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The Flippa Implosion Continues - New Changes Coming Tomorrow

Discussion in 'Site Flipping' started by kvmcable, Sep 11, 2012.

  1. kvmcable

    kvmcable Supreme Member

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    Flippa is the literal definition of how to quickly destroy a solid business model. I don't think I've ever seen such a small company so totally out of touch with their customer base. Their changes in the recent 6 months have all been communicated by Flippa as changes for the "buyers" of websites. Have they completely forgotten the sellers are their customers? Their misguided changes for the buyers has left them with a 30% reduction in inventory in the last six months from their real customers, the sellers.

    This is like watching a train wreck in slow motion. Flippa boasted of 2200+ running listings just last March. With that announcement they increased the minimum success fee from $5 to $10 on 75% of their inventory (listings under $200) saying it was an effort to get sellers to increase the quality of the websites they're listing. We all knew it was nothing but a money grab regardless of what excuse Flippa provided.

    In May, Flippa saw the listings hadn't dropped significantly and introduced another price increase and this time it was significant. Increasing the listing fee from $19 to $29 sent shockwaves through their sellers. What could possibly be the reasoning behind a sudden 50% increase in listing fees? Again we heard from Flippa it's to reduce the number of low price, "template" websites and encourage sellers to create and list more valuable properties. Flippa continued with excuses for the 50% rate hike saying it was for site improvements that offered little benefit for the majority of their inventory. Andrew even appeared here and said with this additional revenue that Flippa would now offer weekend support for sellers. That hasn't happened. Support tickets from sellers are rarely, if ever, answered during the weekend. So once again, it appears this was nothing but another money grab by Flippa.

    This time they didn't see the same low impact result as their previous money grab in March. Flippa's listing numbers have fallen steadily since they announced the 50% rate hike. Their listing numbers are continuing to decline and now teeter around 1450 listings on most days. But this only tells half of the story. To see the larger impact you need to consider the success rate of those listings. Success rates have also fallen and NPB have dramatically increased in the last 4 months. Most sellers I talk to are experiencing less than 15% success rate unless they're just giving away valuable property. Even the brokers are taking significant hits listing very valuable property on Flippa. We're seeing more and more relists and unsold property since Flippa's improvements for the "buyers".

    So if Flippa isn't improving the website for the buyers and certainly not improving it for the sellers, than whom are the changes benefiting? Of course the changes only benefit Flippa. They've tried milking this cash cow for more milk than it can produce and just like a real dairy cow that is milked too often, the milk dries up and the cow stops producing milk.

    So you would think Flippa might recognize their mistake with the dramatic drop in listings, absolute terrible success and NPB rates and try to turn the ship around and head back to better waters. Au contraire my friend, they're just getting started. It appears they are hell bent on sinking this ship before 2013 arrives.

    So what have they done this time to the determent of the website auction powerhouse? They reduced the auction extension time by 75%, significantly reducing buyer exposure on all their listings. Now listings will be more targeted geographically and sellers will work day and night accepting or denying bidders. If you have an active listing on Flippa now you'll be glued to your monitor or smart phone if you want any sort of chance of selling it for your initial listing fee.

    Once again Flippa says the change is for the buyers of websites. They referenced a poll that had 6 choices available with only one choice to leave the current extension untouched at 4 hours. That choice (leave it untouched) received an overwhelming majority of the votes during the first week of the poll (3 times any other choice). But you have to understand Flippa math to comprehend their interpretation of the poll. They had 6 choices with 5 choices meaning a vote to change it and only one choice as a vote to leave it (of course unexplained). The votes on those 5 choices totaled more than overwhelming majority choice to leave it untouched if you look today (48% untouched to 52% something else). What they don't know is I saw this coming. I took a snapshot of that poll on 07/31/2012 at 2100 hrs and at that time (5 days after the poll was announced and no longer receiving many looks) 52% voted to leave the 4 hr extension with the total of all 5 other choices at 48%. So it appears Flippa has been voting in the last few weeks to skew that poll to their liking. Of course a poll with one response for something and 5 responses interpreted against something is a rigged poll from the beginning. This is typical Flippa math that still boasts 50% of their listings sell after 3 months. What they don?t tell you is how many relists it took.

    What is even more amazing is they claimed they listened to their readers yet chose 1 hour extension that only gathered 7% of respondent votes. Why not chose no sniping that received 11% of the votes or 15 minute extensions that received 16% of the votes. Even 30 minute extensions beat out 1 hour extensions. So coddle readers their votes matters but not really. 36% voted for extensions less than an hour. 7% voted for a one hour extension and 48% voted for no change (as it reads 7 weeks after readers were asked).

