Why Flip Houses When You Could Flip Websites?
Amazon and eBay act as marketplaces for commercial products. Airbnb provides a marketplace for rental homes. But, where does one go to buy or sell digital products, like websites or blogs?
That’s where Flippa, a marketplace for online businesses, comes in. On Flippa, users buy and sell everything from blogs to apps to e-commerce sites. It’s a place where a crochet enthusiast sold her blog CrochetKim.com for $90,000, while a handwritten notes service business Thankbot sold for four times its reserve.
How does it all work?
Sellers list their businesses on Flippa along with data or documents that prove their profitability. Interested buyers then contact the seller for more information, place a bid or choose to buy right away at the current price. Once the buyer and seller connect, they can complete the transaction through an escrowing service.
Flippa isn’t the only company that helps people buy and sell digital assets. There are website brokers such as Empire Flippers and Digital Exits. But Flippa stands out in the market by being a true peer-to-peer platform, rather than a broker, with the largest number of buyers for a wide variety of digital products.
“Flippa can’t be matched for buyers,” Flippa CEO Blake Hutchison, who came into the position about a year and a half ago, told Bullish. For sellers of digital assets who hope to find buyers, “ultimately there is no bigger marketplace to do that” than Flippa, he said.
According to Hutchison, Flippa has around 1.5 million active users, registers over 5,000 new buyers every month and sees about 5,500 new sales listings each month.
Flippa’s goal is to democratize the digital asset market by enabling digital asset owners to realize their values, Hutchison said.
“Customers from all over the world are buying and selling their lifelong dreams, their creations and their ‘jobs,’” he said in an email to Bullish
Empowering entrepreneurs to buy and sell dream businesses – but with caution
Flippa provides a new way for online business owners to easily “enter” and “exit” the market in a more casual way than the typical startup investing ecosystem. Thanks to a large number of buyers and sellers on the platform and a relatively low fee, Flippa hosts a lot of smaller businesses compared to other platforms.
One Flippa success story is Blush and Bar, a jewelry e-commerce site that hedge fund investor-turned-entrepreneur John Chen bought in 2017. Chen purchased Blush and Bar for $7,500 on Flippa and sold it back on the platform in 2019 for more than $500,000.
Chen transformed the company brand and increased its value by elevating the quality of the website and pieces of jewelry to give it a more high-end feel. Over two years, the company went from earning $1,000 per month in revenue to $100,000 per month.
Chen said he chose Flippa to buy the company because it had more small businesses than comparable platforms. Which has allowed him to avoid taking out debt. He also understood that buying an existing business is easier than starting from scratch, as coming up with a new product idea if extra work.
Flippa’s users also tend to be both buyers and sellers, and sometimes they own more than one site. Hutchison found that “there’s a group of just over 100 buyers who represent around $12 million in spend.”
Stacy Caprio, an online marketer, is a user who bought and sold multiple sites on Flippa. She shared in a blog post that Flippa was a “catalyst” that helped her transition from feeling trapped in a cubicle to living in a dream apartment with flexible work hours.
“The platform is easy to use and makes buying a site simple as all you have to do is either bid, or message people with expired listings,” Caprio said in an email to Bullish.
But because Flippa is a peer-to-peer marketplace rather than a brokerage site, there are bad actors and misrepresenting sellers on the platform. Caprio told Bullish that her “main issue with Flippa is it is hard to find good deals, similar to finding a needle in a haystack.” She said she even lost money on her first site because the seller was deceptive.
One way Flippa protects users from scams is its integrated escrow service. Once a buyer places an offer and a seller accepts it, the buyer may examine the digital asset for an “inspection period” while the money is stored with the escrow service. If the asset is not the same as it is listed, the buyer could reject it. The service also ensures that the seller would receive the entire payment.
Researching the asset in advance is also an important step for protection. “We recommend vigorously that buyers conduct the necessary due diligence, much like you should with any large scale purchase,” Hutchison said.
Flippa’s blog also provides resources for its users, including guides for first-time buyers and sellers, as well as case studies.
Fast-growing digital asset ecosystem
Founded in 2009, Flippa was “very much ahead of its time,” Hutchison said. He saw that Flippa was signing up 30,000 new customers each month without spending any budget on customer acquisition.
“For me, it was abundantly clear that it was a fast-growing market for digital asset trading,” Hutchison said. “That gave me confidence that what we’re building is a product for the future.”
Hutchison also said that the digital business ecosystem is “supportive of what Flippa is trying to do.” Companies that allow people to easily build their brands or websites, such as Wix and Squarespace, are growing. There are also a number of tools that help website owners monetize their sites, such as Google AdSense, that empower small business owners.
The impact of COVID-19 has been “interesting,” Hutchison said. He noted that the “buyer demand is up,” possibly because they “perceive that they can get at less expensive pricing or more competitive pricing.” The number of lower-value businesses sold has increased, while the number of higher-value businesses have decreased slightly, according to Hutchison.
But Flippa has a long-term goal. Hutchison hopes that buying a digital asset should be “as easy, accessible and ubiquitous as buying a car, when ultimately there are more digital assets than there are cars.”
“Where we see Flippa going is a marketplace where all the digital makers, creators and business owners have the opportunity to realize the value of what they’ve created,” he said.