Flippa is a platform for buying and selling online businesses. In this article, we’ll look at how buying an online business through Flippa compares with buying one through a broker.
Digital real estate will become the next great commodity. Individuals and companies alike will buy and sell their assets as a means of investment, trading to scale up and continuing to invest for growth. The ability to buy and sell these commodities with ease has already become a battleground where a multitude of businesses are vying to win. Just as with real estate, cryptocurrency, stocks and bonds, or even precious metals, there is a need to trade these digital assets on the free market.
Deciding between an online business for sale marketplace like Flippa.com versus a website broker is critical when looking for the right opportunity, accessing the largest base of buyers, speed of sale and price optimization.
Now, more than ever before, there’s a new group entering the digital economy. Traditional industries have been upended and jobs that existed only months ago are no longer viable. Thanks to these fast-moving changes, a whole new group of people will find themselves in ownership positions, running digital real estate and extrapolating value out of a predominantly online world. Every generation is now aware of the opportunity: you can supplement your income, or completely replace your traditional income stream, from the comfort of your home.
So what happens when there’s literally hundreds of millions of digital real estate assets in operation? They become tradable. As with traditional real estate, there’s a ready market of buyers clamoring over the best and a steady influx of owners looking to offload their assets as they move to grow their investments.
While they’re distinct and separately-run businesses, Flippa was born out of the SitePoint forums and shares the same founders.
What are the platforms powering this new economy?
Before we jump into the platforms available to trade digital assets, we should consider the platforms that have led the way in creating this new economy. The number of tradable sites and other digital assets that are powering this growing economy is staggering, and the data behind the platforms that are powering this new asset class are equally enthralling. Whether we’re talking about “traditional” ecommerce sites focussed on selling branded product held in local warehouses, modern drop-shipping storefronts that essentially operate as middlemen between manufacturers and customers, or websites based on entertainment and information, driving revenue through advertising or affiliate marketing programs, there are a few platforms that are absolutely dominating this space and they are doing so in historical fashion.
Let’s take a look at the four largest platforms that are leading the way for the traders of digital assets within the Flippa marketplace and through digital brokerage firms.
All hail the king. The once-upon-a-time electronic book seller is not just the largest online retailer on the planet at this point, but dominates the booming digital asset economy as well.
Did you know that half of all sales on Amazon come from third-party sellers? It’s true. There are actually more goods being sold through Amazon’s retail site by third-party vendors than Amazon is selling itself. If you take a look the next time you’re purchasing something through this behemoth, notice if it says the item is sold and/or shipped by Amazon or another party. It’s nearly impossible to survive as a consumer packaged goods brand these days without a presence on Amazon. And, once there, it’s all about competing through optimized listings and carefully positioned advertising to reach the number one space within your given niche.
What many forward thinking entrepreneurs discovered through the Amazon platform was their Fulfilled by Amazon (FBA) system that essentially runs as a hands-off logistics integration. Today, there are over two million FBA sites live online, with 3,500 sellers joining that ecosystem daily. These businesses have found a way to move their product through Amazon’s system by providing the goods and marketing, but allowing Amazon to handle all of the fulfillment and customer service. In fact, these businesses have found so much success that it’s suggested the average turnover per FBA store is $115,000 annually.
Shopify has made a very strong name for itself over the past decade and is now the go-to answer for any business or individual looking to set up an independent ecommerce business with ease. It currently boasts over 500,000 active sites and the average revenue per business is noted at $50,000 per year. The added benefit that many users find when working with Shopify to build a successful digital business is the ability to readily integrate with several drop shipping service providers such as Oberlo. These plugins allow users to select items from overseas manufacturers and warehousers which they can sell on their site without the hassle, or upfront expenses, associated with purchasing, storing, and shipping inventory from their own location.
Not all digital businesses are selling products. Many, perhaps even most, are creating content, be it information or entertainment, and supplementing that content with advertisements in order to generate revenue. Google’s AdSense platform has made it incredibly easy for even the most amateur digital asset holders to monetize their websites. Opposed to a traditional newspaper or television stations that might be seeking out individual companies to sponsor their programming, AdSense simply plugs into your site using smart API integration and places appropriate ads on your website without any negotiation. At this point, over 11.1 million websites have integrated the AdSense platform, each generating average revenue of $3,500 per year. Combined, AdSense has a value of $7billion in annual revenue. No wonder so many eager entrepreneurs are looking to trade these commodities.
Powering 35% of the Internet in 2020, WordPress is one of (if not the) largest host of monetized, tradable digital assets in the world. Used for a variety of businesses from ecommerce companies to brick and mortar stores in need of a digital presence, WordPress truly serves the entire community. Bloggers certainly have a strong affinity with WordPress due to the ease of use, SEO practicalities, and thousands of helpful plugins. Of those bloggers, 65% have either a product or a service for sale, and 66% of them make money with their content. Professional bloggers have been reported to make an average of $185,000 per blog per year, while hobbyists are reporting an average of $16,000 per year.
