I'd like insight on affiliate/ecommerce sites

[james]

I'm looking at an ecommerce site that sells goods strictly through its affiliate links, and I'm not
at all sure how to value it.
This is a site that sells a particular type of product , but the product has multiple manufacturers, so it
isn't reliant on a single affiliation.

Everything looks good, but one thing that bothers me a little is the income claim - after getting the true figures there was a few hundred dollars a month discrepancy(and don't you know it wasn't to the plus side).
I mean, why bother? But doesn't seem a big deal to me, unless someone here says 'watch out'!

The site is a few years old, gets the majority of traffic from search engines, and seems to be something
that could promoted and grown.

The WHOIS shows a company name as owner - and they own related,inactive domain names.
I can't see how this could be a problem because it would be like this - I buy reddog.com, and they
have domains for bluedog.com, yellowdog.com, etc.
I could find no redirects.

My answer to 'Why are you selling' was 'seeking other opportunities' - a non answer. Or maybe not.
I asked about a non-compete agreement, and they asked 'What do you mean?' Well, have a laugh
at/with me because faced with the question, I don't have a definitive answer. Guess I was just hoping for 'Sure!'
I really can't get my head around the literal thing(s) I would ask for in a non-compete. If they did activate
'yellowdog.com', it isn't actually in competition with my 'reddog.com'.
Any thoughts on what I'm missing here? Other questions I need to ask?

This would be a first purchase, and though I've studied the 'due diligence' threads, Clinton's info here,
and the 'How To Buy A Good Online' book, I'm still worried about what I may be missing.
Any thoughts would be much appreciated!

James

[petertdavis]

It's not an ecommerce site, it's an affiliate site, which is a type of web publishing. There's way too much ground to cover here, but I'll bang out one very important tip. It's very easy to fabricate revenues for affiliate sites. Even if they show you a genuine screen shot of their affiliate earnings, it's so easy to mask where that traffic that earned the revenue came from that you're almost positive you cannot rely on anyone's stats. I think more than any other type of site, when buying an affiliate site you are at the mercy of the honesty of the seller. Good luck.

[3stacks]

I think more than any other type of site, when buying an affiliate site you are at the mercy of the honesty of the seller. Good luck.

Hi Peter

Can I find out why you think this is so? Wouldn't it be just as easy to mask the traffic for an ecommerce site if the seller wanted to as well?

[Clinton]

You've identified one risk area - the supplier. If there are multiple manufacturers (and they all have affiliates programs) there's some safety there.

Other risk areas are the sources of traffic and the conversions neither of which are straighforward to research. What have you done to reassure yourself that his traffic will continue, that it will continue at the current price and that it will convert at the same rate?

Have you challenged him about the discrepancy?

I used to have this guy manage the till in a business I was running. The till used to balance perfectly everyday. Whenever he was on leave a woman employee would do the till. Whenever she did the till there was always a few pence under or over. It was only a few pence ... till you realise that she was stealing money by not entering all sales into the till. It was a busy stall and she didn't have time to add up figures on paper so she'd do the "skimming" in her head. She'd add up £3.47 + £2.78 + £1.42 +£6.35 mentally and get a rough total of £14 when it was really £14.02.

It wasn't the £0.02 difference between till figure and cash that was the real problem.

[james]

Thank you all for the response.
In fact, I did see a screenshot of affiliate earnings - I've read here about PayPal 'proof' possibly not being factual as the income could actually be from more than one source - I guess the same holds true here. (?)

Peter, about your relying on the 'honesty of the seller' comment. When our father passed, my sister said 'He was so paranoid there are things
he didn't even tell himself'. I'm afraid I've inherited a huge dose of that gene.

No, I haven't challenged the discrepancy yet - I posted here soon after I received the email to get some ideas of other things I should consider
before contacting him again.
As far as the traffic is concerned, GA showed 90% coming from search engines (I didn't find any redirects) - as for it continuing at the same
rate & conversion, I have no idea about how to research this. I'll re-read your DD info, Clinton.

On the whole, I take it neither of you have a high opinion of this type of site (I'd guess a great purchase price might be an exception) and from your input I can see why.
Peter, Clinton, anyone else, anything else to add?

[petertdavis]

On the whole, I take it neither of you have a high opinion of this type of site (I'd guess a great purchase price might be an exception) and from your input I can see why.
Peter, Clinton, anyone else, anything else to add?

Without knowing more details, I couldn't really say I have any opinion at all about this site one way or another. Just speaking in generalities.

[Clinton]

There's just so much that can be done blind, james.

If the business is publicly available for sale then I don't believe you're losing any advantage by starting a DD thread with a link to the publicly available info about the site and what's for sale.

On SE traffic - it may seem the most difficult to fake, but it can be faked by posting the same Analytics ID on multiple domains. You could ask him to insert your own one pixel tracking gif just below his Analytics code and monitor over 24 hours to see which domains are calling that gif and verify your findings against his GA stats for the day.

I won't say I have a high or low opinion of the site. You can't decide till you've had a detailed look and, even then, whether it's a good site or not depends on the price.