Website Marketplaces: Retail vs. Wholesale

June 30th, 2010

Before we look at the various flip strategies, it’s important to discuss the difference between the wholesale and retail markets. When researching this, I noticed that virtually no one discusses this concept but it can help you better meet your goals if you know the differences between the two different methods.

• Retail market. If you’re not in a hurry to sell and want to get top dollar for your website property, I would consider selling an established website on the retail market. This includes locations using a non-auction marketplace format and see what comes your way.

One example of a “retail” marketplace would be BuySellWebsite.com. At this resource, you place a classified advertisement where potential buyers review your ad and determine if it meets their needs. If so, they contact you via the marketplace email system. Depending on your site’s asking price, among other factors, you may have a good chance of receiving top dollar (providing it’s realistic) on the retail market.

• Wholesale market. This is where you’re seeking to sell the website at a quicker pace. That doesn’t mean you won’t get top dollar but it tends to tell potential buyers that you’re more motivated than if you sold on the retail market. Auction sites, especially if they offer a Buy It Now (BIN) feature, tend to sell faster than retail (non-auction) marketplaces but usually at a lower selling price.

The most obvious example of a wholesale marketplace would be Flippa.com where both the auction and BIN features are available. As a seller, you’re not required to provide a BIN price but it is an option to consider.

While there are various strategies for flipping websites, they’re generally three key components to a successful turnaround:

1. Buy an established website at the right price.
2. Fix or add website features to boost value.
3. Develop a solid sales campaign to sell the website.

Flipping Websites and the New York Times

June 27th, 2010

If you’ve ever watched the Discovery Channel, you’ve probably seen one the most popular game shows on television, Flip this House. The object of the game is to buy a piece of property (usually a single family home or condo), fix it up then sell it for a tidy profit.

While the concept sounds enticing—almost too tempting—watching the show after an episode or two, you’ll quickly recognize that it may not be as easy as one may think. Despite some of the challenges contestants encounter, it’s always nice to see when an investor is able to buy a piece of property, fix and flip it while stuffing some extra cash into their pocket.

Similar to real estate investors, internet developers, webmasters and internet marketers are buying websites, improving them, then flipping a site for—you guessed it—a tidy profit. The formula for conducting a flip is virtually the same as in the world of real estate but at substantially less risk both financial and using vendors.

In the past few years, I have flipped about 10 income producing websites, some for substantial profits while others were sold just to provide an infusion of cash. The key was to buy at a good price, make proper improvements, beef up traffic then flip. A few may prefer to flip a site within a few weeks or even days for some motivated individuals, regardless, it can be a profitable opportunity.

An article published in the New York Times added credibility to the concept that virtually anyone could make money by flipping established website. It cites some incredible sources including eBay and Sitepoint.com about the tremendous growth in activity. More importantly is that there are still TONS of great opportunities to be had even right now.

New York Times

Website For Sale – Closing the Deal

June 13th, 2010

If everything seems to “feel right” for both the buyer and seller and you see that this could be a possible transaction, there are just a few more steps you need to conduct before the deal is struck. These include the negotiation process, drafting a sales agreement, options for transacting funds, and finally, transferring the domain/website. Let’s take a closer look at each step in completing a successful transaction.

Negotiating for Success
The first step for closing a deal is the negotiation process. For auctions, it’s not so tedious but sometimes certain elements need to be worked out before money is exchanged. Unfortunately, negotiations is an area that can make
you nervous, especially if you’re not experienced. Before I discuss a few tips, you may not realize it but as individuals, we negotiate everyday. Interacting with your kids, co-workers, fellow drivers and other adults are, in essence, part of negotiating in our everyday lives.

However, it seems to be a whole different ball game when it comes to buying or selling something that is very important to you. To take out some of the “sting,” here are a few tips to help you get the most.

1. Always be courteous and respectful. It doesn’t take a rocket scientist to figure out this one. Being cocky or arrogant is a known deal breaker. Always treat the other party with respect and dignity. Not only does this present you
in a professional manner, it is will take some stress off the negotiation process.

2. Remove emotions. For sellers, you could still be sentimental and for buyers, you could be excited about scoring a great deal but emotions tend to cloud your judgement and can sometimes get in your way. Take your emotions off the table and wait until the deal is signed, sealed and delivered.

3. Flexibility. If you hold the attitude of “it’s my way or the highway,” then you may be losing before you even start. One of the keys to the negotiation process is giving and taking, hence the reason why it’s called negotiating.
Having flexibility is one of the keys.
4. Listen or read communications very carefully. If there is something you don’t understand or you need clarification, just ask. It’s the best way to learn about the other party and could be to your advantage.

5. Always try to develop a win-win deal. Another key to the successful negotiation process is understanding the other party’s perspective. You may not totally agree with it but, nonetheless, it’s an important consideration. If
sticking points arise where neither party can agree, move on to another element of the deal or take a breather and come back to that issue at another time. When it’s time to return “to the table,” and if both parties still have a sticking point, maybe you want to concede one element and the other party can concede the other. In this scenario, you’re both not getting everything you want but you’re both willing to work with the other to close the deal.

