Today’s article is the start of a new column that I’m going to feature on MyWifeQuitHerJob.com. In an effort to better serve the interests of my readers, I’m officially creating a new question and answer category for the blog.
So please click on the “Contact” button on the upper right corner of the screen and send me your questions. Every week or so, I will pick the best ones and feature them in a blog post.
This week’s question comes from Randy and he writes.
I really like your videos and blogs as they are very informative. My question is: I have an opportunity to purchase an existing website that is currently offline. This website is a pet supply store and uses two drop shippers.
I am talking with the broker about it. He is not sure of the reason for the sale but he did say the drop shippers have a good reputation and usually keep the items in stock. He said one of them had been in business for 50 years and the other for about 5.
The price of the website is $2,000 although he said it is negotiable. I am putting the information below and would really appreciate it if you would tell me what you think. Thank you.
In addition to the website, the vendor has also mentioned that this store has a customer email list that contains about 2000 contacts. Here’s a screenshot of the website below. Should Randy purchase this site for $2000?
What Do Dropshipping Websites Typically Sell For?
While the selling price of a dropshipped ecommerce store varies from shop to shop, the general rule of thumb is anywhere from 1-2 years of income or between 8-12X monthly profits.
In addition to the numbers, it also depends on whether the income is sustainable or not in the long run and whether there’s room to grow in the current niche.
In Randy’s case, he didn’t get a chance to ask the owner of the website for any numbers just yet before he emailed me for my opinion. But fortunately, I didn’t need to see any numbers at all in order to give him my answer.
After doing some very basic research, I determined that this site probably isn’t making any money at all and that Randy should probably stay away. Here’s how I broke things down.
How Much Is The Website Design Worth?
Many people want to jumpstart their online businesses by purchasing a ready made site. Randy’s first question was whether the website design in itself was worth the $2000.
As soon as I saw the website, I instantly knew that the site was based on the popular open source shopping cart Open Cart.
How did I know right away? Even though the designer tried really hard to hide all traces of the open source shopping cart, anyone who has seen or used Open Cart would be able to tell right away.
Related: How To Install An Open Source Shopping Cart Without Any Technical Knowledge In Under 5 Minutes
In addition, the template that is being used is very close to the vanilla out of the box template. Therefore, the cost of creating a website design similar to this pet supply shop would be next to nothing or $50 at most.
Because Open Cart is open source, the source code for the website is completely free.
There’s nothing particularly special about the look and feel of the website either. The logo is just ok and the images and product descriptions seem to be taken straight from the dropship vendors. Therefore, I would place very little value on the website itself.
What About The Value Of The Dropship Vendors?
Under normal circumstances, there is value in having an established relationship with vendors that supply an online store with goods to sell. In this case however, I doubt that this store has made very many if any sales at all (more on this later).
Therefore, I can probably assume that there hasn’t been any long term relationship established with the vendor at this point.
In addition, if you take a look at any of the products for sale, it becomes immediately obvious who the 2 dropship vendors are. See the example below.
So if you really wanted to create an identical replica of this store complete with the same vendors, all you would have to do is install Open Cart and contact the vendors circled in the picture above. It would be as simple as that.
How Does The Store Rank in Search?
The next question is whether this store already gets any traffic organically through search and whether it ranks for any keyword terms. Thanks to tools like www.spyfu.com and SEMRush, this is relatively easy to do.
By bringing up this online store in SpyFu below, it becomes immediately obvious that this site probably doesn’t make many sales or garners much traffic at all.
First off, the owner of this site has not used any PPC marketing services at all to generate any traffic. Second, this shop has zero keyword terms on the front page of the search engines.
Third, this shop doesn’t even show up in various traffic ranking sites like Compete, Quantcast etc… You put the three things together and that probably means the site gets very little traffic and makes very little sales.
In other words, the site probably doesn’t make any money.
What Does The Backlink Profile Look Like?
But just for good measure, let’s take a closer look at this Pet Supply shop’s backlink profile using Open Site Explorer. If look you look closely, this website is very weak and the only backlinks to the site are from some crappy website directories. No wonder this site is not ranking in search!
Breaking Down The Value
So I’ve already established that the site is definitely not worth $2000 but how much would it cost a normal person to make an exact replica of the site? Here’s the breakdown of costs.
As you can see, the total cost of creating a similar website would only be about $70.
- Create an account at BlueHost for $4.95
- Follow the directions in this video to install Open Cart for free
- SSL certificates and credit card processing should be free.
- Follow the directions in this video and install a shopping cart template. Approximate cost $20-$50
- Contact the two vendors mentioned above and establish dropshipping accounts with them.
- Using the vendor’s spreadsheet and photos, upload the products and product descriptions onto your website
To sum it all up, I just wanted to thank Randy for submitting this question to the blog. Remember, I’m going to start featuring questions like Randy’s on a regular basis now so please send me whatever problems you may be facing. But please be specific.
