Mike Mann / HugeDomains / BuyDomains Business Models

[Federer]

Although Mike Mann / HugeDomains / BuyDomains have a large number of premium-quality domains, the vast majority of their portfolios are comprised of medium/mediocre quality .COM domains - the vast majority of which they seem to have acquired (and continue to acquire) for "low cost".

Based on average sell-through rate (1%-2%), it seems like a very interesting and profitable model for those holding large quantities of .COM brand type domains.

For every 1000 domains, there could be 15 (end user) sales during the course of any given year. Many of their domains seem to be priced in the $2800-$4800 range. Assuming 15 sales at $3.8K, and deducting the initial cost (assuming registration fee for the majority) would leave a profit of $50,000 for every 1000 domains.
The renewal costs would then be deducted, setting up an ideal scenario of more profits/end user sales for the year to come.

Even a 1.5% sell-through rate (based on the fact the domains are have some kind of brand appeal*) covers initial cost, renewals and leaves plenty of profits on the table.

I am certain the landing pages (especially HugeDomains.com landers) also contribute to a consistent ratio of solid sales. They offer monthly payments also that I know help them close some of the sales.

Examples of some of their (HugeDomains/BuyDomains) recent sales (most in the $1.5K-$5K range), include average domains such as:

ILoveStartup.com
ILoveSz.com
StainedGlassShop.com
Uniquid.com
LesterToledo.com
decenthuman.com
niceyard.com
locksbox.com
TheBBG.com
TalentLivesHere.com
Sndcc.com
OurLoveableLabs.com
DareToAchieve.com
PakMachinery.com

What are your opinions on this type of business model? (acquiring hundreds/thousands of average .COM brands at low cost)

 

[SBS66]

...
What are your opinions on this type of business model? (acquiring hundreds/thousands of average .COM brands at low cost)

Isn't that what most of us do? Except we usually don't have the landing pages and whatever else they do to market their sites.

What really matters is whether it's working for them.

 

[Asfas1000]

The standard 1-3% sell through rate applies for domains priced reasonably. Their domains are overpriced. I don't believe they sell as much as 1% of their inventory, but I may be wrong.

Their landing pages and financing plans certainly improve sales though.

 

[Federer]

Based on the DailyChanges.com data re: ownership records over the past few weeks or so (on many of their own inventory), compared to the numbers they are registering daily - it seems that 1.5%-2% is actually quite accurate. $1800-$2800 is actually quite reasonable for end users. For most C.C. BIN purchases, the decision is fast and does not require additional green lights.

 

[garptrader]

Sometimes I have looked through their portfolio for certain keywords. Personally I believe they could drop 95% of their inventory and it would have only a minor impact on sales. Most of their inventory is junk as I gather they are not acquiring aftermarket domains for resale. But yes they do have some gems as their algorithm does focus on aged expiring domains and they have the resources to beat other backorder services for such competitive drops. Personally I have seen a decline in the willingness of buyers to pay for aftermarket domains i.e. number of sales over $500 or $750 has declined from five years ago. Buyers have more choices and domainers have traditionally been a healthy portion of sales. Domainers have overextended themselves on new TLDs so they have fewer resources to buy .Com and .Net aftermarket domains. If buyers are more reluctant to open their wallets for aftermarket domains I would question their willingness to pay mid-$XXXX prices for so-so domains even in .COM. Does HD ever drop domains or do they just keep renewing all those crap domains they should have never acquired in the first place?

 

[Kate]

I think it works for them because:

• they have some quality domains, it's not 100% crap
• they acquire inventory for low prices (dropcatching) whereas domainers often have to turn to expired auctions or the aftermarket
  
• they operate on a large scale (critical mass)

To sum up, what you want is: buy low, sell high, have low operating costs and operate on an industrial scale = $$$$$

 

[biggie]

standing on the outside, trying to look in

but you can't see details of capital, let alone how they manage expenses

the only thing that's relevant about their model.....

is if they caught a name i dropped and sold it or names they drop and i catch and sell.

and that model has been the same for years



imo....

