The more saturated an industry is, the more interesting it becomes for me. It stimulates my creative juices and compels me to think outside the box. Heck, I even get rid of the box entirely sometimes. You can always device new strategies and techniques that will leave your competition in the dust. People often erroneously equate experience with skill. Being a veteran domainer does not automatically make you a skilled salesperson or an effective strategist. You will struggle to do well not because you have competition, but because your thinking is not evolving fast enough. A newbie domainer with exceptional salesmanship and moderate to low quality domains will run circles around an experienced domainer with supposedly great names.
My working strategy:
I simply scrape all the businesses in my area out of the Yellow Pages and sort by industry. I then sort the list by domain length. You will be astonished by how crappy some these domains are. I find better variations of their their domain names, register them and test the traffic for 24 hours using a 301 redirect. If the type-in traffic is less than 15 visitors a day, I dump the domain and get my money back. The more competition the business has, the better for me.
If you present the numbers to the respective business owners in a fashion that makes sense, there's an 80% chance that you will sell. Assuming a scenario where the better variation I register gets 20 visitors a day (based on their marketing), here is what the numbers look like:
20 x 365 = 7,300 visitors/year, which is 73,000 in 10 years.
Now will you make a one-time payment of $1,700 for a domain name that will save you from losing 73,000 prospects to your competitor? The answer is a no-brainer. Now, on the off-chance that Mr. X happens to be hardheaded, I make sure he has 20 competitors that will eagerly scoop up his prospects. Even better for me when Mr. Y has a beef with Mr. X. (Human emotions are powerful.The advertising industry has been capitalizing on it for years.) Once I receive payment, from either Mr. X or his competitor, I renew the domain for 10 years for him and pocket the balance. After I sold the first 4, I gave my first 4 clients a rebate of $300 in exchange for solid testimonials. They were very happy to do that. These testimonials sped up the cycle of the subsequent sales by a whopping 40%.
I have been domaining for just 5 months, and this is how I have been generating a steady $6k-$7k over the last 4 months selling 4-6 domains per month. Mind you, the domains I have been selling will be considered crappy by pro-domainers with 'great' domain names. The next step is to automate some of my processes with proprietary software and scale using
Lean Manufacturing Principles.
Malcolm Gladwell explains that it takes 10k hours to master any craft. What we often fail to realize sometimes is that the skills we acquire in one area of our life or industry is often transferable to another. You may already have 9.5k hours of expertise. Apply them diligently and competition will never be an issue. In fact, it will merely present an opportunity to learn and grow.
I have domains that I buy outside of my working strategy (that will probably be considered low quality as well). This is mostly for the purposes of testing and learning new strategies that will capitalize on the influx of competition. There are a ton of other strategies I am yet to test. Some of them are just slight variations of what have been mentioned in the forums...or a unique combination of them.
I love domaining. I never wish that I had gotten in earlier. THIS is the time for me. Bring on the competition.