Nowadays, people don't want to start from scratch. For this very reason, done for you dropshipping sites have been made available.
There are ready made dropshipping stores that you can purchase. The question now is, "Is it worth it?" Listen to this episode of the eCommerce Lifestyle podcast to know if you are making the right decision.
What's Covered in This Episode:
- Custom Build
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Hey, what's up everybody? Anton Kraly here from eCommerceLifestyle.com, and welcome back to the podcast. In today's episode I want to address something that comes up pretty frequently inside of our community over at Drop Ship Lifestyle, and that is the question of whether or not done-for-you dropshipping stores are legit.
And the story usually goes something like this: The person that's asking the question found out that there's an opportunity where they can build an online business, make some extra money, maybe replace their income, maybe quit their job. They go down the rabbit hole of doing research and watching videos like this one that you're watching right now; and maybe they even start to do the work and build their own store; and then maybe they see an ad online or maybe they just have the idea of, "What if I could just buy an existing store, something that's done for me? What if I can shortcut my path to success and skip the whole process of doing the work, building the store, getting the suppliers, setting up traffic?" And, you know, "Should I do that? Does it make sense?"
So what I want to do is address this in two different ways. Because there are definitely legit done-for-you options out there, but there are also some that are just destined to be losers. And I can't even imagine what it would be like to sink five, ten grand into one of these losers; and even worse, waste that time; and probably even worse than that, lose the motivation that you had because you just spent thousands of dollars on something that's destined to fail.
So in this episode we're going to talk about how to spot the winners from the losers, and hopefully save you some cash and definitely save you some time. So I think the way that I can best help you understand which is a good investment is by breaking these things down into two different categories. We have assets, and then we have opportunities.
Now an asset is something that will cost a sizable amount of money, should you want to purchase it, because what you're actually buying here is the done-for-you store in addition to... So what are those things that you get when you invest into an asset? Well, first of all, you're going to be buying something that's already generating income; and not just something that got one sale as a proof of concept, but something that's been generating sales historically over a long period of time, ideally at least 12 months.
And when you buy this type of done-for-you store, you're getting that track record, you're getting that history, you're getting that safety of, "Wow, I can look at the numbers and see that this business has been profitable month after month, for X amount of months." And obviously, the longer the better because that just shows that there's more safety involved.
Now when you're buying these assets, something that you can know, and something you can look out for if you're looking for stores for sale, is that they're sold at a multiple of how much money they make. So it's not just like somebody says, "Hey, I want to sell my done-for-you store and I'm going to make the price $100,000, because why not?" No. The reason it would cost that amount of the money is because that would be a multiple of how much money it earns every month.
So typically, as just a good average, a store that's already profitable, again with that history, call it 12 months, you can typically sell for about a 30X monthly multiple. What that means is if the store was making the previous owner $5,000 a month over the past 12 months, you can multiply that $5,000 times 30, and in that case get $150,000. Now like I said, these investments, if you're going to buy this type of done-for-you store, you're buying something that costs a good amount of money. It's not just a few hundred dollars or a few thousand dollars, even though there are some opportunities that we'll talk about that try to charge ridiculous prices and are really nothing more than throwing your money away.
Now, the other things that I'll note about when you buy one of these assets... right? We'll put that in the asset category... is that you're also getting unique IP, intellectual property. And this'll be a lot more than just a store design. This will be things like connections with suppliers and previous customers. This will be things like SOPs, standard operating procedures, that the previous owners have put together that basically have a playbook for how to operate the business. In addition to that, you'll also be getting things like their "traffic secrets," if you want to call it that. You'll be getting their whole playbook for how this business has been running, exactly how it is profitable, and in addition to that you'll also get some training that's included.
Typically, depending on the size of the business for sale and the complexity of it, if you buy an asset you're getting between 30 and 90 days of support from the previous owners that are just making sure that everything continues to run smoothly. And the way that's typically broken down is by X amount of hours a week that the previous owners will be available to you to make sure, again, if things come up, they're there to help you; they're there to make sure that the business at least maintains the current revenue.
And because of that, when you're investing in an asset, it's typically a safe bet. If you're buying a done-for-you store, again, that is an asset. It's pretty safe if you really do look into the numbers. And if this is something you want to do... even though honestly my advice is you should build your own store and then sell it and make all that money, but if you do want to buy a business... my advice would be to check out EmpireFlippers.com. Great team over there, amazing people. They sell all different types of sites, including sites for a lot of members of Drop Ship Lifestyle. And if you go there, you'll be able to browse through their marketplace, see what's available, and really vet the companies that are selling these stores to see if their numbers are legit or not.
So now let's move into that second bucket of done-for-you stores that you could purchase and, unfortunately, these are the ones that I get questions about the most. And these are what I would refer to as opportunities. Now I'm going to put two different types of done-for-you stores in the opportunity section because there really are two different paths you can go once you're there.
Now the first would be something that's like a custom store that's built for you. So let's just say... I'm at a standup desk... you decide you want to sell standup desks, you find a company that's going to build you a site to sell your standup desks. And when you do that, the things that you're getting are obviously the completed website; things like your logo, your content pages, products uploaded; you're also typically getting, at least if you work with Drop Ship Lifestyle, you're getting your Google Analytics set up, you're getting your first ad campaign set up, and you're getting handed off a site that is still an opportunity.
