Drop competition has increased a lot lately, wondering why. (Also closeouts etc)

[twiki]

I have the feeling I'm missing something about what's going on here.

It is obviously normal for domain competition to increase over time. But what I am talking about, is a quite significant increase in the last 6 months or so. The same in closeouts. (And I'm not even touching the auctions subject.) Like competition has almost doubled or so.

There are days when I can't find anything at drop to secure. Good names aren't even dropping that much. DC gets many of what remains (and no, they aren't getting in auction, it's the investor partners of DC who are scooping up those mid-value names).

Pandemic did not have a significant effect on accelerating drop competition. Things have been rather linear during 2020-2021. But not anymore.

One year ago, I was expecting I'm going to replace some of my upper tier names with better ones by now.

As sales have dwindled gradually since the end of summer, I was expecting a lot of names to be released into the market, as certain domainers will have to trim their portfolios etc.

Instead, and weirdly enough, the opposite has happened. I find myself renewing a lot, and not buying. Also names that previously did make to the $5 closeouts club now are scooped up at $30-$40.

During spring 2022 I could secure some good names for some reason. Maybe the war has spooked some investors and they let them expire. Anyway. I expected this trend to continue. But in fact later the trend has reversed. The less domains are selling for retail amounts, the more you can't find them anymore.

I have also observed that discounting my names to low xxx range does not help selling them anymore.

In previous years I could sell lots of weakish names before drop for $75, $199 or $299. This is not happening anymore. (Not talking about NP... where you can't sell an everyday domain for $10 lately)

My explanation for this (just a theory):

Lots of domainers and website owners who previously were willing to drop $199 or $99 on such domains (ones I did not renew), now have low cash reserves and therefore they don't buy at that price level anymore. Instead, they have all flocked to drops and closeouts to get some others.

Side note I know my names are bought by US buyers in most cases, so it might be related to the known fact that most US citizens no longer have significant cash reserves like they had when pandemic started.

Another half of the theory is, certain domain investors who are cash afloat might not want to lose money through inflation. What could be a best way to protect your cash rather than securing some names that you can sell later for a tidy profit, once this turbulence has passed?

Anyway. What is your opinion? Hoping to get to the bottom of this, what on earth is happening exactly.

Thanks

 

[phaethon]

I think the big players buy more aggressively than before, even domains not worth much. For example I let

forexdynamite.com​

expire as I don't believe in the Forex niche and it was bought by BuyDomains.
Agree with Twiki, the drop decline over the last 6-9 months has been significant.
You are literally searching for a week to find a half decent drop to buy.
Waste of time.

 

[twiki]

Hmm, this topic made it to the weekly most seen list...

Anyway. Came back here to add a bit of extra info.

As some of you might know, my domain tools are tuned to filter domain lists rather well including my appraiser which went public for a short while (some have used it).

The news being:

While the number of domains found in total is more or less the same, the top section where the best picks are in my tools, is dwindling each day. So good names at drop are now a fraction of what they were one year ago. Less and less names appear there and most are gotten either by DC or another registrar. It's now 1/4 to 1/5 of what it used to be 1 year ago. That's insane.

I used to get 4-5 good domains per day one year ago and a few meh as well, well right now I'm getting 0 good domains per day, or perhaps 1 sometimes - where it went under the radar for any given reason.

So on one hand, the source has clearly dwindled fast which means, people are renewing names much more as before.

Also, I think the guys behind DC regs (their partners, actually - probably large firms like BuyDomains or something similar) already use rather competitive filters today, AI-based or not.

They are good, improved, and no longer getting crap if you ask me (crappy stuff actually makes it to the public auctions, which means common users, but what the partners get are better names than any of that). Edit: The guys obviously know in this market domains don't sell anymore as they used to, hence a readjustment in quality levels a well.

So yeah, this market is getting squeezed from all angles.

At this time it seems my drop-based domain sourcing is about to come to an end. I barely got 1 domain per day overall in the last 30 days which is unprecedented.

Furthermore, closeouts aren't of any help either.

I can only:

1) renew what I have,

2) participate in auctions (little luck there for me and prices are insane)

3) scour closeouts and drops and marketplaces for obscure names of value (lot of work for little result)

4) Or do handregs (kinda viable but still very risky).

The first option seems the only one that makes sense for me at this point.

Edit: I think you can still have good sourcing at auctions for nTLDs but in the .com area there's nothing worth it, really. Unfortunately I no longer do them, only .coms .

 

[Ostrados]

Ironically drop lists now have better domains than $5-$11 closeouts

 

[twiki]

Ironically drop lists now have better domains than $5-$11 closeouts

I agree.

In most cases even better than $30+ clouseouts... especially if you take into account the price as well. Even so many of these are taken at 30+, ones that I would not buy at $5.

 

[phaethon]

1) renew what I have,

This. And buy only names you intend to keep for five years at least, if you find any.

 

[twiki]

This. And buy only names you intend to keep for five years at least, if you find any.

Haven't found much of that lately... if any.

Fortunately I have those I'm going to renew, and it's a good number still.

 

[twiki]

Some further, and deeper thoughts.

One of the things that got me fully into domaining was the ability to scale. At least this was the situation a few years ago.

There is a lot of volume in medium-quality names out there. And if you had a good eye back then, you could scale and make good money. That I did, and sales thread here have showed a good part of it couple years ago and more. The scaling potential is what always kept me in. I'm not here to make say a couple thousands per month in profit. And I never reached where I aimed at, to be in the top, though I made some money down the line of course and still do.

That time - the time of scale, is now gone.

Beginning of 2022, discounting suddenly stopped working for me. Completely.

Before that, I used to increase sales ratio a lot so I was selling a lot before expiry. I made a LOT of posts about how to discount and what to expect, price levels etc. Several NP'ers here used my methods with decent and good results. But discounting halted flat in January 2022 for reasons I can't fathom, no more sales. Today no matter at what price I discount a say medium quality domain, $999 or $199 or $99, or even less, there are NO takers.

Wild.

So something was brewing in even before what happened mid-year; again suddenly, things that we all observed: This very fast competition increase + fast decrease in sales for us here. I wonder if there is any connection with my experience of discounts not working anymore (and no, it's not platform related cause I tested several including Sedo, Dan before it was acquired etc. It's all a macro.

Overall, 2022 was a massive shift in the domain business and in more than one direction, in fact like in all directions possible.

This makes you think... what on Earth is going on here. (scratching head)

The inability to foresee the future is what bothers me at this point.

I know from experience, not having predictability in your business is one of the most damaging factor you can have. And I think we all have this feeling right now.

Edit: Important note here: The only theory I have here about discounting not working anymore, is that those buyers are gone for some reason. And that's not because those domains are suddenly bad. It's because they cannot afford them anymore.

Most likely other investors were buying my names at $199 or $299. Now they can only afford a drop or a handreg etc.

Either their sales went bad since 2022 started, OR they don't have financial reserves (or trust) anymore to invest in domains they can sell later for a profit.