Everything You Need to Know About Buying and Selling Websites
- Why are people buying and selling websites?
- What type of people buy dropshipping websites?
- How do you make and sell a 6-figure website?
That’s exactly what I’m going to talk about in this blog post– buying and selling websites. Specifically, what it's like buying and selling dropshipping websites, and how you can make yours more valuable.
Before we dig in, I need to mention that this post will cover buying and selling dropship websites using the Drop Ship Lifestyle model, which typically uses Shopify as a platform. And the reason why I’m covering this topic is because a ton of people have been asking us some really good questions about building and selling six figure online stores.
This topic was previously covered on my YouTube channel, Drop Ship Weekly. Watch the video below, and make sure to subscribe so you don't miss out on the latest eCommerce strategies, news, and trends!
How to Build and Sell a Six-Figure Business
One question that’s often is asked is if we have any of our own Drop Ship Lifestyle stores for sell. And the answer is no. We have never made any offers to our members. The reason is when we build stores, they're not small investments because they turn into real assets.
This is something I didn't know at all when I first got started with eCommerce way back in 2007. It wasn't until I sold my first network of dropshipping stores in 2012 that I realized how valuable these things actually are.
Selling a six-figure online business isn't rocket science. Allow me to explain.
When I first read the 4-Hour Workweek, it changed my life. Before that book, I never thought going to Thailand and living abroad for months on end was realistic. At the time, I wasn’t sure what I wanted to do with my life (to be honest, I’m still not sure). But I figured I had nothing to lose so I gave it a shot.
I spent the next few months teaching myself how to create an eCommerce store. At the time, I really didn’t know what I was doing. I made a ton of mistakes. I didn’t know how to price my products and I had NO intention of selling it. In fact; I didn’t even know this would ever be an option.
The thought of an online store that I could potentially start for under $50 becoming worth over half a million dollars within a few years never even crossed my mind.
My hard work eventually paid off... but I had to learn A LOT in the process.
After a few months, I slowly started to figure it out. I wasted tens of thousands of dollars (still less than college) on ads, but it was worth the investment because it gave me an eCommerce education.
After some early success, I knew I would be able to build something that would make me a full-time income… but something worth more than my parent's house? I couldn’t even fathom this. I thought making money online had a ceiling. I figured I could get by, but I would never “get rich”.
Well, I was wrong. And I’ve never been happier to admit it!
After about three years of running an extremely successful dropship store with a business partner, the time had come for us to part ways. We were both moving on to other projects so we started to discuss potentially buying the other person out of the business. The problem was we had NO IDEA what our online business was worth.
We were both making great incomes off it but neither of us had sold an online business before. We knew how much profit it made, we knew what is was capable of, but we had NO IDEA how to price it.
I decided to start calling professional online business brokers to have them value it. When I talked to the first guy, his number was so high I didn’t believe him. Then I talked to a few more people, and I realized that they were all spitting out similar numbers. I could not believe what I was hearing! Our business was worth WAY more than I imagined.
DID YOU KNOW –"An online business that has been established for only 1 year can sell for 20 times its monthly earnings"
Now, I’m not a business broker, but ask anyone and these numbers are pretty accurate. At the time, here is what that meant to me -
I was making about $24,000 in profit per month from a small group of online stores. I’m not a mathematician, but $24,000 multiplied by 20 is (hold on let me go get a calculator…..)
When I first learned this, I couldn’t believe it. It was almost TOO GOOD to be true.
My business partner and I ended up selling the store for over six figures. When we did, I had another epiphany. I knew that this eCommerce thing had a lot of potential (it STILL does).
I then realized:
- I could start one new online store today which would cost me about $300 if I outsourced EVERYTHING correctly
- I could have the store completed in two weeks
- I could have my sales channels turned on within 3 weeks (not relying on SEO at all) and they will be profitable from day one
- Based on my experience, my average website would net me $6,000 in profit consistently each month
(Fast-forward to 12 months later)
- I could make a net profit from this one website on $72,000 from the past year
- I could now sell it for $108,000
That’s $180,000 PROFIT in only twelve months from only ONE website which only cost me about $300 to make (with outsourcing)!
This isn’t some sort of pipe, dream folks. I’m living proof that buying and selling websites is a viable way to make money.
