HugeDomains.com is Buying 50%+ of Expiring Domains at GoDaddy.com

[Arca]

I've been wondering about the competition in auctions for expiring domains over at GoDaddy.com, because somebody is paying hundreds for seemingly every domain that gets a few bidders.

I’ve also noticed a clear pattern, with the last bidder (or one of the last bidders) entering the auction winning most of the time, which made me think that there is one large corporate buyer piggybacking of whatever domains other people find and bid on. Turns out that is the case: HugeDomains.com is buying most domains over at GoDaddy.com expired auctions. I looked up the WHOIS of the past 150 auctions I have lost at GoDaddy.com, and 84 of those are now owned by HugeDomains.com and listed for sale on HugeDomains.com.

While 50%+ may not be representative of overall domains bought at GoDaddy, they do seem to buy far more domains than anyone else. The 66 names not bought by HugeDomains.com were bought by a number of different individuals and companies (BuyDomains.com bought 6 of those 66, for example), so 50%+ were taken by HugeDomains, while "the rest" of the auction wins were by a number of different individual domainers and companies.

This might not be news to some, but I've never seen anyone mention that HugeDomains is this active over at GD expired auctions, so I thought it might be interesting for some people to know who is outbidding everyone in the lower range over at GoDaddy. I've read people mentioning that HugeDomains buy names in close-out status over at GoDaddy, but never that they buy most of the domains in auctions too.

HugeDomains absolutely dominates all auctions below $5XX, and they only picked up a single name above $5XX (cakemart.com) in my sample of 150 names, so $5XX seems to be a self-imposed limit for them. If I only checked domains sold below $5XX, the percentage bought by them would be even higher. I've been the second highest bidder in lots of auctions that HugeDomains.com won, and in my experience they will keep bidding until you give up or until the price passes $5XX. By outbidding most bidders in the lower end, and acquiring more than half of the domains other people also have interest, it leaves a far smaller pool of names for the rest of the domainers to compete for, so I guess that's part of the reason why the reseller prices for names keep increasing so much for names in this range.

The only way to buy cheap domains at GoDaddy auctions now seems to be to let domains expire with 0 bids, so that they go to close-out status, and then try to snipe them as soon as that happens. However, some domainers seem to think it's smart to bid $12 on any decent name when there is 1-15 minutes left, hoping that nobody else is going to place a bid, so fewer and fewer decent names are let to expire with 0 bids. However, that strategy never seems to work (I've tried it myself lots of names, and it did not work even one time), because there are always other people watching and waiting for the name to go to close-out, and they jump in and bid if you make a $12 bid, and most of those names are eventually won by HugeDomains.com. What experiences do other people have at GD recently? Anyone else have any good strategies for buying expiring domains @ GoDaddy.com these days?

Some examples of expired domains bought at GoDaddy.com auctions by HugeDomains:
Domain: skillsharing.com
Purchase price (at GoDaddy): $540
Asking price (at HugeDomains): $2995

Domain: ledmaster.com
Purchase price (at GoDaddy): $537
BIN price (at HugeDomains): $2195

Domain: cyberstrategies.com
Purchase price (at GoDaddy): $262
Asking price (at HugeDomains): $2895

Domain: crablab.com
Purchase price (at GoDaddy): $320
Asking price (at HugeDomains): $1895

Domain: dailyportal.com
Purchase price (at GoDaddy): $560
Asking price (at HugeDomains): $2895

Domain: fivesecondrule.com
Purchase price (at GoDaddy): $42
Asking price (at HugeDomains): $2695

Domain: deltacloud.com
Purchase price (at GoDaddy): $365
BIN price (at HugeDomains): $1795

Domain: itace.com
Purchase price (at GoDaddy): $499
BIN price (at HugeDomains): $2595

Domain: sunnykitchen.com
Purchase price (at GoDaddy): $200
BIN price (at HugeDomains): $2595

Domain: baristaschool.com
Purchase price (at GoDaddy): $449
BIN price (at HugeDomains): $2895

Domain: cakemart.com
Purchase price (at GoDaddy): $695
BIN price (at HugeDomains): $3495

Domain: visuala.com
Purchase price (at GoDaddy): $315
BIN price (at HugeDomains): $2795

Domain: massanalytics.com
Purchase price (at GoDaddy): $130
BIN price (at HugeDomains): $2095

Domain: edusport.com
Purchase price (at GoDaddy): $535
BIN price (at HugeDomains): $2995

Domain: acneguru.com
Purchase price (at GoDaddy): $52
Asking price (at HugeDomains): $2495