If your question is too broad or too open ended, you will most likely not get an answer. Thank you and I look forward to hearing from you.
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His blog, MyWifeQuitHerJob.com, has been featured in Forbes, Inc, The New York Times, Entrepreneur and MSNBC.
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To stay up to date with all of the latest ecommerce trends, Steve runs a 7 figure ecommerce store, BumblebeeLinens.com, with his wife and puts on an annual ecommerce conference called The Sellers Summit.
Steve carries both a bachelors and a masters degree in electrical engineering from Stanford University. Despite majoring in electrical engineering, he spent a good portion of his graduate education studying entrepreneurship and the mechanics of running small businesses.
21 thoughts on “How To Evaluate A Dropship Store For Purchase – Would You Buy This Website For 2000 Dollars?”
That is an awesome analysis. Sounds like you saved someone a lot of money. Good work and I look forward to more in this series.
Yeah. Randy didn’t end up making the purchase, but now he knows what to look for.
Goood review, these sites are a dime a dozen on Flippa. In my experience, it’s always better to learn the back-end yourself rather than purchase one of these prebuilt stores. It’s the whole give a man a fish vs. teaching him to fish adage.
I agree. It’s hard to sort through the good sites from the bad on flippa as there are so many auctions.
love this article. The first glance of that website was not worth $2000 and on top of that it is dropshipping so profit margin is usually minimal since I’ve done DS a long time ago. It is good when you do not have the capital to buy and sell.
If it was maybe $200 or less, I would’ve bought the website since it’s been created. Taking consideration of the time put in it.
But overall, love the article since I feel like the seller is trying to rip off this guy who is looking for a business website.
I hope he got your answer and follow it.
For $200 it might still have not been worth it. I didn’t talk about it much in the article, but the pet supplies niche is extremely competitive and saturated. THerefore, it’s questionable whether the store would have a chance in the first place.
Good analysis, and I agree with your conclusion that it’s not worth $2000. I think the one thing that was maybe glossed over was how much time it would take to duplicate the site. $70 may be the actual cost of all the components, but there may be signifant time involved in setting it up. If there are thousands of images and product descriptions to upload, the time involved may warrant some additional cost. What are your thoughts on this?
Most dropship vendors will provide product photos and product descriptions in a spreadsheet. What you then have to do is format this spreadsheet according to what your shopping cart expects and then upload the information. This particular store was clearly using stock descriptions and photos which aren’t very valuable since it likely duplicates content from other stores.
Steve did an incredible job breaking down the details and scrutinizing the site for its worth and value.
I’ll personally value this site at S$400 (US$313) as I felt that quite some work had already been done, especially with the dropshipping vendors items included.
Yes, the first screenshot immediately screams Open Cart; hiding traces of it takes about an hour to 2 on my own.
However, if the buyer is comfortable in contacting the suppliers’ himself, he could, as what Steve mentioned here, contact and build a r/s with the 2 dropshippers, and further enquiring on any limitations or places that they could ship to, and if search results are good, re-rank (or build one from scratch if you want control of design) it to serve a smaller but more focused / local market. 🙂
@Eric – there are some other plugins that allows easy import of products and images from a stock inventory list; not sure for Open Cart but I’ve done it for other e-commerce plugins / platforms
Personally, I’ll prefer having a store that has your own contact number or assurance that there’s a contact person behind the site.
Great analysis again Steve!
Excellent analysis! Thank you Steve for your willingness to share and help your followers. It’s things like this that give us the assurance to go ahead with our visions
I am not into e-commerce, thinking to start soon here in UK, but been in AM for long time I wonder why he doesn’t do PPC? Also a great tool to check for which keywords a site is ranking is ahrefs.com. Semrush is ok but is not correct about your traffic volume most of the time. At least this I noticed with my sites.
Hi Steve, great analysis and thanks for the info. There is an auction currently on Flippa that I am considering for a very similar pet supplies website called PlentifulPet.com and the design is much better and the owner is claiming some sales (~$1550 revenue or ~$250 net per month).
I have had trouble starting an ecommerce site in the past (I tried osCommerce) and would love to buy one that is already earning some revenue like this. The problem is that it does not have a niche and is obviously competing in a saturated market as you said. I’m sure you’re familiar with CSN stores or Wayfair now, but basically my goal was to take one operating ecommerce site, use my seo skills to optimize for a very specific keyword, and replicate that site over and over along different product categories (with domains like simplydogbeds.com for instance). That said, what do you think of this site? Is it worth the current bid ($3050)?
How can you upload the products and product descriptions which are in bulk, onto your website?
I would wish to thank you for that efforts you’ve got created in writing this post
I saw some other people get advice about whether they should purchase an already existing drop shipping site? How could I get an expert opinion as well? Thank you
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