Anatomy of a $20K per month seller

This article dissects the business model of website flippers who list frequently and ALWAYS sell, earning upwards of $20,000 each month, every month.  After a minor upgrade to the Stats section of the app, I experimented with providing a ‘league table’ for sellers on Flippa, that would order sellers by their clearance rate (the percentage of sites sold to total sites listed). Removing anybody that listed less than 20 sites in a month, (if you only list one site and sell one site that would be a 100% clearance rate, which is obviously misleading) a clear divide emerges where some sellers consistently sell almost anything they list.

This isn’t a great feat if you’re only listing say 5 sites in a month, but some of these sellers were listing multiple times per day and still selling over 90% of everything they list. What I found most interesting were the type of sites being sold; if I owned Facebook, Google and Twitter there’s no doubt that (theoretically) I could sell them at $250 all day long, but these sites were all ‘starter sites’ – brand new sites mostly with no traffic and no revenue, effectively a turnkey web site template with a business plan. But for those of you who are thinking ‘turnkey? Not for me!’ – hear me out for a second before clicking away….there’s logic to the madness!

A note on starter sites

This industry has had a lot of passionate debate on starter sites and their value and place in website for sale auctions.  Pre 2010, it seemed that starter sites would sell all day long, then in June last year, a chain of events (coupled with less activity over the summer) led to a massive decline in their saleability. The content on this blog is primarily pitched at intermediate – advanced buyers and sellers; typically people who have no interest in starter sites and rightly or wrongly regards them as worthless.  All of the sellers profiled in this post sell starter sites, and this isn’t a tutorial on how to do that, but more how some people manage to take something that is typically difficult to sell, and follow a formula to consistently win every time.

With that said, here’s the disclaimer; this article doesn’t condone or condemn the sites being sold by the sellers in this example, nor has any due diligence been done into the factual content of their listings. This article also does not imply that any of the sellers used in the examples are either honest or dishonest, ethical or unethical. It simply tries to dissect what’s present to find a common thread.

As much as I initially didn’t want to admit it, there are lessons to be learnt, even if you only buy and sell higher level sites. Failing that, I hope it simply makes good general reading, and provides some insight into what makes the average new buyer tick.

In true Jim Collins style (if you’ve not yet read Good to Great, do so!) I looked at eight sellers who

• Had an overall average clearance rate above 80%
• Sold at least 15 sites per month
• Attracted a minimum average of 3 bids per auction
• Sold sites that generally had no traffic but there were some exceptions

Here’s what I found

The Domains

TLDs

Most of the domains used were .com or .net but surprisingly, .info appears to sell just as well. Final prices were however, lower for  .info domains ending an average of 32% less than their .com counterparts.  One buyer did manage to buck this trend with what seemed to be aged .info domains (typical $5 – $10 from the Godaddy Domain aftermarket) sometimes with a little page rank too. In this case, the sites would fetch a higher price than a similar site on a brand new .com domain.

Keywords

Nearly all the domains listed were keyword domains, usually with a modifier like ‘best’ or ‘my’ or two keywords joined with a hyphen. Whether or not the keywords were commercially valuable seemed to have little effect on the price or whether it sold, so ‘europeholidays.com’ would theoretically be a sellable as ‘holidaypanda.com’, providing both words were easy to identify. Domain name length also seemed to have little bearing on the final sale.

The Sites

Type of Site

There were quite clear ‘types’ of sites sold and what’s probably most important here is the difference in average prices them.

• Content sites, that provided information the buyer was looking for and nothing else. These mostly include product review and comparison sites, and typically these type of sites fetched the lowest final prices.
• Mini Applications and Online Shops. These are typically not a full blown application and usually based on a free script or API (for example url shortening, or an online store that listed a just few products which linked directly to Amazon). These achieved the median price.
• Directory and Portal type sites, pre populated with lots of content around a particular topic. They included game and movie review, and local web directories. Again, these typically achieved the median price.
• Products and Services. These attracted the highest average number of bids and the highest final price. They tend to vary between Clickbank mini-sites and SEO product reseller sites that resold anything from guaranteed traffics to Facebook Fans.

It was interesting to note that whilst none of these sites reported revenue, some reported traffic and these seemed to skew the averages every time in terms of final price. Of all the sites listing traffic, none provided verified analytics but the listings still attracted the highest prices and the most bids. It seems in this segment new buyers care less about the validity of the figures quoted; I find it crazy not to question the 5,000 visitors per month for a website whose main function is to sell guaranteed traffic!

What didn’t seem to sell

Very few of the sites listed were niche content blogs / autoblogs and few seemed to have Adsense as their choice of monetisation. Interestingly, many of the sites that did originally sell with Adsense installed no longer had Adsense after the new buyer had taken over, which might suggest that primary buyers for these sites have issues obtaining or keeping an Adsense account.

Niches

A high proportion of the sites listed dealt in the niche of helping others make money online, which comes with a slight taste of irony as many of the buyers are new to the industry themselves! These sites also fetched higher prices on average.

There was no major correlation in niche types apart from this. Games and Films seemed to be quite popular but I think this is purely coincidental.