Domain: stylefolio.com
Purchase price (at GoDaddy): $195
Asking price (at HugeDomains): $1995

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Related: HUGE DOMAINS SNIPING GODADDY CLOSEOUTS

 

[Arca]

I looked through a few more names, but the numbers are pretty much the same. HugeDomains.com is buying the majority of the names I've been bidding for recently. The percentage might actually be a bit higher, because I do not put any names on my GD watchlist that already have bids at the time I'm doing my research, as I actively try to avoid names that already have bidders. HugeDomains, on the other hand, actively seek out those, and they probably pick up a considerable amount of them, but those names are not part of my sample obviously. I've added a list of 100 names they recently won below. You might recognize a name or two you were bidding for. They're buying in all niches, VR, marijuana, BB-type brandables, etc. so pretty much everyone has to go up against them when buying at GD now.

100 Domains Recently Bought by HugeDomains.com at GoDaddy.com Expiring Auctions:

 

[wwwweb]

Although prices for GD pre-release expiring names are increasing a lot, thanks in part to HugeDomains' auction participation, the competition for NameJet pre-release and dropcaught names is just as fierce (and HugeDomains is not a bidder in those auctions). While HD win a lot of GD auctions in the sub $600 range, they also get outbid a lot of the time, and lots of names sell for high $XXX into $XXXX, and a lot of those names would not have fetched those kinds of prices just a while back.

It's become really hard to buy names for reasonable prices at NameJet as well, even when compared with just a few months ago. Auction competition for dropcaught names has increased noticeably too. HD is just one of many players who are pursuing this kind of strategy, so prices are increasing significantly across all reseller venues, regardless of HD's participation. Hopefully this trend will reverse at some point, because if price increases continue at this rate, a lot of people are going to be priced out of the pre-release/pen del game after some time.

Well cause, and effect. When someone loses out at godaddy, they may be willing to spend more at namejet, and vice versa. Many domainers use different venues, and if they are losing on one, emotion may make them bid more on the next auction, or venue.

We all know the end users, and there $10-$500 offers, these names are selling for high $xxx to low $xxxx, end users are far, and few between, and it takes time to go back, and forth, and for them to get their budgets straight, and when you figure all that out, you still got to get them to submit actual payment.

So you are going to have people who overpayed for domains, trying to get X times return at a higher valuation leading to a lower sell thru rate. Or you are going to get some very high priced aftermarket buys sitting idle in accounts collecting dust.

A good portfolio is maybe churning out 2-2.5% right now, bad ones .05-1%, as costs have to be passed on, you are going to get more renewal pressures, and maybe this will push people to gtld's as .com ask prices have to be more, as more was paid.

The end users do not understand, when you pay $2K for a good 2 keyword .com, and they think they are handing you the world with a $1K offer.

This is a good time to take a step back, and let the market aftermarket correct. To many people think we are upon a gold rush, only thing is the picks, and shovels are costing more then the amount of gold they can mine in the ground.

 

[boziffous]

 

[Arca]

You can choose not to give them your business, if they are using your money to compete with you effectively. It is feeding the perfect circle, don't support their products.

Same can be said about other vendors in the space, who bid against you on say namejet etc...

Maybe it is time to draw the line, and withdraw the use of their services, as effectively this is how you pay for their services, if enough people do so, maybe they will back off a bit.

These are names that used to sell for $11-$100 back between 2008-2012. The holding cost of such $500 type names which can take years to sell, it's really a huge burden for a one off domain investor. A few of those $500 names paid up, and stuck in a portfolio for many years really puts a burden on cashflow.

I am taking December off from the aftermarkets, as they are just to expensive, letting the guys who want to pay up, stock up, and realize what a grind it is to carry inventory, as average turnover is 1-3%.

I hope you are right, but I believe this is most likely just wishful thinking.

In an attempt to make sense of the constant increases in reseller prices across all platforms, where occasionally names sell for what I and many others would consider to be close to end-user pricing, I have done some research to find out who is buying all these names, because their strategy is not viable at all for most people, especially if you are relatively new to the industry (you simply can't afford to put down $300, $500, $1000 on every decent name as a reinvestment, in order to build your portfolio, unless you hold and sell a ton of names already)

I found that at major pre-release (godaddy, namejet) and dropcatching (dropcatch, namejet/snapnams) platforms, most (but certainly not all) names are bought up by a relatively small group of domainers and corporate buyers, who pick up nearly everything worth buying, particularly the better stuff at NJ pre-release and pending delete/dropped stuff. A bit more variety in the demographics of who is picking up names over at GD since prices start at $11-12, rather than $69-79, but as I pointed out, HD is already devouring 50% of those names, which drives prices for decent ones up a lot. Among the people who are paying hundreds, and often four figures even, for seemingly any decent name across all marketplaces, there appear to be very few people new to this industry. I matched bidding aliases from platforms that use it, with WHOIS info after they acquired names, and found that nearly all the people bidding aggressively on names every single day are mostly companies or people who have been doing this for 10-15+ years already, and most of them hold huge portfolios (many in the 5000-20000 range).