Many digital entrepreneurs use WordPress as a host for their ecommerce businesses, 28% of which are using the WordPress owned WooCommerce platform, which has similar integrations to Shopify as far as building a drop shipping business or managing warehoused inventory for online sale.
All said and done, this was a lot of information just to let you know that digital entrepreneurship is big business and sees no signs of slowing down!
If you already own and manage a content site or ecommerce business, or if you’re looking to enter the industry by acquiring an already successful online business, the question remains: what is the best way to go about it?
Categorically, the best option for nearly all online businesses, websites, and investors is Flippa.com.
What are the differences between Flippa and a broker?
The easiest way to understand the difference between Flippa and a broker is to draw an analogy. Let’s pretend that, rather than a digital asset, you’re in the market to either buy or sell a piece of art.
As an art buyer, you want to see the widest selection of art available. You want to see paintings, drawings, sculptures, and maybe some modern art concepts that haven’t even crossed your mind. And beyond that, you want to be able to speak to the artists themselves. You want the opportunity to ask them about their work, what it means, why and how they created it. Then, you want the opportunity to negotiate with the artist for a price that works for your budget. Essentially, as a buyer, you want the largest selection, you want a great experience, and you want a fair price.
As a seller, you want to showcase your artwork on a stage that gets the most attention. You know that you’ll likely only sell a few pieces of art each year, or maybe just one piece every couple of years, so you want the best chance of finding a buyer who’s excited about what you’ve created. More so, you realize that your art is unique, so you want the chance to explain to potential buyers why yours is worth the money. And, of course, you want to make as much as possible through the sale.
Essentially, as a seller, you want the largest available field of buyers, a simple communication process, and you want to be able to make the most money possible.
If these are your requirements as a buyer or a seller of digital assets, Flippa wins, hands down, when compared to a broker. As a peer to peer marketplace, Flippa provides the largest selection of assets, the most people searching to buy an asset, the most fluid communication experience, and the ability to negotiate for the best price possible on both sides of the deal.
Don’t get us wrong. Brokers can also be great.
Let’s look again at art as a parallel to digital assets. In this scenario, a broker will often have a very nice, yet much smaller selection of works. Many of their pieces are incredibly high in value, but their process for selling those pieces is much more closed. They work with a narrow range of creators and a small group of potential buyers who are all looking for something highly specific. In addition, the broker will take over the sales process, performing the burden of communications and negotiations as a middleman, which can certainly be a benefit to some, but this separates the seller from the buyer, removing the excitement from the potential sale.
Selling with Flippa would be like selling at a popular gallery in the middle of a major city. People flow in and out, looking for all sorts of deals, from affordable to expensive, from paintings to sculptures, often looking to move quickly once they find what they like.
Replace the paintings, sculptures, and drawings that an artist might sell with the ecommerce businesses, content sites, and SaaS products that a digital entrepreneur might sell, and you have the difference between Flippa and a digital assets broker. While brokers often have fantastic assets, it’s a relatively small collection, their pool of potential buyers is rather small, and there are hurdles within the acquisition process that must be conquered. A company like Flippa, on the other hand, has an extensive portfolio, an massive user base, and a platform that’s quite easy to join and navigate without any help.
What’s more in our reasoning to choose Flippa in this equation is that Flippa actually works in partnership with brokers as well, should that be your preferred method of going about the process. Flippa’s network of brokers combines the best of both worlds. If you’re new to trading digital assets or you just don’t have the time or energy to work the sale yourself, choosing to work with one of the brokers recognized by Flippa will give you that hands-on treatment, but also gives you the advantage of the size of the Flippa community.
Who would you recommend if you want to sell quickly?
This is a question we wanted to tackle, as it’s quite important to a lot of individuals. Many traders of digital assets are looking to sell one asset in order to free up capital to invest into another asset, and in many of these situations, timing can be critical. Certainly for some, a lengthy sale might not matter, but for others, listing an asset and waiting around for nine months to complete a sale might not be on the cards.
We checked out Empire Flippers to get their take on speed of sale. They’re a well known broker, based in South East Asia, with a nice selection of assets within their network, and they seemed a trustworthy source for this information on the broker side.
While lower priced sites tend to go quickly, that’s not always the case and it depends on each individual listing. For example, we’ve sold $300K+ sites in less than a month and it has taken a few months to sell sites in the $50K–$100K range. We generally ask for at least 6 months to list and sell your site, but can give you a better estimate after reviewing/vetting your site for sale.
Again, it seems it’s the size of Flippa’s buyer base that shines through when considering the speed of sale. As the Flippa marketplace is more transparent, we were able to do the digging ourselves on some actual listings. We took a look at CrochetKim.com. This is a content site that was listed on Flippa on October 3rd, 2019 and it was sold within just a week, on October 8th, 2019. Certainly one can’t expect every site listed to Flippa to sell with such ferocity, but it seems like the examples are plentiful. We discovered a current listing for a website called PersonalityMax.com, which sold for $254,000 in less than 30 days. It sold for a nice 5.8x Net Profit. And again, Joyful Messes was a site that apparently sold for $43,000 in just five days in December of 2019. We could go on, but you get the picture. Assets tend to sell fast on Flippa.