This is the reality of owning an eCommerce business and this is what I have done over and over again. In fact, I didn’t just build one website per year, I built about 3/month. And they all didn’t make $6,000 in monthly profit, some made upwards less and some made way more...
Buying websites for $50,000 or $100,000 isn't as rare as you'd think. Expert Justin Cooke of Empire Flippers admits that there aren't as many profitable websites for sale most people think.
If you're in the early stages of your business and you're wondering what you can do now that will increase the sell-ability of your business, take a look at this video:
I honestly hate bragging. If you’ve met me, you know that I’m not about money and buying bling-bling and all that crap. I care more about helping people.
I love eCommerce but I’m also passionate about helping people.That’s why I created a community, to help people start their own online business. In this community, members have access to all the video training materials that I WISH I had when I was just getting started.
I’ve watched over 10,000 (AND counting) members take the course. I’ve met up with many of them in Thailand and congratulated them on taking action. Now, many of them are living the life of their dreams.
- Follow the Drop Ship Lifestyle course step by step.
- Keep EXCELLENT accounting records, any serious buyer is going to need to see proof of your income.
- Hire a broker to sell your website. Auction sites get nowhere near the value that a broker can get for you.
Once you are ready to sell get in touch with me and I will put you in contact with the team of brokers that I use to sell all of my websites. I’m serious. I want to help you succeed.
If you have any questions regarding forming a business to sell or where to sell a business of this size please post in our private member's forums.
I know it seems miles away if you haven’t gotten started, but trust me, it’s MUCH easier than you think.
"Everything Seems Impossible Until You do It."
So if you're on the buying side, looking to get started in eCommerce, but don’t want to start from zero, I'll talk about how you could do that.
And if you're on the other side, and you've built up a site with a healthy profit that you're looking to sell your website, I'll talk to you about that. You’ll learn how you can prepare for selling your dropship website when the time comes.
Where Does Buying and Selling Websites Take Place?
So the first thing I should talk about is where do these transactions actually happen? Where do people buy and sell websites?
Well, there are a lot of different marketplaces out there.
Some of the most popular ones are self-serve. That means you can go on these websites and basically list your website for sale on your own. You can do it as an auction– think of an ‘eBay for websites’. In fact, people actually do buy and sell websites on eBay. It's one of their categories.
But the important thing to know with any of these self-serve platforms is you’re typical going to have smaller sites for sells. You’re not going to have sites that have been vetted by any type of third party. Which means anyone can say, "Hey, I have a website making X amount of dollars, here it is, it's for sale for this much."
So, then the unsuspecting website buyer goes out and buys the store not really know what they're getting. Even worse, they don’t even know if the person selling it to them is 100% legit. The buyer won’t even know if the numbers are real and won’t know it’s a scam until too late. That's the sad truth.
If you're serious about buying or selling valuable eCommerce websites then I would recommend using a brokerage. Specifically, one that has curated listings and an actual team behind the sell and purchase of each website.
A curated listing means not any website will be listed. A good brokerage company will actually go out there, check the analytics, verify the numbers, and do everything they can to make sure that the site that’s being listed is a real business.
Website Brokers and Vetted Marketplaces
So the brokerage I’m going to cover in this post is run by some good friends of mine. You’ve probably heard of them even if you haven’t been following this blog for a while.
In my opinion, they are the most legit website brokerage online right now.
So anyways, the company is called Empire Flippers, and they’ve been around for several years. In the beginning they were called AdSense Flippers, but a lot has changed since those days.
Over the years, they’ve built a massive business that features a highly curated marketplace of websites for sale that have been vetted by their team.
Yes, the founders, Justin and Joe are good friends of mine, but I can give you some more third party proof they’ve got a solid business. Investing in digital assets is definitely becoming more and more popular, and they’re in a really good spot for it. The numbers never lie, take a look:
Buying and Selling Websites: How to Find Out How Much Your Website is Worth
You’ll answer a few questions regarding such things as views, business type, and age of your business. In return, you’ll have a solid number of what they think your website is worth– and what you could potentially sell it for.
Where to Buy Online Websites
Now, if you’re looking to buy instead of sell, Empire Flippers has a tool to help you with that as well. Referred to as the “Marketplace”, this is a curated list of websites that Empire Flippers currently have for sale. Whether you’re serious about buying or curious about what’s available, this where you’ll want to start.