Most of the sellers had a repertoire of site types that they would consistently sell on rotation (for example, they may list a directory site, then a guaranteed traffic site, a blog, a review site then start again with a directory). One seller, seemed to sell almost identical sites every week, simply changing the url (and hence name of the site) by appending a different animal each time, for example bookmarktiger, bookmarkleopard, bookmarkmonkey..you get the idea! (My only concern is that this business model is shortlived; one day, he / she will run out of living animals and only have dinosaurs left to rely on for income).

The Listings

The auction listing copy clearly made the biggest difference, and offered a reason why some sellers consistently sell. Looking at the sellers with the lowest clearance rate, you’ll often see almost identical (in one case, fully identical except the colour and name) sites being sold, but one sells and the other doesn’t. I believe this is down to the listing, and a buyer psychology most of these sellers understand.

Listing Attributes

With little exception, nearly all the sellers followed this pattern

• Listing duration of just 1 day
• No reserve and a $1 starting price
• An average buy it now price across all sellers of $242

The headlines didn’t seem to follow a particular format, but nearly all adhered to the rules of a good auction headline .

Listing Copy

In their listing copy, each seller managed to incorporate several NLP like techniques (or ‘that jedi-stuff’ as it’s probably better know) that copywriters often manipulate to write convincing copy.

Trust

Each buyer aims to establish the reader’s trust both in the listing and through their high feedback scores (average is 12 with one buyer having -13, although this was an anomaly).

Trying to adopt the mindset of someone new to the industry, especially new the idea of buying or selling sites, I can understand why trust is important, especially if they have no prior transaction experience.

Solving the buyer’s biggest fear

Conventional sales wisdom teaches you to solve the buyer’s problems and address their fears (objections) earlier on and all of these buyers do that well. In my opinion, this is what makes the difference between a starter site listing that sells and one that doesn’t.

For internet business newcomers, I’d expect the two greatest fears / concerns would be not attracting enough visitors and technical knowledge. Many of the people buying starter sites may have previously attempted to create a site of their own and fell over at one of the two hurdles above, and in offering to solve that problem or even prevent it, the seller has a greater chance of making a sale. Take a look at these examples

or


these are not isolated examples; in fact, the most common thread amongst all of these sellers was that their listing offered some form of both link building (or traffic or guaranteed rankings) and technical support if buyers needed it.

Social Validation

Social validation is similar to trust in that people will typically trust a listing or seller more if other people do too.  Here, social validation is shown most effectively through testimonials as used by a few of the sellers, but mostly shown through claims of their other sites selling quickly, or selling at the BIN price.

In auctions, social validation usually happens through bids (more people bidding will always attract yet more people to bid). I couldn’t see any evidence of that here as the auctions had an average of 5 bids when sold. This maybe makes a difference when the starting price and reserve comes into play, as people are less likely to bid on something that currently has no bids. With a low starting price the listing is more likely to attract early bidders and gain synergy.

Scarcity

As a more experienced buyer / seller, this is probably the part that will trigger alarms, but unfortunately creating scarcity is one of the most common tactics used by all of the sellers I looked at.

or

It’s difficult to say whether it has an effect on the buyer in forcing them to act immediately and in fairness, ‘faux-scarcity’ isn’t a tactic confined to just selling starter sites; we can see examples on hundreds of other current listings .

Bonuses Galore

Dan Kennedy would be proud Almost every listing here ‘value-added’, offering a range of bonuses for the winning bidder. These included

• Free hosting (for anything between 1 year and life)
• Ebooks and Videos on everything related to SEO and building traffic
• Free marketing and business consultation
• Keyword research and PLR content
• A whole other website on a niche of your choosing (?!)

Interestingly, as the number of bonuses went up, it seemed the final price often did too. It’s difficult to prove there’s correlation though, as what counts as a bonus to one person doesn’t to another and there were other factors that would have affected the final price.

Other general points

There were some interesting finds that didn’t quite warrant a whole section.

• Sellers often went into great detail about the mechanics behind why the site will (should) work. This includes describing how new links are obtained, why the site will be popular or how it’s designed to organically rank better than its competition. This seems counterintuitive as the buyer probably doesn’t have a deep technical understanding, but in some ways, it probably serves as an act of transparency, increasing their trust.
• Most buyers made potential income claims and often sold the ‘big picture’
• Listings were almost always written in very clear, grammatically correct English.

Regardless of the general perception about starter sites, there’s no doubt that these sellers all have a system that works for them, and it seems to be easily repeatable. Whilst personally, I’d rather make $30k from selling 1 site as opposed to selling 100, there is a part of what they do which I envy, which is mostly systemising and scaling what is typically a ‘bespoke’ business.

I hope this has provided some light entertainment even if you have no interest in starter sites or targeting that market. As always, if you feel I’ve missed something obvious or left something out please let me know.

Related Articles:

• Tips for writing a better auction headline on Flippa.com
• After the Honeymoon
• Premium Calls, Spanish Programs and Jedi Mind Tricks – A-List April 2013
• March 2013 – Website Acquisition Opportunities from the Flipfilter A-List
• Building a Killer Member Site