Stop building and start buying (13)
When going into ecommerce you should realize what your strengths are.
And these are usually not building out an ecommerce site.
It may look easy, get some products from Aliexpress, dropship and run it all on a
And rely on Facebook to get you customers.
That model can work. But it’s going to be hard to transition from that model to one that doesn’t rely on Facebook.
IMO, there are better opportunities for skilled affiliate marketeers. And that’s by buying a site that already has traction.
Because such a site lets you skip all the hard parts and maximizes your skills when applied to the shop.
Really, you shouldn’t be working on your weaknesses, like finding products, a market, setting up payment systems, creating content etc.
You should be bringing your skills to a store that has all of that, but has done little in your area of expertise.
So which sort of site should you be looking at?
Ideal sites has been around for a more than 2 years, has been growing during that period of time.
Most visitors would come from search and there has been no advertising.
The products are in a niche market and the range of products is big enough for upsell opportunities.
Margins are 30% plus and products are easy to ship.
On-site marketing is not sophisticated.
There is an e-mail list and a decent database of buyers.
This is not an exclusive list, but it covers the basics. If missing element scan be solved by the right strategy, it’s not an issue but an opportunity.
Some examples of interesting businesses I have seen for sale:
- a small site selling aluminum screws (which would do well with some UX changes, product positioning and looking at export)
- a site selling clothes for hunting (4k price tag) - expert content, well written product descriptions, site had outgrown hobby ambitions.
- 200K turn over site selling branded t-shirts, 75K price tag which includes 10K stock. 30% gross margin. 10 year history.
Valuation – the price you pay
You pay based on the current value, adjusted for risk.
You do not pay for potential. You buy for potential, but you don’t pay the seller for potential.
The adjustment or risk factor is determined by things like dependence on one supplier, heavy competition, price pressure etc.
I am not talking about budget here, as that will be different for everyone. But these “rules” still apply.
Where do you find these sites?
Well, first of all, if you see a site you seriously like – get in touch.
Great sites are like beautiful women, there’s always somebody who’s tired of f****ng her.
More site owners than you think would be willing to sell. Given the right conditions of course.
Other places to find them are the usual suspects:
Flippa.com
Empireflippers.com
Feinternational.com
And then there are country specific ones. Which can be great, as there are less buyers, which can mean great deals.
So before you decide to build, look at buying. See what’s available and consider the options and how you would need to spend your time.
Love the mindset!
Andrew
@Andrew / Mr Payne - glad you like it!
Many thanks pekadis for yet another post littered with gold.
"You should be bringing your skills to a store that has all of that, but has done little in your area of expertise."
This can be applied to any business. Sometimes we forget how valuable our experience is. Not everyone is comfortable with paid traffic. Some people are good at starting businesses but aren't very skilled in the promotion/expansion part. I remember having read a very valuable post by another member here (can't remember his username at the moment...), where he's done very well by offering small businesses that are struggling, his online marketing services, in exchange for a stake in each business.
It's great to have at least a basic knowledge of every aspect of a business, but by partnering up with people that are strong in areas where you're weak and vice versa, a synergy can be created. It's OK to not be a jack-of-all-trades - I didn't realize that until a lot later than I should have. 
Thanks again pekadis.
Amy
Great post pekadis!
You pointed out the key things to look at when buying sites and they are very important.
The reality will be that the majority of the sites will be just from site flippers - sites made just with intention to sell, so anyone that goes this path should be careful not to get scammed and buy a site with 0 value.
Thank you for the post!
Awesome post mate. Great perspective and hot tips.
@sebastian_r
It really depends on your goals, budget, available time, management skills. Many variables.
A big one is time though, even more than budget.
The more you spread yourself thin, the more every project will suffer. Or one will just die off, due to lack of attention.
I'd rather pay more for a site that suits the time I have then pay less and do a lot of work.
If starting out, I would go for a site with a limited range of products, limited reach in terms of markets (no or limited export), limited number of traffic sources.
Keep it simple, so you can get to know the business quickly (due to its limited complexity). When you have a better understanding of the market and the customers, create a growth plan and scale up.
When learning about the business, write down everything you learn as a procedure and start outsourcing, automating or delegating task by task.
@amy / vortex - would love to find that post, as that's another great idea.
Really low risk approach to diversifying the risks.
Done well, you can have a nice portfolio of businesses that overall are a great insurance against recessions, loss of traffic, competition etc.
Would be interesting to see the different aspects of actually getting this done, especially contracts and terms. Also, the customer acquisition process.
Great post, and great points.
Here's an interview I read a while ago with one person who did this with an SEO SaaS company - it did fairly well: https://mixergy.com/interviews/rob-w...ail-interview/
@caurmen - he did well indeed. And then moved forward with drip which was recently acquired by leadpages
Great example - thanks
So much good stuff in here. This right here is a big one, too, especially for anyone who's new to buying:
Valuation – the price you pay
You pay based on the current value, adjusted for risk.
You do not pay for potential. You buy for potential, but you don’t pay the seller for potential.
The adjustment or risk factor is determined by things like dependence on one supplier, heavy competition, price pressure etc.
Of course, as you stated, one should definitely buy for potential. But look at the current value when you're thinking about price.
Originally Posted by pekadis
https://stmforum.com/forum/showthrea...ll=1#post59583
Also the couple posts following that one. Not a lot of details unfortunately - and they're no longer a member.
Amy
Thanks Amy, much appreciated.
Summary for those who are interested:
What do you do: "finding businesses that are profitable and have a decent business model, but suck with online marketing. We will go in an apply internet marketing skills to blow it up, in exchange for an equity stake."
He found companies through "networking, placing ads in Craigslist for people that want to sell their business, and all the same ways you find your offline clients"
Value proposition: "show the business owner that that will make more money with you involved"
Equity stake (which I am impressed by): "you can typically get around 30% but it all depends on the value proposition"
Pay out: "when it's time to sell the business (or take profits) - mucho cashola. Way better than just getting paid to help offline businesses like everyone else is doing"
Something worth thinking about...
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