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What exactly are the <$10k ecommerce websites on Flippa?

by NoMoreWords
5 replies
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I've been browsing Flippa (out of interest, not really with the intent to buy a website). And I played around with the filters and I saw that there are many ecommerce websites, primarily focusing on dropshipping. From what I can see of their Shopify dashboards, they are mostly new websites (part of the reason why they're cheap) and they are getting good profit per year (pro-rated because a lot of them have not completed a full year.

So then I look at the price. And the price is almost the same as the profit that the website is making per year. Sometimes the multiple (as it is called on their website, a price per earnings coefficient) is even less than one. I've been looking mostly at verified statistics. Many people that sell such websites claim that they are doing it due to not having enough time, having better opportunities, or whatnot.

My question, I suppose, is what is the deal with these websites? Do they have a very short life? Like if you don't seriously invest in some advertising, you will see a cliff drop of clients? Is the website being new a part of why they are getting (relatively) good money, after which advertising per sale ratios jump up? Are these websites scams, like are the people selling to themselves via some mule accounts?

I'm genuinely curious about this, sorry if this sounds noobish. I was kind of taken aback by how easy it seems that those people started making profit (let alone earnings), after opening a brand new dropshipping/ecommerce website.
#<$10k #ecommerce #flippa #websites
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  • Profile picture of the author Frank Donovan
    Originally Posted by NoMoreWords View Post

    My question, I suppose, is what is the deal with these websites? Do they have a very short life? Like if you don't seriously invest in some advertising, you will see a cliff drop of clients? Is the website being new a part of why they are getting (relatively) good money, after which advertising per sale ratios jump up? Are these websites scams, like are the people selling to themselves via some mule accounts?
    Many of these sites are, if not exactly scams, built by opportunists. It's relatively easy to construct a shopify store and gain early traction with a concentrated promotional blitz or by taking advantage of an existing database, for example.

    Of course, there are also those who quote fraudulent figures.

    In any event, it's seldom a good idea to invest in a commerce site with under a couple of years' trading history. You need to look at sales patterns over different seasons and times of year. Every commerce business will have its ups and downs. Unless you know the industry inside out, it's unlikely you'll pick up a bargain with a newly-listed site.
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    • Profile picture of the author Jeffery
      Originally Posted by Frank Donovan View Post

      Many of these sites are, if not exactly scams, built by opportunists. It's relatively easy to construct a shopify store and gain early traction with a concentrated promotional blitz or by taking advantage of an existing database, for example.

      Of course, there are also those who quote fraudulent figures.

      In any event, it's seldom a good idea to invest in a commerce site with under a couple of years' trading history. You need to look at sales patterns over different seasons and times of year. Every commerce business will have its ups and downs. Unless you know the industry inside out, it's unlikely you'll pick up a bargain with a newly-listed site.

      ^ This ^


      An ecommerce site is a business and as Frank points out you should know the business inside and out. You do not have to be an expert, but there are many ecommerce business "actionable fundamentals" a business owner must know to ensure a sustainable business.


      As that an ecommerce site is a business it must be run like a business. A basic business background is a must, meaning you are not only educated in business, yet also have experience running a business both offline and online.


      All online dropshipping sites have their business problems and there is one single problem you will always have to contend with and that is..


      Customer Fulfillment, i.e. product deliver-ability. You must know this part of the business inside and out.


      Some of the shopify websites at Flippa are better than others and IMO they give a beginner a good idea of what an online business website entails, but the website is only the "online tool" managed by an inexperienced or experienced business person.
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  • Profile picture of the author NoMoreWords
    I suppose that's fair. I don't think that any self-respecting businessman is willing to sell his business for what he claims is less than a years' profit...


    But it still baffles me that they are able to turn a profit. I was looking at websites which make a couple of thousand in profit. Which for the 4-5 months history of the website seems like a good place to start.


    Do you know if this is a thing? Research a niche, turn a quick buck (a couple grand seems the most common profit) then try to sell it for another couple of grand when you know that it won't make as much in the future. How do they even get traffic in the first place? If they are 'ecommerce farms' then I don't think that they have that many lists that have converging interests, so they could do some type of cross-promotion.
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    • Profile picture of the author Jeffery
      Originally Posted by NoMoreWords View Post

      I suppose that's fair. I don't think that any self-respecting businessman is willing to sell his business for what he claims is less than a years' profit...


      But it still baffles me that they are able to turn a profit. I was looking at websites which make a couple of thousand in profit. Which for the 4-5 months history of the website seems like a good place to start.


      Do you know if this is a thing? Research a niche, turn a quick buck (a couple grand seems the most common profit) then try to sell it for another couple of grand when you know that it won't make as much in the future. How do they even get traffic in the first place? If they are 'ecommerce farms' then I don't think that they have that many lists that have converging interests, so they could do some type of cross-promotion.

      Originally Posted by NoMoreWords View Post

      I suppose that's fair. I don't think that any self-respecting businessman is willing to sell his business for what he claims is less than a years' profit...
      Due Diligence. Without knowning more about the "business for sale" business inclined people do their own Due Diligence and you can start by asking the seller questions, research the sellers track record, etc.

      Originally Posted by NoMoreWords View Post

      Do you know if this is a thing? Research a niche, turn a quick buck (a couple grand seems the most common profit) then try to sell it for another couple of grand when you know that it won't make as much in the future. How do they even get traffic in the first place? If they are 'ecommerce farms' then I don't think that they have that many lists that have converging interests, so they could do some type of cross-promotion.
      Yes it is a thing among honest sellers and they sell for different reasons and it is also a thing among S C A M M E R S who present fake profit earnings and traffic that is not legit traffic.

      Again, know the business inside and out to make an educated decision and then and only then can you do Due Diligence.

      Questions for you..

      Do you know the Dropshipping Business inside and out or do you have any business experience or formal business education?

      My guess is no, otherwise you would not be asking the basic questions, You learn that in business 101. The rest of your comments suggest you have some experience and that is good. However, your logic is not business formulated which results in asking the wrong questions.

      Really, once you have some real experience running an online dropshipping business you will know how to formulate your questions and you will know the right questions to ask a seller and then you can make a decision based on your due diligence.
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  • Profile picture of the author dave_hermansen
    My guess is that you are not seeing all of the numbers. I'd take a look at their costs. The Shopify dashboards do not show that at all. All they show you is gross dollars coming in.

    Due diligence would require their financial statements (income & expense reports), a guest access login to their Shopify dashboard, Google Analytics and Search Console accounts and maybe even their Facebook advertising and/or Google Shopping account(s) to see if the numbers they are reporting as income and expenses are legit.
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