The other thing to note with these listings isn’t just the speed of the ultimate sale, but the activity that the listings on Flippa achieve in a very short period of time. While we don’t have this information for any of the popular brokers, it’s easy to see the number of views and watchers on a listing on Flippa and it’s hard not to take notice. Still a live auction at the time of writing, an AI marketing platform listed on Flippa currently has a high bid of $250,000 and has had over 20,000 views and over 900 individuals watching the listing. Those are pretty spectacular numbers.
So, while Flippa may have more sites and therefore competition is greater, it would seem that a high-quality digital asset can move very, very quickly, gaining quite a bit of attention in the process.
What about fraud?
When it comes to online scams, no website is immune, so this is a very important factor to consider when comparing Flippa to other online brokers and an important factor in trading digital assets in general. Having been around for over a decade, there are certainly some historical articles posted online about sketchy transactions on Flippa. However, it appears that those articles are just that — historical.
In the past year, Flippa has gone through quite a transition, both with their leadership team and their platform. It looks as if Flippa hasn’t had a single case of fraud in at least the prior nine months after completing a complete overhaul with the intention of cleaning up their marketplace and removing any fraudulent listings or users. Certainly there’s been cases where a scam has been noticed and there has been fraud potential, but it looks like Flippa has been able to successfully resolve the issues and now takes any accusations of fraud or scamming very seriously. They’ve built a marketplace integrity team and additionally, they look to be banning rogue users very quickly. With a marketplace so large and with users from all over the globe, this must have been quite the undertaking, but it appears to have paid off.
While brokers might have bested Flippa five years ago when it comes to fraud, we aren’t so sure anymore. Flippa now mandates that all sellers go through a bank-grade KYC (know your customer check) and all successful sales over $5,000 are independently reviewed before allowing an exchange of money or assets. Finally, Flippa integrated with Escrow.com and other payment services in the past year, providing added security during the transaction process, which have dramatically cleaned up the fulfillment process, allowing users to feel safe during the transaction, no matter how large.
Further to the security during the payment process, Flippa provides verified Google Analytics directly on each listing and recently integrated with SEMrush, providing an independent analysis of a spectrum of metrics, even allowing users to purchase a report of over 150 data points in total for just $10. Not bad.
Winner: It’s a tie.
How does Flippa compare to the rest on pricing?
Simply put, Flippa is cheaper. Both the listing fee and the commission are lower, giving Flippa an easy advantage on price when compared to brokers.
Both Flippa and Empire Flippers are transparent about their pricing structure, so we took the information directly from their websites and posted it below. It’s an easy comparison as numbers don’t lie.
Empire Flippers’ Listing Fee: $297 for your first listing, $97 for subsequent listings.
Flippa’s Listing Fee: $49.
Empire Flippers Commission Structure
|12%||$1,000,000 – 2,000,000|
|8%||$2,000,000 – 5,000,000|
|5%||$5,000,000 – 10,000,000|
Flippa’s Commission Structure
|7.5%||$50,001 – 100,000|
|15%||Broker Managed Listings|
Based on these numbers, Flippa is the cheaper option for any business priced less than $10million, which unfortunately for most of us is the ballpark that we’re playing within. If you do have a business valued at over $10million, congratulations, job well done, most definitely go with a Empire Flippers. For the rest of us, the value is with Flippa.
Just for fun, let’s see the difference in fees if you were to sell a website valued within a few different ranges on either of these platforms.
- $25,000 Asset
Flippa: $49 listing, 10% commission = you owe $2,549 in fees (WINNER)
Empire Flippers: $297 listing, 15% commission = you owe $4,047 in fees
- $250,000 Asset
Flippa: $49 listing, 5% commission = you owe $12,549 in fees (WINNER)
Empire Flippers: $297 listing, 15% commission = you owe $37,797 in fees
- $2,500,000 Asset
Flippa: $49 listing, 5% commission = you owe $125,049 in fees (WINNER)
Empire Flippers: $297 listing, 8% commission = you owe $200,297 in fees
Those numbers are strikingly different.
Flippa even goes so far as to prove that they’re the best valued marketplace to sell an online asset by providing a price matching guarantee. We aren’t sure that any brokers can beat Flippa on price, but should they, Flippa offers to beat that success fee by 1% as long as you provide proof of the competitive price. Pretty cool.
Flippa vs brokers: the winner is Flippa
We explored the growing digital asset marketplace as a whole and proceeded to examine and compare the user base, the speed of sale, any issues with fraud, and the overall cost of doing business with both Flippa and competing brokers for both buying and selling an online business. Our conclusion is that Flippa appears to beat the competition on every facet beyond fraud, where they tie. The community of both buyers and sellers is more robust, the speed of sale is astounding when desirable assets are listed, fraud has essentially been stricken from their site through a series of sweeping improvements, and all said and done, Flippa takes less money out of your pocket.
Digital real estate is here. The time to get busy building, buying, and selling is right now. Our recommendation to you: go with Flippa.