6. Never be rushed into closing a deal. Sometimes there are reasons a seller or buyer may have to close without always disclosing the full reason. If you feel you’re being “strong armed” into a deal and don’t feel comfortable, then ask to take a few hours or break for the day. If the other party is insistent, ask why? If their response doesn’t sit well with you, then this may not be the deal you originally thought. (On a personal note, ultimatums have never sat well with me and can be an instant turn-off for others so you’ll have to judge the situation carefully if it arises). If everything works out to both party’s satisfaction, the next step of closing the transaction process is developing a written agreement.

Buying or Selling a Website? Auctions vs. Classified Marketplaces

June 8th, 2010

Marketplace Auctions
Sticking to your budget should be first and foremost. If you see a website you wish to bid and it’s in your budget range, this may be a great way to jump into the exciting world of auctions.

Before you place a bid, you want to avoid letting your emotions get the best of you. I understand if you’re excited about a certain site but in the end, you want to be sure little, if any, emotion is involved. Rather, you want to focus on making sure the website owner is able to deliver what has been stated in their ad. This is especially true with auctions because it’s easy to get caught up in the excitement of bidding in an active auction and possibly paying too
much for the website.

A common buyer’s strategy on eBay, as with most other auctions, is for the bidder to wait till the last possible moment before placing a bid on an auction that is about to end. This has been known to be an effective strategy and a realistic method of buying an established website at a good price.

Buy It Now Option
In some auctions, a seller may have a Buy It Now (BIN) price where the seller is willing to forego the auction and sell the website for a predetermined amount. This is always a benefit to potential buyers because it lets them know the “official” dollar amount a seller is willing to accept to part with their website.

Not all seller’s will post a BIN when they launch an auction. Sometimes they do this to determine the level of interest an auction may have. Even if they don’t have a BIN, it never hurts to contact them via a private message or email to inquire. And even if they quote you a BIN, there’s nothing to say that a seller wouldn’t consider selling the website below their initial BIN price. As the old saying goes, it never hurts to ask and, in this case, it could
save you money.

Classified Ad Marketplaces
These types of marketplaces is where no bidding takes place. One example of a classified ad marketplace would include BuySellWebsite.com which lists the basics of a website that’s for sale. Similar to a BIN, an asking price is usually included in the ad but that doesn’t mean their official figure is set in stone. By communicating with the seller, they may be more motivated than their ad states—so it’s advisable to inquire.

Selling Your Website? Tips Before You List It For Sale

June 5th, 2010

Once you’ve decided to place your website up for sale, you want to prepare your website so you’re able to get top dollar. After all, you’ve probably put plenty of energy into building your website and it makes sense that you want to be able to get the most possible amount for it. Below are a few suggestions before announcing to the public your established website is for sale.

- Internal Evaluation. The first step is to conduct an internal evaluation of your website. Although it can be challenging, you want to view the site from a buyer’s perspective. By reviewing the previous chapter, there are plenty of valuable tips you may want to consider before placing your website on the marketplace.

- Get your website evaluated by others. One of the greatest benefits of being a part of a forum community is the ability to ask fellow members to evaluate your website. Just don’t expect to drop into a forum and ask. Rightfully so, most forums require you to evaluate other websites for their strengths and weaknesses before asking for an evaluation of your own website. It works both ways; if you want someone to give you a serious evaluation, expect to do the same for others.

- Inventory what you expect to sell. Okay, most may think a domain and the site’s content are obvious but what about other elements which may help increase your asking price? Some of these elements may include an opt-in email list, an affiliate list, license to a classified ad database, membership list and possibly much more. In order to get the maximum, you want to inventory all the assets which you will include in the sale of your website.

- Website metrics. Anytime you place you site up for sale, there will be two obvious questions that a serious bidder or prospect is going to request: (1) your traffic metrics and (2) proof of income. It’s best to have this data prepared, if not already included in your marketplace ad or post.

- WHOIS database. If you use a proxy service to mask your identity, be sure to remove that service so your contact information is displayed in the public database. This also may be a good time to make sure all your contact data is current and up-to-date.

- Anticipate 3rd-party resource scrutiny. If you read the last chapter showing sellers how to use third-party resources as a mean to verify a seller’s claims, you may want to do your own investigations to make sure no “surprises” are brought up about you or your website.

- Quick improvements. There’s no doubt every seller wants to get top dollar for their website. In my special report Flipping Established Websites, I discuss 10 different means of improving the value quickly. Some improvements suggested include search engine optimization, upsell
opportunities and improving AdSense click-through rates. I explain these and other ideas in the special report after this portion of the eBook.

- Timing of your sale. They say that in some businesses, timing is important. It’s no different when selling your website. If you live in the northern hemisphere, summer tends to be a slower time because families are taking vacations or enjoying other leisure activities. December is also considered a challenging month due to the holiday shopping season. The most ideal time is to sell your website at the beginning of the year, early spring and in September when kids return back to school.

- Using a broker. Unless your site is worth hundreds of thousands of dollars, or perhaps millions, there really is no reason to hire a broker to do what you can do for yourself. Obviously, there is much more involved when you’re talking those type of figures. In that situation, a broker is (hopefully) far more skilled at developing transactions that are six-figures plus and the negotiating process. Just be sure you get references of other past
transactions before signing up with a website broker.

- Post-sale financial plan. It may seem premature but I always recommend that you have a “plan” to use the money you make from the sale in a constructive manner. I cannot tell you how many webmasters I know who go “hog wild” and spend their money foolishly, that is why having a plan and sticking to it will help you avoid any potential problems. Obviously, you’ll
need to discuss your sudden income with your tax consultant as well.

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