintenance websites and been cashed out in 2-5 months.


    Here are some tricks I have used to buy websites that pay themselves off in 3 months and make low to mid x,xxx net cashflow


    First my don't list


    1. Never by a eCommerce site that has had link building or that ranks for any keywords.


    This may be counter to what you have heard, but it is a big part of how you can buy a website with an extra high ROI. A big % of buyers on flippa are seos and the first thing they do is look in sem rush to see if the site ranks for keywords.


    2. Never buy an eCommerce site that makes its profit from paid advertising.


    It's ok if they run a little bit of their budget into advertising but if they clearly just cycle paid ads just do it yourself don't buy someone else's shitty website that is probably loosing money.


    3. Never buy an eCommerce site that sells drop shipped goods


    This is the last one, and I will explain more about it in my buying criteria but basically we are looking for a unique website with a unique product, so you don't need to compete.


    This is what I look for before I buy


    You want websites that don't rank for anything specifically because most bidders don't trust the income. They have low traffic and high sales this is what I look for and how I find the gems. Websites that sell for cheap that are built to scale. If they have high traffic and no rankings, the sellers are almost always scammers. On the other hand, 500-1k a month traffic with 1-5k in sales is actually a normal traffic to income ratio on a good ecommerce site that sells by word of mouth more than marketing.


    So what I do first is look for someone that writes the listing that doesn't look like an internet marketer.


    Then you want to look for it to not be managed by a internet marketer/seo also. No link building, minimal paid advertising, no or very limited blog, youtube. The first two are because they are unreliable income streams, and the last is because you want the customers to have a relationship with the product not the owner because when you buy the owner is changing.


    That being said, the sites I buy will usually have between 9-20 links. People writing about the product on their blog, putting it on shopping lists and/or reviews from blogs in the same niche.


    Now that I gave those criteria you have a lot of total shit sites in the same category that is why it leads to great prices, but you also need to wade through the shit.


    The big thing I look for when vetting is personality: Personal stories on linking sites, linking sites that look personal in nature, positive reviews that are very specific, real press and real mentions in niche authority sites. Anything real, you aren't looking for things that can't be faked but rather to many things that are hard enough to fake that a scammer wouldn't do that and not pad the link profile and traffic.


    Link profile I can't stress this enough if it has more than 20 linking sites and isn't banking 10k plus you can find a better deal out there.


    Get them to show you the sales history on their backend on a screen share, look at shipping and coupons, look at return rates and reorders. Only buy sites that get reorders loyal customers are the basis of a good business vs. a niche site. Also people are unlikely to fake a loyal customer base.


    Get them to introduce you to the suppliers, this is probably the most important. Even if your going to change the supply chain they are are the ones that are going to tell you the truth about how much the owner orders and how often. You can reverse engineer this to tell if a business has legit sales or is padding their numbers for the listing. Also, some suppliers are just total dicks, if they are a pain in the ass and can't get cut out I just walk on the deal, one lemon can become a black hole for time.


    Shipping receipts. I don't know if this is legal but I make my sellers give me one or two shipping receipts. No one back dates a usps/ups shipment and link it to a sale so if they have that, combined with all the above, you have a legit eCommerce site.


    How to find a gem of a site that can profit fast


    I like single product sites, a site that sells swim trunks with only one color and style. You can easily add more colors, styles and accessories to turn a one shot wonder into a small business and sell the new products to the existing customer base.


    Inventory, inventory, inventory. I can't say enough positive about this one so I'll just give you two stories. One of the sites I got I bought based on 10/mo net income. The product has a 60% margin and the purchase price was 20% less than the cost of the inventory that came with the site. I trippled my money before I sold out of the inventory that came with the site and with a little growth had the investment paid out in the first 3 months of sales.


    Another site the owner and supplier got along well; the supplier liked me also, and I worked out a deal where I got my first order of inventory for 50% off. He already offered the best price but by him taking no profit on my first order, he made it unlikely for me to leave. I was able to pay for the site in 2 months by selling the inventory I got for free. We both won.


    No email list is a good thing. If a person is selling 1k a month of a product that is consumable to a customer base of 400 customers. If you get those guys emails, you can typically bring the sites income up by 20-50% by scraping the customer emails and starting an email list. It will help with customer retention and increase referrals if you stay in communication with your customers.


    Reorders. I cannot stress it enough but if the product has bad reviews and/or customers aren't reordering just start from scratch don't take someone else's bag of shit.