Interestingly, I hardly recognized the names of any of the individual domainers, aside from Jason Newby of domain renewal fame, so they appear to not maintain any kind of public industry image (unlike certain veterans, bloggers, brokers, or people who have started or work for domain companies), but I'm sure everyone would recognize their bidding aliases at different platforms. These domainers, along with various privately held marketplaces, probably make a killing with the names they bought cheaply a long time ago, and now re-invest some of their earnings into new names. Of course there are lots of buyers who don't fit this profile, but in my own research into this (I didn't outline it in a very rigorous way, as it was only something I did to get a better view of the reseller market, rather than to post on NP, but as I recall I looked at something like 400-500 past auctions I bid in, none of them at GD), it was a surprisingly small number of people and companies that picked up most of the names I lost out on. When you got multiple individuals, along with corporate buyers/marketplaces, all with deep-pockets, and all aggressively trying to buy names from the finite pool of pre-release and pending delete names that become available each day, prices are just going to keep rising. I don't the people behind all these price increases are going to realize anything new about domaining anytime soon that would make them start paying less for names. And with the CHIP market seeming pretty lethargic these days (I don't actively follow it, so I don't know exactly how dead or active it is these days), and few people seeming to have any faith in the ngtlds as a viable investment, a lot of the money that would have gone into those two markets must not be returning to "regular" .com names again, also increasing prices.

 

[Name Trader]

Really interesting thread @Arca. I didn't know this. Jeez! Where are HD not interfering with our lives? Of course. They have every right to, in a free market. I'm sure it makes GD really happy I think I start bidding on some domains with the intention to make them buy even more

 

[Grego85]

People should stop going through and putting early bids on domains, its stupid anyway. It brings more attention to the name for no reason. Stop rewarding those who have not done there homework!

 

[brandsly]

Thank you for the information.

I too like insiderr but I wouldn't bid more than $50. Do you think it is a viable business model to buy brandables for $350 and sell for $3,500 ? (They won't all sell, you know - only a small fraction). Brandbucket sells at lower prices and has a much lower sell-through rate, despite getting a ton of traffic.



Very well said. Infact you have LESS competition if you let it hit closeout !

No, I don't think it's a viable business model to buy and sell at 10x your cost, because we all know that sell through rates are most likely to be lower than 10% for most portfolios.
Some names I mark for 10x, some even for only 4x (like pronounceable 4 letter domains, where you have less investment risk, higher return in terms of amount, higher demand, and always have liquid value). But I also have a ton of names that I bought for $x-$xx, and sell / sold for mid $x,xxx. As long as you manage your portfolio/finance well, not blindly buy and sell, then you can still be a winner (i.e. your average cost per name across your portfolio divided by your average selling price (x100 for percentage) equal or less than your sell through rate).

Not all domains are equal in terms of investment/holding risk, sell through rate, or even value to you personally. I'm an entrepreneur before I am a domain investor. For some names, I really want them because I think they are useful for some of my development projects in the backlog. "Insiderr" is great for a publication site -- tech insider, fashion insider, health insider, etc....the usage is endless. Additionally, not every one can afford "insider .com", and I think it's better than insiderly (kind of a mouthful), and I like it the best out of iinsider, innsider, inssider, insiider, insideer (all taken, most MANY years ago), so I think it's a great choice for someone looking to name their company "insider".
I also really wanted this particular name because out of my portfolio of 3000+ names, I don't have a lot of names with "insider" in it, I thought it was a great addition. If someone comes to my site and search for it, now I have a great choice for them.

I don't want to go off topic, I know this is suppose to be about Hugedomains and the auction price in general. I just wanted to answer your questions and hope these thoughts are helpful to some people

 

[brandsly]

I’d say it’s within the realm of the discussion topic, as huge domains is just one of many entities and individuals driving the broader trend of price increases at GD (and other reseller venues too, where hd is not bidding). And the significant price increases in "reseller" prices, that appear to be following a trajectory that is out of touch with current aftermarket prices, was what I hoped to gain a better understanding of with this thread.

