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Thread: Building a new Marketplace

  1. #31
    Administrator Clinton is a Premium Member
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    Alasdair, I absolutely agree that a logical and businesslike way forward is to do your costings before you start - to draw up a business plan and work out your profit projections. That's how we'd approach most business deals.

    I don't believe it applies here. Take Twitter, take YouTube, take eBay - in some cases it's a matter of building critical mass first and then finding a way to monetise it.

    When taking on a "monopoly" which is benefiting from monopolistic pricing (and higher than fair profit) the considerations are different.

    The reason they are a monopoly is because of the high barrier to entry. The barrier isn't a financial one as it's fairly cheap to set up an auction site. The barrier is mindset, the barrier is attracting sellers and buyers in sufficient quantities.

    To do that you need to have a unique selling point. A $9 discount doesn't seem a very powerful motivator. When sellers are paying $19 to sell an $x site, your lower listing price is, to them, simply a 0.0001% lower cost. As a seller would you rather sell your $10K site in a marketplace that has 1000 buyers and charges $19 or a market that has three buyers but charges $9 less?

    Whatever your pricing structure, I believe price is the cart to your established user base horse.

    A review of the site on offer prior to listing with a special emphasis on verification of income. Iím not sure exactly how at this point how a siteís earnings can be satisfactorily verified...
    If you can solve this problem, onpreneur, you'll win over a lot of buyers.
    Find the right business brokers to maximise the value you extract from your business and improve the chances of selling your business.

  2. #32
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    Clinton - I think that we are probably agreeing
    I only mentioned it because it does need to be a part of the process - but totally agree, critical mass is everything... it is why so few alternatives to ebay really take off...

    Alasdair

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    Hi everyone,

    Let's say that for a small project, we put together a business plan for a new marketplace that would have a chance of competing with Flippa and other marketplaces and would address the issues that have been discussed in this thread.

    1) What would this marketplace look like? What is the minimal amount of technological investment required in order to test out the viability of such a marketplace? Would a simple classified ad site such as ClassiPress with some mods be sufficient for proof of concept?

    2) I think we would all agree that critical mass is important. How would this be accomplished? Suppose there is a great domain name available? What would be required to get buyers and sellers interested? I am not talking about flippers. I am talking more about serious buyers. I noticed that there is a site called WebSiteProperties that seems to be viable. Are they successful? Is this a preferred selling site to Flippa? One thing that can be improved on WebSiteProperties is better use of their home page to display premium listings. Why would someone pay $100 to be buried in a deeper page?
    Last edited by richrf; 29 December 2010 at 11:35 am.

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    Quote Originally Posted by richrf View Post
    Hi everyone,

    Let's say that for a small project, we put together a business plan for a new marketplace that would have a chance of competing with Flippa and other marketplaces and would address the issues that have been discussed in this thread.

    1) What would this marketplace look like? What is the minimal amount of technological investment required in order to test out the viability of such a marketplace? Would a simple classified ad site such as ClassiPress with some mods be sufficient for proof of concept?
    I'd say that something like Classipress or another classified ad script would be fine as a starting point. You can get one for little cost, or even free in some cases, so the upfront investment required is quite low.

    Quote Originally Posted by richrf View Post
    2) I think we would all agree that critical mass is important. How would this be accomplished? Suppose there is a great domain name available? What would be required to get buyers and sellers interested? I am not talking about flippers. I am talking more about serious buyers. I noticed that there is a site called WebSiteProperties that seems to be viable. Are they successful? Is this a preferred selling site to Flippa? One thing that can be improved on WebSiteProperties is better use of their home page to display premium listings. Why would someone pay $100 to be buried in a deeper page?
    If you can get high quality domains or sites to place exclusive listings on your site and then promote the sale, that would be one way to do it. Another way would be to offer a service that Flippa is lacking (like verifying the claims of sellers, or actually policing the marketplace), but you would have to be sure that buyers and sellers actually care about the service and that it won't take up too much time or money.

    WebSiteProperties is run by a website broker who has focused on higher end websites, and recently relaunched the website to try and attract lower end listings that don't need the support of a broker. You'd have to ask the owner (who is a member here) how things are going, but I haven't seen a rush of people placing listing at the site. There is a thread on this site discussing the relaunch of websiteproperties.com if you want more background info.

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    One thing to consider (which might not be popular to say ) is why sites like Flippa are as they are...
    Money making - simple.
    So, while there are a lot of good reasons to move away from their model to one which serves the buyers and sellers better, be aware that it is not necessarily an approach which will increase profitability of such a site. e.g. veryifing the claims of sellers / policing the marketplace - both have issues - huge ones potentially, for example - liability if cliaming to verify claims / cost of doing so...
    Sites such as Flippa succeed because they make money - you need a balance between idealism and commercial hard-headedness...

    Alasdair

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    Quote Originally Posted by benitez17 View Post
    WebSiteProperties is run by a website broker who has focused on higher end websites, and recently relaunched the website to try and attract lower end listings that don't need the support of a broker. You'd have to ask the owner (who is a member here) how things are going, but I haven't seen a rush of people placing listing at the site. There is a thread on this site discussing the relaunch of websiteproperties.com if you want more background info.
    Thanks for your comments and info. I will check out the thread about websiteproperties. It struck me as being a good site but I wasn't sure whether it is successful and attracting the necessary attention.