Because at this point, remember it's not making money. It's custom-built for you, but the opportunity is there for you to then run with it and to turn it into something extremely profitable. Now I wouldn't say, obviously, that that's a scam at all because it's not. But people do need to know that when they're just buying something that's custom-built for them, you're not getting this thing that's making all this money or that's guaranteed to succeed. What you're getting is an opportunity that's custom-tailored for you based on your input, but it is still an opportunity.
And because of that, the way that opportunities are sold are not by a multiple of revenue and profit because there is no revenue and profit. So the prices you could pay for a store like this could range from as low as maybe a hundred bucks on Fiverr to tens of thousands of dollars to a custom, high-end dev shop. With our members, we typically charge around $1,500 for these websites. But again, there's a wide range depending on who you want to work with and the quality of work you expect and also the deliverables.
Now with that being said, let's talk about the opportunity that I see way too often; something that's been around since I started in 2007; and something that you should be extremely scared of; and something that you should never put your money in. And these are opportunities that come as turnkey stores. They're done for you, but they're not marketed as something that, "Hey, here's a store. Let's see what happens."
They're marketed as, "Hey, this is built. It already has 10,000 products on it. Everything's ready to hand off to you. It's connected to a supplier directory. Just pay us X amount of dollars and you're going to get this site, and here's the opportunity." And the pitch there isn't that, "Here's something that you could start to work with." The pitch is, "This already has 10,000 products. All you have to do is turn traffic on. You're going to be profitable from day one." And that is just not true at all.
Now, some places you'll find these "opportunity" done-for-you stores being sold are on marketplaces like Flippa.com. If you're not familiar with it there are legit sites there too, but there's also a lot of these "opportunities." You'll also even see them on eBay, in the Website For Sale section. And these are the ones you want to run from, especially now. Because I see a lot of people marketing them on Facebook, running Facebook ads, selling these "opportunity" stores, and they're being positioned as if they were already assets when they're not.
And what's worse than that is these types of opportunities are not customized, at all, for you. What you basically do will go to the directory, again, Flippa or eBay, or you'll see a Facebook ad, and then you'll see the different types of stores that are already prebuilt; again, turnkey, ready to be sold. And they can be things like selling golf equipment. They could be things like selling pet supplies, whatever it is.
But the thing that gets people excited about this, from the buyer's standpoint is, "Oh wow. Instead of spending $150,000, or $500,000 or $1 million, on a site from EmpireFlippers that's already a proven asset, I can get this opportunity site for maybe two grand, five grand, ten grand, and I can just start making money when I turn the ads on. So I'm saving myself $100,000, or several hundred thousand dollars, and then I'll just make it profitable myself."
And this is a huge issue because the way that these turnkey sites are built are on a copy-and-paste template. So things like the logo, the content pages, the products, none of that is custom for you. It's just something that these companies that sell them constantly copy and paste and turn out, and turn out, and turn out. And basically all the buyers are getting the same thing.
And what's even worse than that... that you have no input, and no say, and nothing's custom... is that the products that these sites are typically connected to come from middlemen supplier directories, where there's basically no profit margin. So they might show you, "Hey, this product on your new store is selling for $100 and your wholesale cost is $50." And from somebody that's unsuspecting, you might see that and be like, "That's awesome." But then the person that knows a little more, digs a little deeper, might go on Amazon or eBay, search for that same product and see it's being sold for $50 or $55 there. So there's really no margin, there's no competitive edge, and that opportunity quickly fades away as soon as you get the store handed off to you.
So this is something you really do want to stay away from. They are pitched in a way that makes it sound extremely exciting, extremely affordable. They're pitched in a way that make it seem like a great investment. But I have never, ever, ever, seen anyone have success with one of these turnkey done-for-you stores.
So let's do a quick recap of this podcast. There's three different buckets that I'm going to put done-for-you stores in. There are the assets which are proven to be successful. They're sold at a multiple of their profit. They are generally safe investments, but they're not for everybody. And again, my advice is build your own asset and then if you want to sell it, sell it.
The second type of done-for-you store would fall into the opportunity bucket. That is a custom store that is done for you, to suit your needs. That I do recommend as long as you do your research upfront and you know why you're having the custom thing built for you. Again, if you wanted to sell standup desks, then you can go out there and work with a company. There's tons of them online, on Upwork, on every website there is. You could work with Drop Ship Lifestyle and we'll build you a custom site for that product type. That is a good investment again, but it's something that doesn't come as a guarantee because there's no revenue attached. It's new.
And then finally, the third bucket is the opportunity for turnkey stores, which in my opinion is nothing more than a scam. It's making the people that are selling them a bunch of money. But the people on the other end, the buyers, all it's doing for them is wasting their time; it's wasting their money; and it's really wasting their motivation because it's a lot harder to start over after you've sunk one, two, five, ten thousand dollars into a turnkey store that literally has no opportunity to succeed.
So keep that in mind, guys. I hope you find that helpful. As always, if you did, please do leave the podcast a review. Means a lot to me. I'll post a link in the description where you can do so.
And if you're brand new here and you're thinking, "Anton, this sounds awesome. I want to build my own asset. How do I do that?" My advice is go to DropShipWebinar.com. D-R-O-P-S-H-I-P. Webinar.com. Get my free training and I'll show you exactly how we build assets that are highly profitable, semi-automated stores.
So, thank you everybody. I appreciate you and I'll talk to you in the next episode of the podcast. Bye.