Do you find that buying brandable names at todays reseller prices at venues like GD is a viable business model? Is end-user demand in the current aftermarket able to cover these acquisition costs (within a reasonable expected amount of time)?

Great questions @Arca , I think it is still possible to be a profitable domain investor today by buying brandable names at auction platforms like GD, NJ, SN etc...I'm quite late to the game, so I've never had it the easier way that most seasoned domainers had, I was never able to find/buy a ton of great valuable domains at GREAT prices, I wasn't there when "brandables" weren't that big of a thing that you could hand reg a ton of great word+suffix or 2 worders.
I go through an insane amount of names everyday, I write my own scripts and algorithms to sort through names and try to spot hidden gems, use numerous metrics to find valuable names, watch a decent amount of names everyday, but pick up only a few at the end of the day because most go way overpriced. But I am still able to add a few hundred names a month to my portfolio. Some I get in bidding wars and win for mid-high $xxx, some I grab really fast at closeout, some I catch for reg fee with API, some I get by backordering, and some I win with 1 bid. I spend from $x to high $xx,xxx (3 L or popular names/dictionary words) per name, I'm definitely one of the more aggressive bidders I admit, but I do know when to stop, when a name is way overpriced. At the end of the day, my average cost per name across my portfolio is $xx without the 5 figure acquisitions, or $1xx include my 5 figure acquisitions. My average selling price is mid $x,xxx, the most valuable names are yet to be sold, my sell through rate is healthy (for last year at least anyway), so I'm still optimistic and loving this game.
Yes it's getting way too competitive, some prices even make you angry, but as long as you hold a clear head, know when to stop bidding, work hard, work smart, build a strategy that works for you, there's an ocean of names out there, you can still get great profitable names.

 

[Michael M]

I'm glad people are finally starting to open their eyes (slowly) to DropCatch & HugeDomains. Though I do believe it is most likely too late to lessen their growth and dominance.

You need to understand they are *using* you to feed them valuable metrics, and then they are cherry picking the gems for themselves. This is why I will not place a backorder on DropCatch. I don't want to feed their wallet or metrics. Both will ultimately be supplying your main competition with much needed assets and superior data/analytics.

The money can be used to buy more registrars (which they do constantly) which increases their reach and ability to catch more and more drops - therefore locking you into their platform if you want a drop. The data is used to decide what names HugeDomains will add to their portfolio by using domainer demand as one metric. So they will either gain data or money from you when you use their services, which will continue to be used to stack the deck against you moving forward.

Also they are getting the added advantage of raising reseller prices and draining the hobby domainer's bank account so they can no longer compete with HugeDomains in the future. They have the money in hand to weather a temporary (or even extended) rise in acquisition cost, while most domainers can only sustain a high acquisition cost for a very limited time.

Once the beast has grown to a certain point there will be no competing with them. This will only leave crumbs for us other domainers to fight against among ourselves - which will continue to lower in quantity and quality. This has already started, but finding the gems missed in the drop list will more and more be a thing of the past as time goes on.

If your assets have been drained by inflated auction costs - and you can not acquire any drops that will produce a decent return - That will most likely push you out of this market with a bad taste in your mouth. Now there is less competition for the big boys - which DC/HD is poising themselves to stand in the top of this group.

 

[Arca]

Thanks for that info. Have you noticed whether they have a preference for domains over a certain age?

Just wondering if they filter domains by age, keywords etc, as well as having been bid on.

They don't appear to be using any highly specific filters. Some domains they buy are aged, some were hand regged just a few years ago. Some have search volume, others don't. Some don't have any specific metrics that would make them stand out (to an automated system), and can only be discovered by a discerning domainer while browsing through thousands of names, yet since HD bid on those too, they probably take advantage of the ease of discovering domains by looking at the activity of other bidders. And since sorting by bids is so easy on GD auctions, why not just let domainers do the work for you, and jump in and outbid everyone in the last minute?

That said, they probably do use some kind of filters too, as they apparently pick up a lot of names when they go to close-outs. But if we look at the hundreds if not thousands of mostly low-quality names they register on the drop every single day through dropcatch, their filters are probably pretty loose.

Competition has been getting fierce lately. it's becoming tough to acquire decent names for decent prices at auction. Even the drop has gotten way more competitive I been building lists of domains to see if they would drop and everyone has been caught over the last week. At the current time we as domainers need to get crafty, lucky or overpay to get good names.

