Looking at purchasing new ecommerce business

[Streetsnake]

OK. To all the experts out there, I'm looking for your advice. My wife and I are looking at purchasing a top rated url that is "ready" to be built out into a store. We are trying to get my wife a home-based business and like the "drop-ship"/ecommerce idea; that is if it works. She has a lot of experience on working ebay/amazon stores and loading products and such on the website of the company she currently works for. Basiclly my dilema is this, I like the idea of purchasing a site but am nervous about buying one that hasn't proven results. Also, doing research on the potential url, i found that it was owned by avid armini. I have not spoke with him and had no knowledge of who he was until I found this forum. We have been working with David & Dan Urmann. They have been great thus far but a lot of what David talked about was what Avid talked about in regards to previous/current sites built on the other post. Also, I was unable to find any other negative info on him on the web. We plan to work hard to build the site and expand our business and don't expect it to run itself. Please let me know your thoughts. Thanks

[Clinton]

Welcome to experienced-people.net

I would advise that irrespective of the feedback you find about someone here or elsewhere, you'd be well placed to decide the value of any investment based on what you're actually buying, not who owns the domain.

Many of the members on this site, like I, look for established websites because it's easier to understand the value proposition if there's already an income stream. It's easier to form an expectation of future profit if there's already a history of healthy trading because we can examine the revenue sources and the drivers of the site's traffic and make an educated guess as to the likelihood of that continuing ...and the extent to which we can add value to the business/increase the profit.

With a new site, that's a lot more difficult. These sites range all the way from the $200 sites just a few days old and using a free template to the $1000 sites that may have a bit of content, a few inlinks and a dribble of traffic to the ones that have been greenhoused for a year or two, have considerable backlinks, a fair amount of traffic from search engines and which sell for anywhere from a few thousand to few tens of thousand.

I have an article on valuation here that's just as applicable to a new site as it is to an established one. I've argued there and elsewhere that value is decided by the buyer. For a given property valuations differ because each buyer has his own profit expectations and his own judgement of risk - the two main factors that determine the figure he puts to the site.

It boils down to this: Are you able to make a fairly reliable projection of net profit for the next year or two? And can you envisage the risks i.e. what's your level of confidence in meeting those figures? If you'd like to expand on that and disclose the domain name, the wealth of talent on here would likely investigate it a bit and point out risks you may not have anticipated yourself and/or explain why they might value the site differently.

If your profit expectations are based on a third-party assurance rather than facts you've understood yourself, I'd walk away now irrespective of who that third party is.

[Streetsnake]

The site is www.gardenstatues.org

[TrustButVerify]

The exact match search volume on that keyword is about 90k (make sure to click "exact match" on the google keyword tool) http://screencast.com/t/YTlhMGRl It already ranks on the first page of google for that keyword but that probably isn't bringing you much traffic.

Especially for product based searches, you will have a lot of paid ads, plus normal organic results, plus google shopping results (images). You had better be ranking 1 or 2 to get any real traffic based on the "head term" (i.e. main keyword). But then this is where the "long tail" comes in from filling the store with 100's or 1000's of products which will all bring you small amounts of traffic.


http://screencast.com/t/NTNkZDE5Y

I did some due diligence on a site that Avid had sold to another person in similar shoes as you. It was his first web purchase and he paid $xx,xxx for it. The site was making money, built out with lots of products, was well SEO'd and had rankings.

I think he paid a fair price for the site. He paid probably 24-36x earnings (if I recall). More than we pay for sites here... but I would say many of us are pretty aggressive in buying and only buy the best we can find.

But for someone brand new to the web, I think he did alright because the process was very easy for him to get into with no experience.

I was doing DD on the site because he was looking at selling it to me and starting another site and did not have a particular love for the market that site was in.

The niche in general - garden statues - I think it pretty decent. There is a lot a traffic in that niche. There are a LOT of unique products you could fill your store with.

It all depends on what you're paying and it depends on how much you "get" all this seo/web development stuff.

Buying that site as a starter and hard work are just the beginning. There is a learning curve to all this stuff.

If you would like some additional help, in the matter let me know and I'm happy to weigh in.

[tke71709]

I would assume that the shipping costs would destroy any garden statue business versus buying at the local garden centre.

But that is my ASSumption only.

[Rover]

Run away dude, run away. The backlinks aren't natural.

[Clinton]

The site is www.gardenstatues.org

You can surely give us more details than that! How about your own thoughts and investigations so far? Price? The justifications you've been given for the price? Why you believe you can earn the profit estimated? etc

Run away dude, run away. The backlinks aren't natural.

That doesn't say very much either. What's the investigation behind the conclusion?

I think he paid a fair price for the site. He paid probably 24-36x earnings (if I recall).

TrustButVerify, in the OP's case there isn't any existing profit. How would you suggest he value this?