When you head to their website, you’ll see a link for “Marketplace” at the very top of their page, go ahead and click. On the next page you can search for current listings, new listings, and recently sold listings. You’ll see what eCommerce model they’re using, monthly net profit, established date, price, and niche. Some listings even include a seller interview.
One thing you won’t see is the URL. Obviously, that is to ward off potential shady people that are just looking to rip off existing sites.
What's unique about Empire Flippers is they interview some of the sellers. So if you see a microphone next to the listing, you can click on it and listen to the team at Empire Flippers actually interviewing the business owner. This will help you to learn a little bit more about the business to see it's a good fit for you to buy. It’s a nice little bonus that makes you feel a bit better about buying an online website.
It’s fun to browse around and see what stores are making how much. Below is an example of a dropshipping site that's in the furniture niche. It's making $36,146 net profit a month and selling it for $1.3 million.
How are Online Websites Valued?
When looking at Empire Flipper’s Marketplace, you’ll noticed that all the list prices are different. You might be wondering, “How does this number come to be and how are these websites actually valued?”
What it comes down to, typically, is how much money these websites are making each month. This isn’t how much in sales, it’s how much in net profit. Which is then multiplied by a number, which becomes the selling price, or 'List Price'.
Valuation = Monthly Net Profit x Multiple + Assets
This year at our members retreat in Bali, Empire Flippers founder Justin Cooke gave us a behind the scenes look into valuing dropship stores. Here are some of the numbers he shared on selling and buying dropshipping stores:
Now how are the multiples determined? There are a few factors that determine if a valuation multiple will be high or low.
Website Value Factor #1: Risk
One of the factors that determines the value of your online website is potential risk. For the new buyer, what are they putting their money into when they buy an online store?
One way you can determine risk is how long has the website been established? How established is the business? Is there a track record of success? Along with consistent sales?
How about those sales… are they trending up? Staying flat?
Obviously if sales are trending up, and if it's been consistent for two years, there would be a really high valuation on the dropshipping store. On the other hand, if someone's been in business for six months, and their sales are kind of spiky and not consistent, well that store is not worth as much because it's more risky.
Website Value Factor #2: Traffic
Another thing that determines the value of your website is how diverse is your traffic? If you have an online store and want to sell it, but the bulk of your traffic comes from Google organically (or search engine optimization), that’s not so good.
It makes it super risky for the buyer. Mainly, as mentioned earlier, what happens if Google de-indexes your website overnight? Then your store won’t be making money anymore.
So the more ways you have traffic coming into your store, the better. That will have a huge impact on the valuation of your store because it reduces buyer’s risk.
Website Value Factor #3: Time
A big factor in a online business’s value is time. How much time is the new buyer going to have to spend to keep this business profitable? What skills do they need?
This is a major factor when buying and selling websites because people are investing a lot of money into these stores. And most of them aren’t looking to buy themselves an 80 hour a week job.
That means if you have a business that has a lot of employees or virtual assistants along with a good automation system in place, you’re probably only working a few hours a day, a couple times a week. That type of business is much more appealing to a potential buyer than a website that requires around the clock care to keep things afloat.
So the more you can take yourself out of day-to-day tasks, the higher your website’s valuation will be.
Website Value Factor #4: Monthly Expenses
Since valuation is based on net profits, and not sales, expenses are a huge factor in your website’s value. When you’re starting to think about selling your website, you'll want to start cutting some expenses.
If you have any ads that aren’t profitable, or just breaking even, it’s time to turn those off. If you’re running experiments and spending money to do so, you’ll want to to close those out.
Basically, anything that isn’t leading to more profits should be cut. As your monthly net profit goes up from these cuts, your store’s sales price will increase as well.
Selling a Store Using the Dropship Lifestyle Model vs Dropshipping from China
One thing Justin brought up during his talk at our recent retreat was selling websites that are dropshipping from China. He mentioned that he has sold plenty of sites that use the China model, but right now, things are changing. There are some issues going on with different tariffs, potentially a trade war, and even increased shipping costs. So those websites, right now, have more risk involved on the buyer’s end and in turn are taking longer to sell.