Yes, competition across both pre-release and pending delete platforms is increasing drastically, even when compared with just half a year ago. The open nature of platforms like GoDaddy and DropCatch allow a small group of deep-pocketed companies and domainers to buy up most of the available names every day, often at prices that are not sustainable if you are running a smaller operation (e.g. new to the industry, part-time domainer, etc.). Simply getting a lot harder for all smaller domainers to grab stuff under the radar, since the platforms are making it hard by design, and since certain companies and domainers are willing to bid aggressively on anything half-decent.

It just seems like such a crazy business strategy. I don't see how it could be profitable, or sustainable. They have to sell roughly 20% of their inventory to cover their acquisition costs. My guess is they sell around 2%, like everyone else (though maybe not even that with all those crappy domains - who would ever spend $2700 for fivesecondrule.com?!)

The only way it really makes any sense is as a very long term strategy. It's a big number but there is a finite number of aftermarket domains (ones that have any conceivable enduser market). Perhaps they plan to buy them all up (or as many as become available through GD auctions). After that, they just have holding costs, which are manageable on a ~2% sell through.

Another thought is that it is in fact a strategy to put the little domainers - ie, us - out of business.

Buying a name for $500 and selling it for $2000, like what seems to be the case with many of these HD purchases at GD, would not be sustainable for anyone doing only that. As you point out, you need a sell through of 20% just to break even. But HD is not covering the cost of these names with sales of other GD purchases. They are covering their costs with names they bought for $7.XX through dropcatch, and sell for $1-3XXX at HugeDomains, so they can afford to pursue this strategy with lower margins and over a much longer time period than what is feasible for any small-time domainer.

 

[Name Trader]

I know Estibot isn't everyone's cup of tea. But here is what they thought about those domains Just for fun.

skillsharing.com $560
ledmaster.com $1K
cyberstrategies.com $360
crablab.com $330
dailyportal.com $240
fivesecondrule.com $790
deltacloud.com $510
itace.com $930
sunnykitchen.com $1.1K
baristaschool.com $1.6K
cakemart.com $270
visuala.com $330
massanalytics.com $120
edusport.com $2.5K
acneguru.com $20
stylefolio.com $200

 

[theSun]

I really like their style. Go huge or go home. Wealth always tends to favor the bold.

 

[BrandingModel.com]

I've noticed HD buying up.

On the other hand Namepros Auctions has some good opportunities that HD doesn't touch at least for the moment

 

[Arca]

Update: HugeDomains continue to bid aggressively on names while they are below $600 (a lot of names I have been bidding on closed above $600 too, but HD never persisted with their aggressive bidding style subsequent to the auction price passing their ceiling).

Below is a list of domains recently won by HugeDomains at GD auctions. I have included the number of bidders, and when HD entered the auction. They are always the last or one of the last bidders to enter the auction. None of these names have been listed on HugeDomains.com yet, so I have not been able to include their list prices for these.

Domain: firespace.com
Sold for: $515
Note: 13 bidders. HugeDomains were bidder #13 (last bidder to enter the auction)

Domain: multistat.com
Sold for: $78
Note: 5 bidders. HugeDomains were bidder #5 (last bidder to enter the auction)

Domain: freshspirit.com
Sold for: $206
Note: 6 bidders. HugeDomains were bidder #6 (last bidder to enter the auction)

Domain: webosphere.com
Sold for: $370
Note: 7 bidders. HugeDomains were bidder #6 (second last bidder to enter the auction)

Domain: blazingdeals.com
Sold for: $62
Note: 3 bidders. HugeDomains were bidder #3 (last bidder to enter the auction)

Domain: pushingthelimits.com
Sold for: $330
Note: 10 bidders. HugeDomains were bidder #9 (second last bidder to enter the auction).

Domain: sdmarketing.com
Sold for: $525
Note: 11 bidders. HugeDomains were bidder #11 (last bidder to enter the auction)

Domain: hairwellness.com
Sold for: $306
Note: 9 bidders. HugeDomains were bidder # 9 (last bidder to enter the auction)

Domain: bitbunker.com
Sold for: $103
Note: 4 bidders. HugeDomains were bidder #4 (last bidder to enter the auction)

Domain: leadthefuture.com
Sold for: $478
Note: 5 bidders. HugeDomains were bidder #3 (third bidder to enter the auction)

Domain: photopick.com
Sold for: $293
Note: 4 Bidders. HugeDomains were bidder #4 (last bidder to enter the auction)

 

[Arca]

I encourage people to keep paying up, I know the struggle, I am getting $100, $150 offers for 10-20 year old 2 keyword .com solid domains, all day long. Respond back with low - mid 4 figure counters, they run away for the most part.