    Quote Originally Posted by akirk View Post
    One thing to consider (which might not be popular to say ) is why sites like Flippa are as they are...
    Money making - simple.
    So, while there are a lot of good reasons to move away from their model to one which serves the buyers and sellers better, be aware that it is not necessarily an approach which will increase profitability of such a site. e.g. veryifing the claims of sellers / policing the marketplace - both have issues - huge ones potentially, for example - liability if cliaming to verify claims / cost of doing so...
    Sites such as Flippa succeed because they make money - you need a balance between idealism and commercial hard-headedness...

    Alasdair
    Thanks for the comment Alasdir. I don't think given the constraints of online commerce that it is possible to verify claims. If a group of people are out to scam (e.g. Madoff and friends, or even Countrywide Bank), they will figure out how to do it. Only a potential buyer who has the time and incentive to investigate specific claims can do the necessary due diligence. What a site can do, however, is attempt to keep members informed of how to best perform due diligence and possible pitfalls that they may encounter.

    I think it may be possible to set up a site that is successful even though it may not be hugely successful. But it depends upon whether there is a need for a new kind of site.
    Last edited by Clinton; 29 December 2010 at 11:21 pm. Reason: To merge posts. Please do not inflate your post count

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    Quote Originally Posted by richrf View Post
    Thanks for the comment Alasdir. I don't think given the constraints of online commerce that it is possible to verify claims. If a group of people are out to scam (e.g. Madoff and friends, or even Countrywide Bank), they will figure out how to do it. Only a potential buyer who has the time and incentive to investigate specific claims can do the necessary due diligence. What a site can do, however, is attempt to keep members informed of how to best perform due diligence and possible pitfalls that they may encounter.

    I think it may be possible to set up a site that is successful even though it may not be hugely successful. But it depends upon whether there is a need for a new kind of site.
    One area where you could stand out from Flippa that doesn't require much work is to confirm that the claims of the seller match up to what they have provided as proof of revenue and traffic, and forbid listings like "$1,000,000 per month potential!!!!! Zero work required!!!!" on a blog that was started last week. However, terminating listings and banning scammers costs money, which is why I suspect Flippa doesn't have much interest in doing this.

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    Quote Originally Posted by benitez17 View Post
    One area where you could stand out from Flippa that doesn't require much work is to confirm that the claims of the seller match up to what they have provided as proof of revenue and traffic, and forbid listings like "$1,000,000 per month potential!!!!! Zero work required!!!!" on a blog that was started last week. However, terminating listings and banning scammers costs money, which is why I suspect Flippa doesn't have much interest in doing this.
    There is an legal issue associated with warranting any claims. Suppose the owner of the marketplace warrants that proof has been received and confirmed and it turns out that the seller has fooled the marketplace owner (there are many ways that this can be done). The owner of the marketplace would then be liable for legal damages. Of course, it is possible to get insurance for this type of problem but it would be very costly and in any case, there is always a possibility that negligence can be proved and then the insurance company is off the hook. So, it all gets very messy. Personally, I feel best when I don't have to get involved with people and money. That mix always is quite toxic. :-)

  9. #39
    Administrator Clinton is a Premium Member
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    To add to the good suggestions from benitez17, there may also be opportunities to work in partnership with an existing business broker who doesn't have any online clientele. Developing a marketplace with him would give you access to his expertise on business buying and selling (there's a lot to learn there!) while they capitalise on your online skills, your SEO and your promise to attract sufficient numbers of buyers and sellers of websites.

    This would only make sense if you're targeting the better properties. Those marketplaces that are looking to attract the "site flippers" (a tarted up name for turnkey sellers) are probably best off replicating as much as they can from Flippa's MO.

    What a site can do, however, is attempt to keep members informed of how to best perform due diligence and possible pitfalls that they may encounter.
    That's a slippery slope. I believe that marketplaces getting involved with "education" is not in the interest of the consumer. As we've seen with Flippa it doesn't take long for that "education" to merge silently and sneakily with the marketing.

    There is a demand for DD, but marketplaces and sellers aren't the ones who should be providing it - such service and information must come from people who are working on behalf of buyers and buyers only.
    Find the right business brokers to maximise the value you extract from your business and improve the chances of selling your business.

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    Quote Originally Posted by Clinton View Post
    To add to the good suggestions from benitez17, there may also be opportunities to work in partnership with an existing business broker who doesn't have any online clientele. Developing a marketplace with him would give you access to his expertise on business buying and selling (there's a lot to learn there!) while they capitalise on your online skills, your SEO and your promise to attract sufficient numbers of buyers and sellers of websites.

    This would only make sense if you're targeting the better properties. Those marketplaces that are looking to attract the "site flippers" (a tarted up name for turnkey sellers) are probably best off replicating as much as they can from Flippa's MO.


    That's a slippery slope. I believe that marketplaces getting involved with "education" is not in the interest of the consumer. As we've seen with Flippa it doesn't take long for that "education" to merge silently and sneakily with the marketing.

    There is a demand for DD, but marketplaces and sellers aren't the ones who should be providing it - such service and information must come from people who are working on behalf of buyers and buyers only.
    Yes, I agree. I will certainly keep my eyes out for potential business partnerships such as the ones you describe. I believe such a partnership would be mutually beneficial.

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