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Advice on buying an established internet retail business?

Discussion in 'Ecommerce Forum' started by mrRed, Jan 7, 2009.

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  1. mrRed

    mrRed UKBF Newcomer Free Member

    289 37
    Has anyone had experience in buying an established internet business? eg, internet retailing perfumes, baby wear etc?

    What are the pro's/cons of this? Could somebody do well from this if they haven't any experience in internet retailing?

    I've been looking around on sites such as businessesforsale.com, and i'm sure there are thousands out there, but does anyone know of any reputable sites that i can browse internet businesses for sale?

    Thanks in advance.

    :cool::cool::cool:
     
    Posted: Jan 7, 2009 By: mrRed Member since: Nov 18, 2008
    #1
  2. sysops

    sysops UKBF Newcomer Free Member

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    The vast majority of retail sites up for sale are not making any money, which is why they are for sale. I review dozens of sites every year with the aim of buying them to add to our existing sites, and am regularly shocked at how long some people manage to run a site making almost no profit, then expect to sell it for a significant sum.

    As to whether you could do well - it really depends on what skills you have.
     
    Posted: Jan 7, 2009 By: sysops Member since: Feb 1, 2007
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  3. busynessman

    busynessman UKBF Newcomer Free Member

    105 2
    Ive recently bought a few sites.

    ! was a real gem in that people didnt believe the guy who was selling it and that he was selling it so cheap. It should have been woth approx 12k$ based on 10 months profit, i got it for a lot lot less than that so i was very happy.

    the one thing ive noticed in buying sites is...

    make sure you know what is involved in running it, a big mistake ive made before.

    Check hosting costs, traffic reports, paid advertsing they have, where they are in the search engines.

    look at their competition, could they be selling because one of the competitors has upped the stakes?

    Dont take their word for what they turn over, check as best you can and ask them to verify it the best they can.

    Why are they selling? always ask that first....then as you go along if their is a hidden agenda you can normally pick up bad vibes as you chat.

    Basically do all the research you possibly can not just on the company, but on them and their niche as a whole.

    I always think if you dont know much about e commerce, its best to start up yourself and learn as you go.

    hope this helps
     
    Posted: Jan 8, 2009 By: busynessman Member since: Jan 18, 2008
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  4. deniser

    deniser UKBF Legend Free Member

    7,982 1,676
    IMO whether you sell online or from a retail shop, it doesn't make much difference in terms of skills required. The important thing is to know your product and the market.
    Just because you are selling something online it doesn't mean that you put it on your site and people will buy it. The normal rules of retail apply and if you don't buy in the right product at the right price, it won't sell any better online than in a shop.

    Babywear is a typical example of a site which an owner will have invested a lot of money in but not be making any. It is a very, very difficult market and even if it is successful now, there is no guarantee that, faced with buying in the new season's collections, you will have the necessary knowledge to buy the right things for the next season.

    It won't be the costs of buying the site that are the problem but the amount you invest in stock that you can't shift. So unless you know the product well (or it is a simple product which doesn't require much knowledge) and the market it is in, I would proceed with extreme caution.
     
    Posted: Jan 8, 2009 By: deniser Member since: Jun 3, 2008
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  5. CableGuy

    CableGuy UKBF Newcomer Free Member

    130 8
    Agreed.

    I'm looking at making a few acquisitions this year. Any recommendations on which sites to look at for half decent web sites for sale?
     
    Posted: Jan 8, 2009 By: CableGuy Member since: Jun 13, 2008
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  6. Stampy

    Stampy UKBF Regular Free Member

    263 33
    Posted: Jan 8, 2009 By: Stampy Member since: May 16, 2008
    #6
  7. Steve2507

    Steve2507 UKBF Newcomer Free Member

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    I'd agree with this.

    I had a competitor contact me about buying their site/business. Turnover was a decent £250K but profit was only £5K (per year for anyone thinking per month). The owner had to take on a seperate job to pay the bills.

    I looked at it and found they were pumping loads into ppc, bidding on stupid phrases and way too many generic phrases. But it had a good customer list, not much stock and very little other equipment (they dropshipped a lot). I thought that with a bit of work I reckoned I could get it back on track and stop the stupid marketing expense.

    So I asked what sort of figures they were thinking. When the owner told me I did something very unprofessional, I actually started laughing. I honestly thought he was joking. I wasn't just giggling, I was in hysterics. He said he would be looking at offers based on at least 6 figures, preferably with starting at 150K. The reason for this stupid figure was because the site "had great potential".

    Unfortunately this is what you get when people want to sell a site, they think it has great "potential" and so should demand a high price. They can't make any money from it, but it has "great potential":rolleyes:.
     
    Posted: Jan 8, 2009 By: Steve2507 Member since: Jun 9, 2006
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  8. sysops

    sysops UKBF Newcomer Free Member

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    I have 3-4 conversations like that every year. I think that one is a very good example - they've built up a good turnover, and proved that their business model is not profitable. Yet for some bizarre reason, they think it's worth a lot.

    After the laughter subsides, the conversation usually continues:

    Me: Ok, we'd be looking to offer you around £15k. Would that interest you?
    Him: You must be joking! We're turning over £250k!!
    Me: But the £15k I'm offering you is equivalent to 3 whole years profit!
    Him: The business has great potential, it's worth more.
    Me: Yes, when you've built it up to £1M turnover, you'll be making £20k

    I think it's partly sheer stupidity, and partly being so attached to your business that you can't step back and look at it objectively.
     
    Last edited: Jan 8, 2009
    Posted: Jan 8, 2009 By: sysops Member since: Feb 1, 2007
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  9. Steve2507

    Steve2507 UKBF Newcomer Free Member

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    Yep, that was pretty much the conversations, apart from I offered £5K, which he didn't take too kindly.
     
    Posted: Jan 8, 2009 By: Steve2507 Member since: Jun 9, 2006
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  10. sirearl

    sirearl UKBF Legend Free Member

    29,800 6,640
    worries me a bit when I see a site for sale for $5,000 which claims to be making a profit of $1,500 a month.?

    One factor is a s pointed our how much work is involved in running the site.

    Best site I have in work to return ration is one page that gets me a tidy sum a year with no work whatsoever.

    Earl
     
    Posted: Jan 8, 2009 By: sirearl Member since: Apr 23, 2007
    #10
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