It is a struggle, and time consuming, a dollar today, is worth more than a dollar 3 years down the road. You really have to work to get that money back. I almost think people will have no choice but to jump to gtld's at these prices. We see what buydomains is churning at, then we see what domainers are paying. It is unbalanced. If you have a mix of newbiers with dnjournal reports thinking just because candy.com sold for $3M, they can get $3K for yummycandy.com or something, it just doesn't happen.

This is a huge issue with domaining, from time to time, fairytale sales get advertised, all the sudden the whole keyword gets valuated on that one off sale, for the most part it will only ever be a one off sale.

It takes a lot of discipline to take a step back from the aftermarket, but now might be a good time. I monitor when I get outbid on good names, and see if those names sold thru, majority are still sitting in the accounts that outbid me, and probably will for a while.

Yes, and that’s why these price increases don’t make sense. However, since the people paying up supposedly know the struggle already (they’ve been doing this for years already), and they still keep paying up, then I don’t see why they would suddenly stop. If you have been domaining for years and you own thousands of names, and you already have a model that works for you, then you won’t suddenly discover that what you are doing doesn’t work, and stop spending so much on names. So buying names for these kinds of prices apparently is working for some domainers, because there are enough domainers and companies doing it to drive prices towards end-user pricing across all marketplaces.

One company that appears to be more aware of the “struggle” of selling names is BuyDomains. Here are some numbers compiled from NameBio.com two months ago (numbers have slightly increased since then):

BuyDomains.com sales according to namebio:

4,925 sales in total.

4,349 sales under $3000.
576 sales over $3000.
233 sales over $4000.

3,784 sales in the $1000-$2500 range.
1,113 sales in the $2500-3500 range.

When your business is based on selling names in the sub $2500 range, your business model is no longer feasible in this market, in terms of acquisitions. And the percentage of names I see bought by BuyDomains.com is continuously decreasing. They are hardly able to buy anything anymore. They either have to change their business model (significant price increases), or they will end up entirely priced out of the market with the way prices are going through the roof. And anyone who follows the sales reports on namebio can see that some of the names that sold at BuyDomains in the past five years, and are now let to expire by the buyers, sometimes end up selling for prices close to what they previously sold for at BuyDomains, but to domainers this time around, rather than end-users.

 

[Name Trader]

I'm still picking up domains on the drop and at GoDaddy for approx twice regfee. As a whole, not as good as good as those being mentioned here, but certainly saleable at $2k, from looking at these prices Of course some of them are as crap as what we see here. Others are at least as good as we see here. Some are even better than the crap we see here. IMHO

There is a niche for everything. My niche is going to be selling reasonable quality domains to those people who will be refusing to pay the prices these domains need to be sold at

I don't think I will be getting out of the market. I would say I'm maintaining or even increasing my inventory

 

[wwwweb]

It is obvious from people like brandsly posting that people with gigantic budgets are changing the aftermarket for now in addition to the huge domains of the world. Will the market correct in due course and slow down, I guess time will tell. I am bearish on the market for most of the names and prices we are now seeing, I don't think many people realise just how low sales % are and what sort of prices end users are paying on the whole.

I do agree that solid one word .coms do have real potential to end users but a lot of these other names are simply going to lose buyers money holding these, no question whatsoever about that in my mind.

End users don't care enough about domains to pay up above these price levels especially in a world of new gtld's where you can get a good brand name which spans the right and left of the dot well. Before people jump down my throat I am an end user and pay up for great domains for serious Company projects but I can assure you these aftermarket prices are 90+% ludicrous.

There is one thing people fail to realize, domain sales reports tell very little. The people who have the majority of the information are people who own large diversified portfolios.

So when the 4L.com so called Chips hit $2,500 letters like NFBQ.com were liquid cash, all these people were saying omg don't sell, it is going to $5K, but these portfolio owners who had held them for 10 years knew that they got no traffic, they got no offers, and they had no end user leads, and I got 50 of these things lying around, now is the time. Stay quiet, put them out there, and let them fight over them, so be it.

Then you have all these people that walk in the door telling you what's worth what, because their uncle knows an elephant who is holding strong, and buying more.

If you ask any domainer what the most important thing about domaining is, it's not getting all the best domains, it's not 3L.com, it is capital management. Making sure you have enough money to pay your renewals, restock inventory, purchase more bulk inventory, and then try to make a profit in the face of it.