[TrustButVerify]

TrustButVerify, in the OP's case there isn't any existing profit. How would you suggest he value this?

I already talked with the OP over the phone and gave him a lot more tips than could be posted here. But there really is no way to value you this that all of us could agree on.

In actuality, the site has less than 20 back links, a little unique content and a pretty good domain name. How much would that take duplicate?

But I believe they are offering to build it out fully where it's getting traffic, seo'd, full of products, drop shippers set up, etc. For someone who doesn't know how to do that - it's pretty valuable.

And from what I can tell, these guys know how to do SEO and have done some pretty cool ecommerce sites.

From what I've seen, they've sold these built up sites for $xx,xxx in the past. Therefore that makes them worth $xx,xxx.

[Clinton]

But I believe they are offering to build it out fully where it's getting traffic, seo'd, full of products, drop shippers set up, etc. For someone who doesn't know how to do that - it's pretty valuable.

Agreed. But how valuable? The problem I'm finding is that people who need this kind of service are the ones least able to put a value to it. They rely on the seller to explain to them where the value lies. To me it lies more in the creation of the site, filling it with products, arranging the drop shipping, assisting with support, coaching and advice ...not so much in the "SEO". But I'd still be interested in knowing how you'd value it. As I've said elsewhere, there is no "agreement" to be reached on valuation, it's perfectly normal for different people to put different values to a site.

From what I've seen, they've sold these built up sites for $xx,xxx in the past. Therefore that makes them worth $xx,xxx.

I would disagree with that. That someone has sold something at a certain price in the past should have no bearing on my own valuation of the current property they're selling. I have to value it just as I'd value any other website - by the amount of profit I am reasonably confident of making in the next few years discounted by the amount of risk I see in that profit materialising. Both of these take a certain amount of experience to guage properly. The risks, for example, can arise from loss of drop shipper, loss of SE rankings, market changes, how easy it is for competitors to enter the market etc. Each risk needs to be examined carefully. For example, to assess the possible loss of SE rankings, I need to know and understand what's behind the current rankings - the backlinks, the sources of backlinks, who controls them, whether they are bought or natural links ...first time buyers aren't best placed to put a market value to an offering.

And from what I can tell, these guys know how to do SEO and have done some pretty cool ecommerce sites.

That's brilliant. However, I wouldn't spend tens of thousands of dollars on a site that's completely reliant on a search engine for traffic. Would you?

I already talked with the OP over the phone and gave him a lot more tips than could be posted here.

It would be great if you could share those here so others could benefit... or disagree .

[benitez17]

I already talked with the OP over the phone and gave him a lot more tips than could be posted here. But there really is no way to value you this that all of us could agree on.

I agree that there is no good way to value this site, because they are basically buying a keyword domain and paying someone to build a site around it. However, there is a good way to value the work being done to the site, since the buyer can go out and get multiple quotes for similar work if they have well defined requirements. Also, I'd love to see a summary of the tips you gave on the phone.

In actuality, the site has less than 20 back links, a little unique content and a pretty good domain name. How much would that take duplicate?

I think we all know the answer to that: Not much work. This just reinforces my point above that all they are really buying is the work needed to build out an ecommerce site.

But I believe they are offering to build it out fully where it's getting traffic, seo'd, full of products, drop shippers set up, etc. For someone who doesn't know how to do that - it's pretty valuable.

The question I would ask is if the selling price is the best value for the buyer. I agree that the service is valuable to this buyer, but could they find someone to do a better job or equal job for less?

And from what I can tell, these guys know how to do SEO and have done some pretty cool ecommerce sites.

I personally don't care how cool the site is or what its SEO score is, I just care about how it translates to profit.

From what I've seen, they've sold these built up sites for $xx,xxx in the past. Therefore that makes them worth $xx,xxx.

That's a very dangerous statement you made since it can easily be interpreted the wrong way. The selling price means that the seller convinced someone to give them $xx,xxx for the work, especially in a case like this where there is no real revenue or business to use when determining the value. Everyone will come up with their own valuation, and the seller can choose to sell to the person with the highest valuation, but that doesn't mean that the highest valuation is the most accurate one.

I know a site is only worth what someone will pay for it, but the value of a site for everyone is not determined by one person that came up with an absurd valuation on their own or is talked into it by the seller. It's possible that those people who paid $xx,xxx overpaid, and it's possible that they got a great deal, though I personally think one of those is a lot more likely.

Here's my 2 cents:

Unless the OP has an adviser who knows the going rate for this work or takes the time to learn about the business himself, he's a very ripe target for a good salesperson. This is why in almost every instance, I would recommend that someone new to the business either build a site on their own to learn the ropes, or buy an actual established business. There's no shortage of ecommerce sites for sale at any given time at a lower multiple than the expected return for one of these new sites, and they probably have a lot less risk because they have a history to fall back on for repeat buyers, established advertising channels and affiliates, and so on.