    I see bad logistics as a good thing. Cleaning up logistics is easy, and it is a factor in someone selling an otherwise good business. Just use FBA if you're going to sell the product on amazon or shipwire if your not.


    That's how I now bought a small portfolio of sites in half a year that sell over 10k a month with a 70% average margin on a 8k budget.
    Cheers!
     
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    Last edited: Oct 28, 2014
  2. rtraphic

    rtraphic Jr. VIP Jr. VIP Premium Member

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    Reading now, thank you for the effort of writting a guide like this!
     
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  3. HiFi66

    HiFi66 Newbie

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    Thank you for the interesting share!
     
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  4. nickeberle

    nickeberle Regular Member

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    You bet BHW played a role in me quitting my day job this year, happy to give something back.
     
  5. FutureProofSeo

    FutureProofSeo Jr. VIP Jr. VIP Premium Member UnGagged Attendee

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    Is it supposed to say "portfolio of sites that make 70% of 10k (7K) on an 8k budget (= -1K p/m) ?

    I presume the 8k budget is yearly or bi-annually?
     
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  6. nickeberle

    nickeberle Regular Member

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    Its 7k p/m I wouldn't quit my day job in the USA for 7k a year.

    I just reinvested the money the sites made into buying more sites so I have a few little sites and a couple big ones. The cheapest I bought a site was 2.5 months net. The most I spent was the example I gave where I paid 10 months net (the site netted just over 500 a month). The thing with that site was it had unnecessary expenses, tons of inventory on hand, no mailing list and was easy to expand and is now one of my top earners.

    So I started with 8k cash and in 6 months I got to 7k a month income.
     
  7. FutureProofSeo

    FutureProofSeo Jr. VIP Jr. VIP Premium Member UnGagged Attendee

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    Yeah this is what my point implied it should have said, bi-annual investment of 8k + re-investment of % earnings = 7k sales p/m from all sites combined.

    Numbers look great, are you mainly focusing on SEO for traffic, and are you using personal SEO, concentrating on similar niches to keep the cost down , or paying a service provider?
     
  8. nickeberle

    nickeberle Regular Member

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    Yeah it's nothing out of this world but I am happy to not be dependent on google.

    The reality of what I am doing is getting niche products that grew despite their owners. I just get sites that had somethings right but are missing fundamentals.

    I'll recruit affiliates when I can, give bloggers with following product to review or mention, give press kits to authority websites, list on amazon if there isn't already a listing or set up FBA if they haven't already, add similar products to the store to raise the $$ per order, build email lists where they don't already exist. Lower product cost if possible without sacrificing quality. Take better product photos, improve branding and/or packaging if quality is lacking.

    I basically do everything I can to make it so a store can grow on it's own. That is the fun part about buying websites with this kind of product criteria is they didn't develop into a business through seo so you don't need seo skill to grow them.

    I started doing this because I have this affiliate site that earns 1-1.5k a month and I look at it and just see that it is a portal to someone elses real business. As long as it is ranked I make money as soon as it is gone there goes the income.
     
  9. lonelytty

    lonelytty Newbie

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    Thanks for the valuable information
    I know your thread is about "How to buy eCommerce sites" but can you give some tips on the average price of the items so its profitable ? do you go broad or niche market ?
    thanks
     
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  10. nickeberle

    nickeberle Regular Member

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    Oh that is a good point. Like I said in the guide I'm buying single product sites. So botique coffee site with organic coffee from costa rica available by 8oz 1 or 5lbs or a athletic wear website that sells one style of compression shorts in 2 colors 4 sizes.

    Either of these could be expanded the former into organic coffees from different regions of south and central america or the ladder could have compression shirts, hoodies and athletic pants. If you buy a website that is already big you don't have that immediate expansion potential and your not going to increase cash-flow as quickly.

    As for price I look for a product that is $40+ and has a minimum of a 60% margin.
     
  11. virtual.indiano

    virtual.indiano Regular Member

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    Any specific platform you choose when buying these websites? I mean do you find sites made in magento or prestashop or custom coded sites?
     
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  12. nickeberle

    nickeberle Regular Member

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    I haven't had any specific platform, for me it's about the product, customers and $$$. On that note, I did buy a site recently that is hosted on Amazon's CMS the hosting is really expensive like $80 a month so I will move that to WooCommerce with WP managed hosting.

    When I make that move I will update the design and in the case of this site (a lifestyle fashion brand) I am starting a lifestyle blog that I will post onto weekly.