So sure you can blow your wad in a single day at godaddy, namejet, etc... takes all but a few clicks, but once you have the $5k+ domains sitting there, do you think the doorbell starts ringing with big companies, startups, end users trying to get at you. By no means, you will get startups emailing you saying we are bootstrapping, we have a $100, budget, you come back with 5 figures, they call you crazy, you ignore. This will go on, and on for years. This was ok, prior to GTLD's as there was no other choice. Soon there will be over $1000 choices, which may not affect the best of breed, and specific inventory, but it will affect lower, and mid level inventory.

Sure I could be called Colored Labs, and want to own Colored, but I would rather pay $500- $1000 for ColoredLabs.com, or Colored.io, Colored.co, etc.. than pay someone $25K for Colored.com, unless I am viable which takes a long time. If I am really boostrapping I could go with Colored.Link, Colored.Top Colored.Whatever some of which cost all of 50 cents. It takes a really special buyer, and a lot of back, and forth to get such deals done.

I can assure you some of the bigger players in the industry get generic domain lists sent to them all the time with great domains on them worth 5-6 figures, there is a reason they will only offer pennies on the dollar to people in distress sale situations. You can't afford to tie up all your money in a few domains.

Sure you get lucky, as there are many lucky sales that happen where people get out of market type money for certain domains, it happens from time to time, not always, but it does occur.

For every sale on those lists, I can compare against my own portfolio, and see what similar domains I own, and the traffic, and end user inquiries. That is why I know, it is not sustainable, the names I paid $12-500 for, are selling domain for $1-$5K, and most are still sitting unsold, as it takes time to churn inventory, at a decent price.

Godaddy has bought lots of portfolios with many of the keyword domains costing sub $500, they are competing right next to you, within the same platforms selling these great domains for simply a margin %, they have better names, better prices, and better marketing, how do you compete. Do you go to their platform and keep bidding against each other, giving them more money to go buy more domains, and compete even stronger against you? I don't have the answer to that, but the business has changed, as the people who sold the picks, and shovels, now want to mine the gold, and you are simply their employee if you are paying those kind of prices at their exchanges.

 

[krx]

It just seems like such a crazy business strategy. I don't see how it could be profitable, or sustainable. They have to sell roughly 20% of their inventory to cover their acquisition costs. My guess is they sell around 2%, like everyone else (though maybe not even that with all those crappy domains - who would ever spend $2700 for fivesecondrule.com?!)

The only way it really makes any sense is as a very long term strategy. It's a big number but there is a finite number of aftermarket domains (ones that have any conceivable enduser market). Perhaps they plan to buy them all up (or as many as become available through GD auctions). After that, they just have holding costs, which are manageable on a ~2% sell through.

Another thought is that it is in fact a strategy to put the little domainers - ie, us - out of business.

 

[Arca]

People should stop going through and putting early bids on domains, its stupid anyway. It brings more attention to the name for no reason. Stop rewarding those who have not done there homework!

Absolutely. Price increases are also a result of numerous domainers going about their business in self-sabotaging ways. Due to the open nature of most platforms these days, you can buy a ton of names every day without having to do any research yourself, because these platforms are designed to facilitate piggybacking on other domainers research. However, people are not doing anything to prevent it (even though it is preventable a lot of the time).

At GoDaddy, a ton of people (or maybe just one guy, we'll never know until they implement bidding aliases) place a $12 bid 3 days, or even 6 days ahead of the auction ending time. So instead of putting the name on their watchlist, they use bidding as a way of putting the name on their watchlist, so apparently they don't understand that bidding is alerting everyone to the fact that they intend to buy the name. Names with bids are highlighted at expireddomains.net and they also tend to show up in the list of domainshane and others, so they will get a ton of eyeballs, and subsequently bidders, and whoever is buying the name is almost guaranteed to overpay. Bidding in order to put names on your watchlist, instead of just using the built-in watchlist function and starting to bid later, is like asking to lose or overpay for a name. Yet a ton of domainers do it. It is probably going to make less of a difference now that HD is jumping in on everything with bids though. I wonder why not more people take their chances and try to snipe names as close-out bargains instead, because the chances of winning a name this way is likely higher than being able to win a GD bidding war these days.

Also: GoDaddy Auctions smartphone app works fine (at least the android version). If you can't be on your computer and bid, there is no need to place a proxy bid in advance, just bid later on your smartphone wherever your are.

Similarly, on Namejet, if everyone could wait until the last minute to place a backorder for most pre-release names at NameJet, there would be 50-95% less bidders in auctions. Most people there are clearly just piggybacking of other people research/orders, but still some people place bids days and even weeks in advance, alerting everyone else to the name, making sure there are 20-80 other bidders eventually. Due to the way the NameJet system works, if everyone just waited until the last minute to order pre-release names, there would be far less bidders in all the private auctions for these names, and prices would be far lower, because many of the deep-pocket bidders who are usually in these auctions would simply not be participating in many of them.