Empire Flippers could still help you sell your dropshipping store if you’re doing so with Chinese suppliers, so still reach out.
At the retreat though, he showed some real world examples of websites they’ve sold that use the Drop Ship Lifestyle model. Our model is all about working with domestic suppliers versus dropshipping from China. And it’s no surprise, but stores using the Drop Ship Lifestyle model sell a lot faster and get a lot higher multiples than other dropship models.
So, if you're watching this right now, and you're dropshipping from China, definitely consider shifting your business model to the Drop Ship Lifestyle model. It’ll help you in the long run should you ever want to sell your dropshipping website.
Build a Store to be Sellable, Because You Never Know
At this point, you might be thinking, “Anton, why would I ever want to sell a store that’s profitable? I built this, and it’s my baby.”
But you never know… Something might come up in your life and you need money. Or you have a new project that you want to invest your time in. Justin even told the story of one couple that sold their store to help them with the costly expense of adoption.
Even if you’re thinking that you will never want to sell your dropshipping store, you should still be building and operating it to sell. Should that day ever comes, you’ll have an asset to cash out.
If you’re looking for further reading on building stores to sell, I highly recommend picking up, “Built to Sell” by John Warrillow. Grab it from Amazon here.
8 Steps to Maximize the Value of Your Store
We all love the Ka-ching sound and feeling when you get sales through your Shopify store. After thousands of sales, I still love it. It’s addictive.
There is, however, a better feeling (although unfortunately no associated sound) and that’s the big pay day when you sell your site. There’s nothing better than seeing a great listing price as recognition for your hard work and then getting that big payout arrive in your bank account.
In my opinion, there aren’t many investments that can pay out as well on a percentage return basis than a DSL store. The investment in dollar terms is small and the payout can be huge.
If you are planning on selling a profitable dropship store follow these 8 steps to maximize your sale price.
1. Don’t Rush
So you woke up this morning and decided to list your site for sale today. Bad move.
If you do this you will most certainly not have a website this is optimized for sale and you will not get the best price.
Of course, there are circumstances where we need quick money and if you find yourself in that situation then ignore this point.
For the rest of us, though, time should be taken to optimize your site for sale. I would generally recommend that you sell your business between 3 and 6 months from when you make a decision to sell it. This period of time will allow you to make a significant difference to the sale price of your site.
Make a sales plan and then stick to it. If you plan to sell your business in 6 months, plan what you will do in each of those 6 months to increase your net profits and potential multiplier. Base everything you do on data (see step 4) and your website's analytics. Focus on what works and avoid experiments.
This plan will look different to what a normal business plan would look like as we are solely focusing on improving a few aspects of what is working. We don’t need as much of a holistic plan when preparing a site for sale.
Use whatever format or tool works best for you. Set milestones and targets and review regularly.
3. Use a Reputable Broker
You have 2 choices when selling an online business. Sell it yourself or sell through a specialist online business broker.
If you are looking to sell below the $10,000 mark you should be able to sell by yourself through online marketplaces like Flippa or the Shopify Forum or of course by offering your site to other DSL members.
If you are aiming for a higher price you will almost certainly get a higher sale price and an easier sales process if you sell your site through a specialist online business broker.
Yes, you will have to pay the broker a commission but in my experience, this is well worth it to get a quick and usually painless sale.
A good broker will have a large list of interested buyers that they will push your site out to and when interest is generated a good broker will weed out the tire kickers (of which there are many online) and make sure that you are only dealing with genuine buyers.
A good broker should also act as an intermediary between you and the buyer and work to iron out any kinks in the sales negotiation and hand over the process.
4. Get Your Accounts and Analytics Straight
This seems like a no-brainer. You should have a good handle on your finances and website analytics. If you don’t get it sorted asap.
To plan for sale you need to have a clear picture of what your revenue is, what your cost of sales is, how much net profit you are generating and an idea of how these have been changing over time.
You need to be able to analyze these figures to know where the levers are that you can pull to maximize your net profits.
The same goes for your website analytics. If you haven’t got your Google Analytics set properly and tracking conversions accurately then now is the time. You need to know what traffic is converting at the right price and what is dead wood.
In my experience as a DSL coach, many DSL students have Analytics set up but they miss properly setting up their conversion tracking and eCommerce goals. You can find a great guide to setup conversion tracking here.
