Non Traditional Investments: Online Stores

Last summer, I wrote about some non traditional investing that I was attempting to do.  I had gone to a few tax sales in hopes of earning a 15% return on my investment, but unfortunately my number never got called and I never got a chance.  I’m planning to go back again this year, but I’ve been looking into other ways to earn income outside of more traditional options.  While the stock market and traditional savings/cds are fine and all, I dont care for the extremely low interest on savings accounts, or the volatility of equities.  That being said, I’ve been looking for other ways to grow my money.  Since I’ve been “working” for a pittance online (Made about 4k in 4 years), I decided that maybe I should look into ways to make money online.

For this, I looked at buying more websites, which I’ll detail in a process a bit later.  I wanted something that was going to be fairly passive, and something that would make a fair amount of money every month.  I was looking for more than $100 in profit, which isnt hard when you’re dealing with online stuff because operating costs are so low.  Since I was looking for something fairly passive, that essentially ruled out purchasing another blog.  As you can tell, I’m hardly able to keep up with this site sometimes (and this store has been a big reason why lately).  Once I got my requirements ready and the amount of money I was prepared to invest, it was time to head over to flippa (A place where you buy websites) and start to poke around.

After a few strikes, I finally found something that met all of my criteria, and I impulsively put in a bid.  After being confirmed the winner, things began to get fishy.  My partner in the venture and I told the seller that we would like to use escrow.com for payment.  We would pay escrow, and after the escrow closed and everything was OK, they would pay the seller.  Obviously, this would take longer but added protection for both sides.  Once we suggested this, the seller was very quick to suggest wiring the money to him directly – total red flag in our book.  After a little digging, we concluded that the listing was fake, and the person was most likely selling something they didnt own.  We reported it to flippa and went about our day, feeling like we dodged a bullet.

After more looking around, we found another site that met all of our requirements, and even better it didnt have much competition on the listing.  We made a bid for the lowest price the seller was willing to sell for and waited.  We had set a limit for what we were willing to pay, and waited until the end of the auction.  After watching many auctions, we noticed that there was usually a huge run up in price as the listing closed.  Fortunately, that didnt happen to us and we were able to get the site for the minimum that the seller was willing to sell for.  Of course, we quickly wondered what was wrong and if we missed something that everyone else saw.  Upon looking again, we didnt think so.  Like last time, we suggested escrow.com and the seller was fine with that.  Things just felt better from the get-go, and after an escrow period that went well, my partner and I now own the reusable bag store.

Unfortunately, we are still in the transition process and are ironing out some issues that happened during the transfer, mainly the ones relating to all the images associated with the products.  There’s over 100 images that need to be associated with their respective products, and that’s just a time consuming process.  Once we get the store completely up and running with appropriate logos and images, we will begin to work towards driving traffic to our site, in hopes of more sales.

As of this moment, our site is nothing but an imaginary place on the internet that we are shoveling money into.  We pay 30 dollars per month for hosting and the ecommerce platform, which would cover this blog (and all my other sites) for the better part of the year.  Other expenses are really non-existent, aside from our time.  That right there is why i’m interested in online businesses – expenses are very low, and with the right strategies, you can make a fair amount of cash.

This store (and possibly others) are part of my income stream going forward.  Once the stores are up and running, they dont require that much time or effort (so I say now).  I’m expecting it to be mostly tweaks with the advertising, and continuing to build links and increase traffic.  Of course, this will require a consistent strategy on traffic building, but shouldnt be that difficult.  According to revenue figures we got from the prior seller, this site was able to net off more than $500 per month.  Hopefully, my partner and I can get the store back to that and exceed it in the future – basically, we are looking to be reusable bag magnates.

Now I’m not sure what’s going to happen in the future in regards to online commerce, but it would be nice if this could turn into something that would replace all of our household bills per month (approx $500) or even our mortgage somewhere down the line.  Not sure what will happen, but that would be a total home run scenario.

So, for the numbers, I’m into this for $250 off purchase, and a bit of money for fees – I’d say that i’ve invested ~$300 total, and the upside will return all of that in 2 months or possibly less.  The downside will be just having this generate no revenue, and tossing $30 per month at it for hosting.   To me, those are pretty good odds, that are mainly dependent on the work that my partner and I put into the site and the strategies that we develop to get the site and our products in front of what we consider to be a growing market of people interested in sustainability (which I’ve thought for a few years, obviously since I’ve been writing on this site).

Clearly, this is a non-traditional investment, much like my (attempts) at tax liens.  Unfortunately, this wont end up with me owning a piece of land, but I do plan to utilize those again this year – and hopefully I can get my number called and get an option to buy something.  If you cant tell, I’m really looking to non traditional investments to diversify the portfolio that H and I are building into the future.

Readers: What do you think about online stores?  Have you ever bought something from one of the smaller stores (something not like amazon or with a major retail presence in your area) What do you think about this as an investment diversification option?  Would you be willing to try it, or is it too out in left field for you?  What other “non traditional/odd” diversification options have you heard of/are you considering?

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9 thoughts on “Non Traditional Investments: Online Stores

  1. Congratulations! In my stock market experiment I started last year “Random” is beating the S&P 500 by 4% and beating investment “experts” by almost 10%. I completely agree that online businesses are a better investment than the market.

    It’s also great that this site is something you believe in (recycling and sustainability). I hope it works out for you and you can add many more sites to your portfolio.

  2. Hi Jeff – new reader to your blog, great stuff so far!

    I’m in a similar boat as you with regard to trying to invest in ‘turnkey’ websites so I wish you the best and the Reusable Bag Store seems like a terrific buy.

    If you don’t mind me asking, I like the idea of a having a venture partner but not sure where to start… were you already friends with your venture partner or is it strictly a professional relationship?

    • Thanks for stopping by josiah!
      THanks for the well wishes. I’ll be publishing reports periodically about how it’s going.
      As for the partner, we were already friends before we started this venture, but I did meet him a few years ago through blogging. As it turned out we grew up in the same area and went to the same undergrad, but didnt know each other until we connected through blogging!

      • Good to know and thanks for the response.

        On a side note, do you have any alternatives to Lending Club that you suggest? Doesn’t seem like the Buckeye State is permitted when I try and register…

  3. As someone who works for an online only ecommerce site, I can tell you that the potential is there to make quite a bit with them. Will every one make a ton of money, probably not, but the potential is there. You guys have a great start, and I’m sure you’ll get it kicked into gear in no time.

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