Selling at Flippa, What’s the Deal?

With all the news about recent sales at Flippa.com, have you thought about trying it out for some of you revenue generating names? While I have known of the site for some time, I have not yet listed any domains there. I spoke with Dave Slutzkin, General Manager at Flippa, to get a better feel for the service and to find out some interesting facts.

Mike: Where did Flippa originate and who are the people behind the site?

Dave: Flippa was born out of SitePoint in mid-2009, the second SitePoint child following the creation of 99designs in early 2008. The creators and owners are the same as for the other two sites in the group – Mark Harbottle and Matt Mickiewicz are the founders, and Leni Mayo and Andrew Walsh are internet veterans who serve on the board.

Mike: Flippa has made headlines recently, with record breaking weekly sales. What do you attribute the recent increase to? Is it higher sale prices or greater volume of sales overall?

Dave: It’s a bit of both. Certainly that week saw some very impressive sales close, but we’ve also seen big numbers of sales in the last few weeks, since the northern summer ended and our users started to return their focus to indoor pursuits.

Mike: How does a website owner go about selling their site through your service? Are there specific requirements that need to be met around revenue and traffic volume or other criteria?

Dave: Selling is easy on Flippa. There are no specific requirements for the site except that the seller actually owns it and can make some very basic technical changes so that we’re satisfied of that. Apart from that, you can sell a site which you started yesterday, or you can sell youtube.com – well, if you happened to own youtube.com. Mike, you could have SullysBlog.com listed in half an hour, and most of the time would be taken by writing some listing text to let potential buyers know why they should purchase your site.

Mike: What advantages does a site owner gain by listing with Flippa as opposed to posting on some of the domain forums or hiring a broker?

Dave: A single listing on Flippa is significantly more affordable than a broker, who will often charge an up-front fee plus a large percentage of the final sale price. Brokers can be useful at the very high end of the market, but below that it’s much more cost-effective to run certain elements of the sale yourself in conjunction with Flippa.

At the other end of the market, domain forums and listing sites are missing something that Flippa has in spades – an audience full of savvy buyers who are looking to purchase great websites.

Mike: What is the highest public sale price a site has gone for on Flippa? What was the domain?

Dave: The highest sale price that I can publicly disclose is for retweet.com: http://flippa.com/auctions/85167/Retweet-com

This sold for $250,000, a price which both the seller and buyer were very happy with – the perfect situation! We’ve had some other bigger sales, but under our private sale model, which keeps the final price undisclosed. A significant fraction of large sellers choose this model as it has some confidentiality benefits.

Mike: What are some of the more interesting sites you have seen listed and sold through Flippa?

Dave: The most recent one which comes to mind is a site called ReadPrint.com: http://flippa.com/auctions/101723/ReadPrint-com-As-seen-on-BBC-World-News-117K-profit-last-12months-was-PR7

This is a high-profile site with decent traffic – 450k unique visitors per month – driven by an enormous library of quality content which they’ve built up over almost seven years. It was pulling in decent revenue – $5k a month – but they’d by no means fully exploited the potential of the content.

This sort of sale fascinates me because there’s a great business waiting to emerge from this established but still fledgling site – the sort of challenge which I love myself! (I often have to restrain myself from picking up a bargain that catches my eye on Flippa – not enough hours in the day…)

Mike: Do you find certain types of sites sell better than others? For example, do sites with generic domains sell better than those with brandable domains? Other than dot com, what is the next best selling TLD?

Dave: Most of the sites which sell best have provable revenue – this is something buyers find extremely attractive. On top of that, buyers love unexploited potential. For instance, an ugly, unwieldy site with good search engine rankings and lots of traffic will attract those who have skills in design and conversion optimisation, to make it all it can be. Generally we feel that’s something Flippa does well – put sites together with those who can move them to the next stage of their evolution.

On your questions, we don’t see a lot of difference between generic and brandable domains, as it’s often about the business the seller has put behind it. As to TLDs, .net is listed more than .org, though .org actually has a better sell-through rate – make of that what you will!

Mike: Do you feel that developed domains are the best way to sell? That is, is it better to start with a domain and then add value before reselling it?

Dave: Yes, of course, because the less developed a domain is, the more potential is sitting there on the table, and it’s hard to get buyers to pay as much for potential as you want.

But it’s all about time, isn’t it? Most of us have more domains than we could ever fully develop in a lifetime!

So one good in-between option, after parking, is to work out a way of throwing together mini-sites which can give you a really good sense of the potential of your domains. At that point, having boot-strapped the process, you’ll get a better idea of what the domain is worth with a site on it. Then you can decide if it’s better to hang onto the partially-developed domain and earn a bit monthly, or to hand it over to someone who can better exploit it – and bank a lump sum up-front.