Use your accounting and analytics data to make sound decisions when planning for a sale. You will also need to give accounts and analytics data to both your broker and potential buyers for due diligence so getting a handle on it now will make things easy when you need it most. If you make any claims about your business that can’t be backed up with data then you will most likely get negotiated down.
5. Automate and Outsource Your Business
So you’ve been hustling hard for 12 months, juggling lots of balls, customer service has been growing along with your business and before you know it you’ve created yourself a job.
When you are setting up and running a business solo you need to be a lot of things and this can take up time. You need to manage your ads, deal with suppliers, provide customer service, maintain your catalog, add new products, find new traffic sources and so on.
The reality is that most buyers of online businesses don’t want to do this. They want an income stream that they can add to a portfolio or use to support their lifestyle rather than another job that they have to work in.
Automation and outsourcing will not only make your business more attractive to more buyers but it will also often lead to a higher multiplier being applied to your net profits.
In my view, this is particularly important for sites that are making more than $40,000 per month in sales but really it’s good practice to get started anytime!
Start by documenting how much time you actually spend per week on anything related to running your business and what those tasks are. Get forensic with it, right down to the minute.
Once you’ve got a list, break it into tasks that could be done by someone else. Here’s a list of some of the things that can and should be outsourced;
- Image resizing
- Product description writing
- Product uploads to Shopify
- Customer service including answering the phone, email and online chat
- Content creation (blog posts, social media posts, lead magnets)
- Managing your social media accounts
- Managing your pay per click campaigns
- Order processing
- Payment processing
In fact, there is very little that can’t be outsourced on a dropshipping store. Remember though that good outsourcing takes time to put in place. Take the time and do it right. Don’t leave the buyer with a mess that they can use to back out of the deal.
Before you go rushing off to automate and outsource you need to consider the price of doing so. Keep in mind that our aim here is to increase net profit, spend too much on automation and outsourcing and you may negate the benefit derived from doing it in the first place.
6. Grow Your Audience
Email lists and social followings carry a value. A large email list will add value to your business and make it a more attractive prospect to potential buyers.
If you’re planning ahead make sure that you have a think about how you can grow your audience through the period to listing your site for sale.
Maximize the effect of doing this by tying it into activities that are also going to result in more sales.
For example grow your email list and Facebook following by running targeted paid traffic to a landing page offering a lead magnet in return for the prospects email address. Follow the delivery of the lead magnet up with an automated email sales sequence to turn some of these prospects into paying customers. As a side benefit, many of these people will also follow your Facebook page.
7. Maximize Net Profits
This step is another that you should be doing anyway in the normal course of business but now that you are planning to sell your site you really need to focus in on maximizing your net profits.
Even adding an extra $1000 per month to your net profit in the 3 months before the sale will increase your sale price by a significant amount.
We often have the goal of increasing total sales and revenue which in turn should lead to higher profits but improving net profits can be a bit more nuanced than this. Here are some actions you could consider to improve your net profits;
- Fine tune your Adwords spend. If you don’t pay regular attention to this start checking in every couple of days. Trim your CPCs down to the lowest amount you can without affecting performance. Eliminate under-performing products from your shopping feeds and under-performing keywords from text campaigns.
- If you are running any paid advertising aimed at branding or increasing awareness, cut it out. It isn’t going to help you now.
- Focus on marketing that you know delivers a solid ROI, slowly increase spend here while resisting the temptation to experiment with new paid traffic sources. Or better yet just don’t experiment, you are rolling the dice if you do.
- Increase your efforts to find free or extremely cheap sources of traffic. This could be organic social traffic, blogger outreach or running a viral contest. Even if the conversion rate is lower the profit margin on sales from this traffic will be higher.
- Cut any unnecessary costs out of the business. Review all of your paid apps, if they don’t deliver a direct benefit hit delete.
- Negotiate with all of your suppliers for a lower rate. You would be surprised how often this works particularly when you have a good track record with them. Even a 5 % - 10% reduction here can have huge benefits over 3 months.
- Pump your email list. Don’t be afraid of a few unsubscribes here, you’ve got the resource so make sure you use it to drive an increase in sales.
The above isn’t an exhaustive list but will definitely get you well on the way to boosting your net profits.
