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Quick Hits: Flip This Web Site!

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Brief scrutiny of today's headlines.

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Forget summer houses or fixing up distressed properties for a quick resale. Web sites are now the hot thing to flip.

According to the New York Times, entrepreneurs with geek skills are sniffing out niche Web sites that few 'Net surfers visit or even know about and snapping them up for a few hundred bucks or, at most, several thousand dollars.

They then redesign the Web site to improve the graphics, sections and content. Most importantly, the search tags are re-jiggered so the site shows up in a broader range of Yahoo (YHOO), Google (GOOG) and Microsoft (MSFT) Internet searchers. This boosts readership – and value of the site when resold.

Much of the buying and selling of niche Web sites is conducted on eBay (EBAY). You didn't expect a classified ad in the Times (NYT), did you?

The Web sites are pitched to small but passionate audiences and are devoted to things as diverse as model railroading, bird cages, croquet, and exotic pets. Get something wrong, and the Web master soon discovers that the site's readership consists of 5,000 proofreaders and one old crank.

Few flippers expect to match Conde Nast's purchase of Wired News for about $25 million or People.com's acquisition of Celebrity Baby Blog. Most profits in the Web site flipping biz are small, and several thousand dollars is considered a good haul.

Early in the Internet boom, many companies such as Pets.com or Drugstore.com (DSCM) used the Internet as a grand ordering device and were little more than a proxy for the brick-and-mortar store. Such operations still required warehouses and huge inventories.

Now, smaller Web sites rely on third-party shippers to fulfill orders - and avoid tying money up in inventory.

But who wants to compete with Amazon.com (AMZN)?

Most niche Web sites don't. Instead, they deliver specialized advertising to a targeted audience – and that's more important than selling a few trinkets or gizmos. It's also what makes niche Web sites of interest to entrepreneurs.

Some niche Web sites offer advertisers a devoted following and have little competition. But success in paintball shooting, exotic fish, rare stamps or remote control toys is sure to spark competition. However, most Web site flippers don't have to fret about imitators because they sell a site as quickly as possible after fixing it up, pocket a profit and move on to the next project.

The hucksters are out, and artificially-inflated click counts are fraudulent and create a new range of enforcement problems. Buyer beware.

Last month, the average price for a niche Web site on eBay was about $80. This means, you, too, can be an entrepreneur. All you have to do is be on the lookout for a poorly-developed Web site devoted to gift baskets, barbecuing or antique bathroom fixtures, or anything else that will attract an audience, and have the skill to punch it into shape.

For more on the business behind niche websites, check out Hoofy and Boo's always astute report.

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No positions in stocks mentioned.
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