 

[brandsly]

It is obvious from people like brandsly posting that people with gigantic budgets are changing the aftermarket for now in addition to the huge domains of the world. Will the market correct in due course and slow down, I guess time will tell. I am bearish on the market for most of the names and prices we are now seeing, I don't think many people realise just how low sales % are and what sort of prices end users are paying on the whole.

I do agree that solid one word .coms do have real potential to end users but a lot of these other names are simply going to lose buyers money holding these, no question whatsoever about that in my mind.

End users don't care enough about domains to pay up above these price levels (5 figures based on a lot of the buying prices to have a chance on ROI) especially in a world of new gtld's where you can get a good brand name which spans the right and left of the dot well.

Before people jump down my throat I am an end user and pay up for great domains for serious Company projects but I can assure you these aftermarket prices are 90+% ludicrous.

I can assure you that if I didn't know what this business really is like or how to have a sustainable business, I would have won a lot more names everyday. I totally gave up on a ton of names I liked everyday because the prices went crazy, and I think mostly because of people that don't have a clue what they are doing, and I know when to stop, although I do get carried away at times (I think most people do). But I was a businessman before I was a domainer, I started my first business out of my college dorm at 17, I made my first million at 21. I understand what a business takes to succeed.

If you read back my posts a few posts back (before this whole "colored" discussion), I highly advocated managing your finance well and know your sell through rate. Yes, I own a few 5 figure names, and honestly, they are almost like "collectibles" for me, I love the names, I might name one of my companies by those names one day, or I might even pass them down to my next generation (if I have any that is lol), or maybe I'll take them out and auction off when the market is right, no dreaming here, and all of these acquisitions I've had offers/inquiries coming in on weekly basis months after winning the names, some saw my buying price on namebio, and offered a few thousands more asking me to flip, but I turned down.
But the majority of my portfolio I have acquired by various channels, there are names that cost $x, names that cost $x,xxx, but my average cost per name have always stayed in $xx-$1xx across my portfolio.

I started with mostly handreg, when I had enough of those, my first low 4 figure sale came in. Then I started to acquire better aged domains from auctions, when I won enough of those, my first high 4 figure sale came in, and covered all of the names I won in that price range, then I started buying pronounceable 3-4 figure 4L .coms, then my first 5 figure sale came in when I had less than 20 of those. Finally I started to pay high 3 fig - low 4 figs for brandables, and my first 5 figure sale for normal brandable names came in. I kept on buying each month, and I kept on selling each month, and the end user sales each month are what keep me staying in this game, but not one day do I take my sales for granted, and not one day do I just blindly bid on any name out of satisfactory of winning.

 

[slimjim270]

@dordomai - I agree. Masking profits via "implied value" assets (domains) that can be handled as an expense has merit, especially as a C-Corp.

This may be an idea from left field, but...

- Does HD carry their domains on their books as "assets"?
- Or do they carry them as "inventory"?
- Or do they handle them as "operating expenses"?

The reason I ask, is an "asset" can be depreciated over 3 years for tax purposes.
An "inventory" item has a shelf-life and can be written off as "obsolete" (spoiled goods).
Whereas, an "operating expense" is a one time expense at the time of payment. Renewals being an "operating expense".

There is a huge tax implication based on your accounting approach... HD might be using their domain "inventory" as a tax shelter, where they are "hiding" (masking) their operating profits from their other operating units via domain "inventory" purchases whose value is (on the books) zero, but in actuality carries a much larger value while they pay the paltry renewal fees as "operating expenses" each year.

Yes, out in left field... but hey... I know a couple friends of mine who buy real-estate and hold it in a real-estate trust and then run their operating businesses as separate entities "renting" from their real-estate holdings... meanwhile... their real-estate assets have appreciated significantly while they pay off the mortgage and use depreciation on the real-estate as a tax shelter.

On a corporate level... not that far out in left field...

-Jim

 

[garptrader]

Interesting find - many had commented about the high percentage of low-quality domains in HD's inventory. Well, I guess one way to go after better domains is to pursue those which other people are bidding on. I am a little surprised however they would bid that aggressively on some of the names above.

 

[urlurl]

Look at the positive side, they are buying up inventory making good domains harder to find in the market for end-users. That means (assuming you already have good names) you would be able to make more money per name.

 

[webquest]

They are setting themselves up to get bought out.