Flippa Case Study - An E-Commerce Business Valuation Exercise
During January's Philadelphia SEO Grail Meetup the topic of discussion was purchasing a website using Flippa.com. During the evening's presentation, Bill Rowland and Jeff Louella presented an analysis using a e-commerce business currently for sale. This deck touched on the following areas:
- Online Business
- Build vs. Buy
- Intro: SeedAndGarden.com
- SEO Audit
- The Business
- Valuation
- Opinion
- Recommendation
3. AGENDA
• Online Business
• Build vs. Buy
• Intro: SeedAndGarden.com
• SEO Audit
• The Business
• Valuation
• Opinion
• Recommendation
4. ONLINE BUSINESS
• Benefits vs. Brick & Mortar
• Many Business Types
• Revenue Models
– Advertising
– E-commerce
– Affiliate
– Subscription
– Others
5. BUILD vs BUY
Build a Website
Strengths Weaknesses
Lower Initial Cost Longer Time Horizon
Gain Experience Time Intensive
Pursue Topic of Interest
Buy a Website
Strengths Weaknesses
Proven Concept Higher Initial Cost
Immediate Feedback Extensive Due Diligence
Faster Results Can Resell Immediately
6. SEO AUDIT
• Analytics
• On-Page Optimization
• Site Health
• Issues & Opportunities
• Off-Page Optimization
• Challenges
• Keyword Rankings
• Platform
• Domain Changes
17. SEO AUDIT
The Platform
The site uses Bigcommerce as a
platform. Bigcommerce is a very
popular SaaS platform that
competes closely with Shopify.
● Flexible hosting options ranging from
$30 to $200 a month
● Themes and Apps similar to Wordpress
● Built in blog. Though not as good as
Wordpress
● Good customer service
19. THE BUSINESS
•Website
•$10 K Inventory
•1760 Member Client List
•8 Related Domains
•90 Days Support
•Legacy Services (Discount)
•Supplier Relationships
•Related Social Media Accounts
22. OPINION
• No Unique Value Proposition
• Selling Commodity Products
• Over Dependence on One Brand
• Little Social Engagement
• Low Profit Margin ≈ 25%
• Overpriced for Value Recieved
Online Benefits vs. Brick & Mortar
Low Startup Cost
Greater Flexibility
Can Often Greater Upside Potential
Many Business Types
Services
Software
Information
Retail
Information
Products
Revenue Models
Products
Software
Services
Access to Google Analytics was declined by the site owner, which is a big red flag.
However, “Verified” metrics from Google Analytics are provided within the listing but these should always be independently confirmed.
On the surface, the performance of this seasonal business would seem to make sense…
However a closer look at trend data which is estimated by SEM Rush suggests that this business has been on the decline for over two years.
In and of itself this is not necessarily bad; however this must be carefully considered when making a bidding decision
Accessibility is difficult to guauge without access to analytics or webmaster tools.
Upon review, the Robots.txt filed appears to exclude pages correctly.
Within the Robots.txt there is no reference to an XML sitemap; furthermore one does not exist at /sitemap.xml . This is common on smaller sites, but it would be preferable if one was present to identify potential indexation problems.
Indexation is judged to be roughly good. The Site: operator is compared to the Screaming Frog scrape.
Title Tags – Under-optimized and could be expanded to attract broader search traffic
Heading Tags – H1s wrap the site Logo. Multiple H2s wrap Primary Heading (Should be H1) and Supporting Headings (Arguably Should be H3s)Note: None of the Product Titles are Wrapped in Headings
Content – Product Descriptions – Product descriptions are only adequate. Could include more.
Content – Supporting – There are customer reviews (vendor Yotpo), however the content cannot be seen by search engines. Some product pages have embedded manufacturer videos (dup content).
Content – Cornerstone – There is no cornerstone content (e.g. blog, how to articles, FAQs, etc…)
SeedAndGarden.com generally performed well
2230 Pages Missing Image Alt Tags
Minimal Duplicate Content (Page Descriptions)
49 Page No Meta Description Tag
Keyword rankings have trended downward since September 2012
Two Algorithm Updates Occurred in September 2012
Panda # 20
Exact Match Domain Update
Based on the relatively low quantity of on-site content, it was probably Panda that affected keyword rankings
Using SEM Rush, the keywords ranking on the first two pages were broken down by category:
Jiffy 26 – Brand
Pots 10
Testing 10
Tree Seeds 7
Seeding 6
Equip 6
Veg Seeds 3
Misc seed 2
This suggests that these are likely to be the most popular products, which is troubling
There appears to be an over-dependence on the Jiffy brand (which is distributed by big box retailers)
Also, Peat pots are also among the most popular which is likely to be more of a commodity.
Source: http://whois.domaintools.com/
What you get:
My assistance for 90 days to ensure a smooth transition
10k worth of inventory shipped to you. That's our cost, not retail value!
A great domain name plus 8 other domains, 9 total. See below.
A unique and trademarked logo including the .ai and .cdr source files.
Includes a very nice business card design with source files.
The website
Save 5$ per month per email account. Includes a free google apps account which currently handles the email. Google no longer offers these accounts for free.
Save $29 per month. Includes a grandfathered in free StitchLabs account. They no longer offer free accounts.
List of suppliers and contact names
Supplier price lists and their terms
Google Analytics account with custom scheduled weekly reports so you can see how your business is doing and where the traffic and orders are coming from.
Facebook page with around 340 likes
Twitter account with 2,285 followers
Mailchimp account with 1760 subscribers and a custom template matching the look and feel of the website.
Includes a Dymo label printer for the tree seed packet labels.
Access to Google Analytics was declined by the site owner, which is a big red flag.
However, “Verified” metrics from Google Analytics are provided within the listing but these should always be independently confirmed.
On the surface, the performance of this seasonal business would seem to make sense…