    So why do I think Flippa made this change and ignored either the 36% that wanted less than an hour extension or the 48% that said leave it? For the same reason they made the last two significant changes; another money grab. They know damn well changing the 4 hour extension to a 1 hour extension will reduce a listing's views and odds of succcess. Flippa wins (gets paid) whether a listing is successful or unsuccessful. They know they'll increase their relist revenue by shortening the auction extension time. They don't advertise the number of relists a website takes before it sells but I know the numbers. Typically it takes two relists plus the initial listing fee before a seller sells his website. So the typical listings fees with the 4 hr extension was 29 + 14 + 14 = $57 and if you get lucky and sell it after the second relist you'll owe another $10 minimum for FVF. So a conservative number is $67 in Flippa costs.

    Now with just a one hour extension you can expect the relists to at least double if not triple. Your website listing has much less exposure and a much higher probability of ending unsuccessfully. So a conservative calculation of Flippa listing fees are now $29 + 14 + 14 + 14 + 14 = $85 and the FVF minimum of $10 for a $95 conservative listing budget.

    I predict that Flippa listings will take another significant hit in the upcoming weeks and before Thanksgiving if Flippa doesn?t fix their broken marketplace they?ll be down to about 1200 listings or less running concurrently.

    Like I said this is like watching a train wreck in slow motion. It appears Flippa no longer wants to be the website auction powerhouse. They?re doing all they can to run off their sellers and their inventory is continuing to decline. I bet they will accelerate that decline with this latest announcement.

    The rigged poll if you want to see it: http://flippa.com/blog/poll-should-we-reduce-the-auction-extension/

    The latest Flippa post announcing the shorter extension times: http://flippa.com/blog/shorter-auction-extension/
     
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  2. Seadragon

    Seadragon Regular Member

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    Time for a couple of us to bring a competitor to the table.
     
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  3. minimo88

    minimo88 Jr. VIP Jr. VIP Premium Member

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    If you hate flippa soo much, why don't you make your own?

    Spend $2000 - $3000 on making a script then, traffic. This won't be hard since other sellers are having the same anger as you and so are going to switch.
     
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  4. kvmcable

    kvmcable Supreme Member

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    I already have the best script in the business but waiting for the competition to collapse. No reason to compete against a dying business model. Just wait them out and be ready when they collapse. I figure Spring 2013 will be a good launch date if Flippa keeps at their current trend. I know enough people in the business to probably open with 500 - 600 listings.

    Before any successful business you need to do research and the more the better. I don't crunch numbers and study Flippa for the hell of it I assure you. I've seen the Flippa competitor models that fail and don't need to be another statistic. I also see the mistakes Flippa is making and don't want to follow their path either.

    To be clear I don't hate Flippa. Competition is good and you can't have a superior model without it. Flippa does many things correctly. I just think instead of getting more cows on the farm they're milking the few cows they have to death. Sorry for the farm analogy, I'm from farm Country.

    'If Pepsi didn't exist, we would have to invent them" is because, what you're doing through competition, you're increasing the size of the pie. ~ Neville Isdell, author of the new memoir "Inside Coca-Cola: A CEO'S Life Story of Building the World's Most Popular Brand," spent 43-years with Coca-Cola and was chairman and chief executive officer from 2004-2009.
     
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    Last edited: Sep 11, 2012
  5. florflor

    florflor Senior Member

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    I don't really see the problem.

    If they want mostly high value sites, fair play to them. Most of the $100 sites on there are turnkey sites that will never make a dime anyway. Why should they cater to all? Nothing wrong in deciding to ditch the crap.

    As for reducing the auction extension times, again I don't see a major problem with this. As for reducing the overall time to end of auction, that's fine too. Most interest comes in the last few hours anyway, I'm glad for this reduction.

    I'd like to see a different marketplace for smaller sites. I have sites that could go to someone else for which I would like some spare change. Last time I listed there, I just broke even. If flippa don't want such sites then frankly that's their perogative.
     
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  6. axus_auto

    axus_auto Power Member

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  7. IamNRE

    IamNRE Jr. VIP Jr. VIP Premium Member

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    I look forward to seeing your website professor butters!

    I really enjoyed reading your post and by the sound of things flippa will soon be on its last leg.

    The market needs a SERIOUS competing site to put flippa in to check, I hope it will be your site :)

    Send me a PM when you launch, I will try to help any way I can.
     
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  8. dog-tag

    dog-tag Senior Member

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    Yeah very enjoyable write up, +Rep added :)
     
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  9. erniedawg

    erniedawg Junior Member

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    LOL! That's the first thing I was thinking when I started reading this post. Bring in a lower priced competitor who takes care of their sellers and wa la... $$$

    Oh and by the way, I was going to list a domain I had for sale on Flippa a few weeks back. I saw their ridiculous 29 dollar fee and bailed. This is the internet, there are tons of sights that do the same exact thing. If not, it'll come along soon, and be much better.

    -erniedawg
     
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    Last edited: Sep 11, 2012
  10. Seadragon

    Seadragon Regular Member

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    Obviously will take a lot more work then that lol.