8. Be Flexible and Supportive
Lastly, when it comes to the actual sales process and dealing with potential suppliers try to be as flexible and accommodating as you can.
This means that if possible you should offer comprehensive training in how to run the business followed by ongoing phone or email support to the buyer for a period following the sale. I would suggest that you offer support for at least 30 days following the sale.
What this suggests to potential buyers is that you are comfortable with the success of the business and it will make them feel like there is less risk that things will go wrong and they will be left with a mess.
This, in turn, will reduce the amount that buyers try to negotiate your sale price down by. Always remember that just because you list a business for a certain price there is no guarantee that is the price that buyers are willing to pay.
There is usually some form of negotiation around the sale.
What Dropshipping Niches Sell for the Most Money?
One cool detail that’s listed in the Marketplace, is the niche of the store. It’s not specific, but they do list the broad category, which can be an extremely helpful tool if you’re just getting started choosing a niche.
When you’re on the Marketplace page, click the “Sold Listings” tab and you’ll see what niches are selling, what they are selling for, what the net profit is, and when they were started.
Justin shared with us at the retreat that some of the drop shipping stores they sold were in high-ticket niches, and some were in low-ticket niches. The largest drop shipping site they've sold in the past 12 months sold for $533,000, And the sites up in that tier include apparel and accessories, home and garden niche, sports, home decor, automotive industry, art, and so on.
Some of the low-priced sites they've sold were in the technology industry, home furnishings, toys and games, kitchen and dining, outdoors.
What’s important to know about which niches are selling for the most money, is some niches are more valuable than others. Like I mentioned earlier, so much goes into website valuation based on how long the sites have been around, how risky they are, and how much money they make.
It’s interesting to see data on what niches are selling and for what, but it’s important to keep in mind that the niche is just one factor behind a website’s valuation.
Final Thoughts on Buying and Selling Websites
Whether you’re getting ready to buy or sell an online business, I recommend heading to Empire Flippers and checking out their website. You can read up on some pretty interesting stories and data, not to mention their blog is full of great resources for this.
Again, full disclosure, I'm good friends with these guys, I think they have an amazing business, and I recommend their services to our members because I trust them. They've proven themselves by selling $54 million of businesses (so far), and at the very least I'd recommend coming here, going to their marketplace, going through all the different sites, listening to the interviews.
If you want to see websites that have been sold in the past, even if it’s just to get an idea of what your business is worth, go to Sold Listings. Or if you go to their Valuation Tool, you can enter information about your online business, whether it's drop shipping or not, and it will tell you what your site they think is worth.
To wrap things up, there’s plenty of different reasons why you might want to buy or sell a website.
For buyers, many want to invest their money buying a website because they want to:
- Fast-track learning curve
- Trade money for time
- Leverage established momentum
- Or put an unique advantage to work
On the other hand, why do sellers want to sell?
- Better opportunities to deploy cash
- Life events
- Lack of interest
- The business has “peaked”
And if you don’t know whether you want to sell your site or now, I still recommend building a store that’s valuable. It’s a great way to get going and to have a safety net in place when you need it.
From personal experience, I’ve seen a lot of our students at Drop Ship Lifestyle sell a store when they’ve had multiple stores running and one of them starts to take off. So, they sell the ones that are still profitable, that are great businesses, but that they'd rather just get the payout to then reinvest into the one that's taking off.
HOW TO START
YOUR OWN BUSINESS
WITHOUT PRIOR KNOWLEDGE OR EXPERIENCE
Enjoy the Process!
As you can see there's lots of different reasons to buy, lots of different reasons to sell. Again, I think Empire Flippers's tools are a great starting point, so go check them out!
Hopefully this gave you an overview on buying and selling websites, but as always leave me any questions below! Also, if you’ve ever sold or bought an online business, I’d love to hear your story and any advice you have for first-timers.
At the end of the day selling a profitable dropshipping store can be one of the most exciting and nerve-wracking things you can do. If you are planning a sale in the near future enjoy the process and best of luck!
Have you sold a Drop Ship store lately? Leave a comment and tell us what you did to maximize your sale price.
Here Are your next Steps...
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Be sure to register for our next free web class. Then, click here to learn how to successfully outsource and hire a virtual assistant.