 

[Federer]

I agree with Kate.
A certain portion of the domains they acquire daily are 2-3 keyword brand-types that have been registered for a number of years - and they are selling these types daily as well. It is a numbers game, even when it comes to mediocre .COM (and even .NET/.ORG in some cases) brands.
Their landing pages are 1st class (by far the best in the industry) and I am sure that is a contributing factor to their daily close rates.

Some of their registrations yesterday include:

AmericanMansions.com
AlchemyWatches.com
CastineEnergy.com
ChemistryBetweenUs.com
DiscoverBeyond.com
DivineTalents.com
EICCorporation.com
EnchantedKittens.com
GlobalMakeup.com

There are not amazing brands, but I can guarantee that a few in every 100 will find a buyer in the prices on the above 9 landing "BIN" pages.

 

[Arca]

While HugeDomains can register names cheaply on the drop, they can do so because they operate 1100+ registrars for drop catching (which costs a lot of money, so they don’t “just” pay the low base cost per registration).

How do you plan to acquire thousands of “ok” domain names that could work as brands?

 

[garptrader]

I still find it hard to believe anyone paid $2500-$5000 for domains like these...

ILoveStartup.com
ILoveSz.com
Uniquid.com
LesterToledo.com
decenthuman.com
niceyard.com
locksbox.com
TheBBG.com
TalentLivesHere.com
Sndcc.com
OurLoveableLabs.com
DareToAchieve.com
PakMachinery.com

These are the sort of the names you see on a deleting domains list and ignore. They are not mediocre domains. They are reg fee domains. As I mentioned previously, I see a disturbing trend of reluctance among buyers to pay for aftermarket domains - low $XXX sales have always been more common but seem to be the rule now while higher-dollar sales are much rarer than they used to be several years ago.

 

[Federer]

They are a random selection of domains that were all purchased by companies over the past few months. Companies are paying $1K-$5K every single day for short/keyword/invented brands daily - even for names that most of us would not invest registration fee.
niceyard.com ($2,500) & locksbox.com ($1,850) even made it to NameBio.com.

 

[Recons.Com]

The point is that even if the cost is $20-30 per name average, it is still working model, doesn't have to be reg fee cost.

Also, I agree that their portfolio could use some optimization. What I would do, if I were them, I would rank all names in the percentiles, track their offers, visits, sales for a year and if I notice that the ones I ranked as bottom 20-30 percentile are much worse than the rest and don't pay for the cost of renewals and administration, I'd drop them.

 

[Kingslayer]

I've dealt with HugeDomains before.

I with think them, they don't care about the potential of a domain name - Crap/good or potential gem, all are priced $1700-$2700.

They do have a lot of junk, but I bought something off them a couple months ago which i think has potential to do really well in the future - How fast and professional they was i can't fault the company tbh, soon as i paid, the domain was uploaded to a registrar and i was given a password, all was completed within 6 hours.

None of this waiting around for 10 to 14 days like you do when you buy from places like Afternic/Sedo.

 

[Arca]

The point is that even if the cost is $20-30 per name average, it is still working model, doesn't have to be reg fee cost.

Also, I agree that their portfolio could use some optimization. What I would do, if I were them, I would rank all names in the percentiles, track their offers, visits, sales for a year and if I notice that the ones I ranked as bottom 20-30 percentile are much worse than the rest and don't pay for the cost of renewals and administration, I'd drop them.

They do drop a lot of names. Must be automatized, as some of the names they drop are pretty good, while some names they keep renewing make no sense.

 

[Recons.Com]

They do drop a lot of names. Must be automatized, as some of the names they drop are pretty good, while some names they keep renewing make no sense.

Probably automated. The whole business model is automated, looks like. Although I am sure acquisition stage does require lots of human touch still.

 

[Arca]

Probably automated. The whole business model is automated, looks like. Although I am sure acquisition stage does require lots of human touch still.

If they had someone look though their daily to be caught list, removing all the names that do not make any sense or do not have any apparent value, they would go after far less names than they currently do. But when you look at what they sell, a lot of it is names that do not make any sense or do not have any apparent value. So this “lack” of optimization seems to be a central part of their business model. Just hold a massive amount of names, and a certain % will sell for $XXXX, even though a large part of their portfolio is low quality names.