    OP - I'm also willing to help out when/if you launch, just as long as you don't join in and start milking your cash cow,like flippa, if it's a success that is. ;)
     
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  11. stefan_v

    stefan_v Newbie

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    I had in mind a really different model of flipping site. This (flippa and other competitor sites) doesn't go to the core of the problem. First, it's too complex. It needs to be lot simpler. I have in mind developing a new kind of marketplace. It's shame I'm really busy with everything and already finishing some startup works. Completely agree with kvmcable. If they don't listen we can make our own site.
     
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  12. thejake

    thejake Jr. VIP Jr. VIP Premium Member

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    I've had the best luck buying sites from site for sale sections of webmaster forums. Flippa has always felt like a weird little wafo-related circlejerk of a pseudomarket where people who make sites just to sell on flippa can dump them with the perception of value because of the shill and ignorant bids on wafholes who suck at internets. In fact I'd be superhappy if there was a site-for-sale board here where donors or better could post a thread for a site they have for sale free, $30 is a little steep to list a site or domain that may or may not sell, regardless of ask price.
     
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  13. wexzone

    wexzone Regular Member

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    yeah, I agree. I haven't listed anything on flippa basically because of the listing fee and decreasing success rates. DP is pretty bad for selling sites, but at least it's free!

    are there any decent flippa alternatives right now? I've got some sites I want to sell...
     
  14. webwhizz

    webwhizz Power Member

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    flippa is shit, everyone uses godaddy.com as registrar, it sounds like a kiddy fiddler site, hard to do business on their if your from UK and dont use godaddy
     
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  15. steelballs

    steelballs BANNED BANNED

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    I have read many posts from kvmcable on BHW and lurking behind the poster lies a very - articulate - astute business brain :cool:

    I am with you in your Flippa project and hope that when your work is done with Flippa - You will have more time to help dismantle another online imposter Facebook!
     
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  16. AR!ZONA

    AR!ZONA Regular Member

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    kvmcable, I think this is actually the perfect time to start promoting your listing site...

    If flippa wants to let go of all of the low value site builders, then that may be an opportunity to snag them up and start commissions immediately?
     
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  17. tnhomestead

    tnhomestead Regular Member

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    WHT is a good free place to sell sites. Lie some others said, I have several domains to sell, but they are not high end -- worth maybe 50 to 100 or so. So there is no point in them on Flippa, wont make a profit. Very good write up of their business model!
     
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  18. wexzone

    wexzone Regular Member

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    what is WHT?
     
  19. AndrewAU

    AndrewAU Newbie

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    Hi kvmcable.

    Andrew here from Flippa.

    Sorry to hear you feel that way. Reducing the auction extension was not a decision we took lightly and it certainly has no impact on revenue - we're focused on getting sales rather than relists.

    At the end of the day, the poll we ran shows that there was more interest from both buyers AND sellers in reducing the auction extension - this is emphasized further when you take into account the feedback in the comments, and the types of users making these comments.

    Common complaints we were receiving through support:
    - buyers/sellers needing to stay up throughout the night when their auction was repeatedly extended
    - new users (both buyers and sellers) being confused on why auction end-times were changing

    Furthermore, our introduction of automated-bidding (proxy bidding) has greatly reduced the need for the extension being so long, and mobile usage has continued to grow - greatly reducing the need for many buyers to get back to a desk before placing a new bid.

    Few things to note:
    - We remain committed to removing the incentive for bid sniping and a 1 hour extension continues to achieve this
    - Sellers can accept pending bids for up to 72 hours after the auction ends

    I can appreciate that changes like this are not going to please everyone however we feel it remains in the best interest of both buyers and sellers - our analysis indicates that it won't have the negative impact you're anticipating in terms of sales rates.
     
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  20. bryanon

    bryanon Executive VIP Premium Member

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    While I agree with the OP on some things he's posted re: Flippa and their latest changes, this change is something that I personally welcome, as all of the impact it will have is that of making my life easier (auctions won't drag on for as long).

    The reason behind this is that I sell mid- to high-end quality sites, and as such, there are very rarely any last-minute bidders. There are and always will be last-minute bids though, so it's important not to confuse bids with bidders. The 1-hour extension would have been a horrible idea before the implementation of proxy bidding, but now that you have to approve a bidder, rather than every single bid, it makes perfect sense to me, as you can never expect a new bidder to appear 4 hours before the end of the auction and do all the required due diligence within these 4 hours to be able to place a legitimate bid.

    The only market segment that I see suffering from this change is the sellers that are selling cheap, turnkey sites, as these sellers
    a) need all of the additional (free) visibility they can get - and until this change the "Ending soon" section provided this visibility;
    b) rely heavily on new bidders falling in love with the site (or in most cases, the sales copy) and placing their bid as soon as they can, rather than doing proper due diligence (as this would scare most of them away).

    I'm not sure whether this change will hurt or improve Flippa's bottom line but what I'm absolutely sure of is that it will improve the success rate of my auctions as once again I will have less "Buy now for only $149.99" template sites to compete with.