Also, since they let domainers place backorders via DropCatch, they allow all the best dropping domains they catch to be picked up by resellers. What they're left with for their HugeDomains inventory is mostly just the domains that domainers didn’t see enough value in to backorder.

 

[Recons.Com]

If they had someone look though their daily to be caught list, removing all the names that do not make any sense or do not have any apparent value, they would go after far less names than they currently do. But when you look at what they sell, a lot of it is names that do not make any sense or do not have any apparent value. So this “lack” of optimization seems to be a central part of their business model. Just hold a massive amount of names, and a certain % will sell.

Also, since they let domainers place backorders via DropCatch, they allow all the best dropping domains they catch to be picked up by resellers. What they're left with for their HugeDomains inventory is mostly just the domains that domainers didn’t see enough value in to backorder.

I won't argue with that. The point still is that some names probably have sell through of 2%, while others have 0.2% and they all average 1%. Why not go through the inventory and dump the 0.2%-0.5% region altogether?

 

[Arca]

I won't argue with that. The point still is that some names probably have sell through of 2%, while others have 0.2% and they all average 1%. Why not go through the inventory and dump the 0.2%-0.5% region altogether?

Looking at the quality of some of the names they own, that might be a really big dump... Also, I've registered and sold names dropped by HD. As their business model shows, what eventually sells is unpredictable.

 

[Recons.Com]

Some of the pricing is weird too. HugeDomains values rad9.com, raw7.com, bac2.com at $19,250 each. Those are the names you can hand register even now and are priced higher than aimy.com ($18,788) or mexy.com ($13,288).

 

[Federer]

I am sure they are very successfull.
They own 10s of thousands of 2-3 business-keyword-brands that I can easily see selling for $1K-$3K to businesses.
With the clean, crisp and clear landers they have, they probably convert a larger % of leads than BuyDomains/Mike Mann.

 

[hookbox]

If you put quality thrift store clothing in a flea market environment then you will get flea market prices but put that same inventory in a boutique store in the right zip code and you get gold prices. Having a very professional appealing business website is the key to high volume domain sales and any sales for that matter. If the storefront looks like it should charge $3,000 for a name then it will get $3,000 for the name.

 

[Federer]

that's why landing pages have their importance. HugeDomains.com's are crisp, high-end.

 

[SheikhOvais]

I agree with @hookbox. But I also remember a fellow domainer who once told me that if the domain I have is exceptionally hot, then it will get sold no matter what (no sales page, no website, no professionalism). But still, I am a firm believer of doing business professionally, and having a nice business website for selling domains for a good price is a must and it helps you to represent yourself as a serious business owner.

PS: I believe that the above-mentioned domain marketplaces/domain investors don't publish their annual sales report 'for a reason'. Or do they?

 

[hookbox]

I agree with @hookbox. But I also remember a fellow domainer who once told me that if the domain I have is exceptionally hot, then it will get sold no matter what (no sales page, no website, no professionalism). But still, I am a firm believer of doing business professionally, and having a nice business website for selling domains for a good price is a must and it helps you to represent yourself as a serious business owner.

PS: I believe that the above-mentioned domain marketplaces/domain investors don't publish their annual sales report 'for a reason'. Or do they?

Great domains are sought out by multiple buyers all the time but HugeDomains doesn't have great domains this is why a great looking website matters. They have a mass quantity of marginal quality names mostly priced in the low to mid $X,XXX range. The key to selling in this price range is hooking the consumer with a high quality professional website. HugeDomains has around 1 million domains. 1 million domains at a 2% sell through rate is selling 20,000 names a year at an average of probably $1,800 which is 36 million in sales with 8 million in reg fees. 28 million minus a few million in expenses and they are obviously kicking ass. Even if the sell through rate is much less they are still knocking it out of the park.

 

[En]

Many comments on here http://www.scottphillips.com/2010/11/buying-a-domain-from-hugedomains-com/