new gtlds .SHOP Worth $42 million? Biggest mistake in Domains

[betthelot]

GMO Registry Inc with a big presence in Japan and is Registry for .tokyo .osaka, with their focus on Japanese cities and teaming up with brands such as Hitachi and Canon to apply for .brands; made a major play and won .shop for $42million. This is against some of the deepest pockets on the planet Google and Amazon. Even Google and Amazon with their unlimited supply of dollars and importantly their massive reach to sell and monetize .shop, bulked at the price.
We have all brought domains that we have regretted, I brought a load of IDNs in .cn, nightmare with the rules changing in China soon after, that meant they became worthless. But this was about 30,000USD and importantly made just a small dent in the figures that year.
However GMO Registry Inc makes about $24million per year, they are gambling 2 years of profit on this.
We have all been there, fell in love with a domain concept, spent a ton of money, only to find out you are the only one that appreciates them.
Love is blind and this was the biggest mistake in 'domain' history.

 

[wot]

They only need to price .shop at 1 million a pop and then just sell 43 of them to be in profit, I am sure the other registries will rally round at the next auction. :D

BTW, I think I am one of the few who actually made money on IDN.cn/China.

 

[cocaseco]

Their success will depend on how they release them. This is a case where I would be very strict about who could buy them. If they are only available to legitimate retailers of a defined size, the gTLD could be instantly recognized and trusted by consumers. Sites like amazon.shop or apple.shop would be very much in demand, and they could easily make money. If they instead open it up to anyone, I don't know that they will.

 

[betthelot]

[BTW, I think I am one of the few who actually made money on IDN.cn/China. [/QUOTE]

HaHa Probably made money from me. I was buying in the aftermarket. Didn't get one enquiry as dead as .ca

 

[Grego85]

.shop is probably the single best new gtld either available now or in the future. I'm a bit nervous now that the reg prices will be too high to get in on the action.

 

[betthelot]

Their success will depend on how they release them. This is a case where I would be very strict about who could buy them. If they are only available to legitimate retailers of a defined size, the gTLD could be instantly recognized and trusted by consumers. Sites like amazon.shop or apple.shop would be very much in demand, and they could easily make money. If they instead open it up to anyone, I don't know that they will.

Amazon and Google will now go for shop.amazon shop.google or even apply for .store or another gTLD. Im sure Amazon and Google would have given these .shop domains free to those businesses that sell their product services on their platform.
Big problem with these .shop domains, they are for small start ups who wants shoe.shop but any company of any size will know they will be losing traffic and email communication to shoeshop.com, so they would never go for shoe.shop unless the have the matching .com. I just cant see enough businesses paying a big enough premium to justify $10million let alone $42million

 

[cocaseco]

Sounds like you should be running Amazon or Google with that much insight. How have they been able to be successful so far is such luck.

 

[betthelot]

Just I can understand a sound business model for Google and Amazon buying .shop - Just cant with GMO Registry at $42mil

 

[mad409]

Just I can understand a sound business model for Google and Amazon buying .shop - Just cant with GMO Registry at $42mil

I agree seems like a lot for .shop, will take some time to make their ROI.

 

[cocaseco]

Just I can understand a sound business model for Google and Amazon buying .shop - Just cant with GMO Registry at $42mil

That's why they have $42M to spend, they do understand.

 

[itsmeyall]

I tinks it can be big in uk where thats the more common term for stores
I could see a lot of retailers wanting that instead of .co.uk

 

[betthelot]

That's why they have $42M to spend, they do understand.

Just because they got $42million doesn't mean they cant make a mistake - Time Warner and AOL springs to mind.

 

[Grego85]

I have no doubt that .shop will have near half a million registrations in the first year. They will have no problem making that money back within the first 3 or 4 years.

 

[betthelot]

Only if they give them away like .xyz - no prediction has come true for the new gTLD. All thought that there was a queue of people just waiting to register them. Even Frank Shilling the evangelist of new gTLD admitted that the public reaction was a lot less enthusiastic then they believed it would be. Colin of .club predicted 1,000,000 in first year and they are considered a success and were way under that.
To get their money back in the first 3 - 4 years at half million sales they would need to retail at $30 each. Not going to happen. Be lucky to get 100,000 regged at that price and so will be 20 years before they get a return and I even doubt that number of registrations at $30 each. Big mistake

 

[Mervyn]

new gTLDs will always be boom to bust. I think the only one that ever did moderately well was .MOBI but that was butchered by responsive website scripts. .CLUB had some interesting buys last year but it's gonna have a tough 2016. .CARS and .AUTO will do the same - have a great 2016 but fall flat in 2017 (why Apple even bought those auto domains is beyond me considering the year they're going to have with flagging sales in their core business)

So .SHOP? Which major player would ever commit to that one? I don't see Walmart.shop? Woolworths.shop? Carrefour.shop? Not likely and like @betthelot says the maths at a "mom and pop" level ($30 reg) won't work either.

GMO Registry is just taking a stupid gamble and ironically strengthening .COM because when .SHOP fails all that money will come back and get a stern "I told you so"

 

[S-B]

new gTLDs will always be boom to bust. I think the only one that ever did moderately well was .MOBI but that was butchered by responsive website scripts. .CLUB had some interesting buys last year but it's gonna have a tough 2016. .CARS and .AUTO will do the same - have a great 2016 but fall flat in 2017 (why Apple even bought those auto domains is beyond me considering the year they're going to have with flagging sales in their core business)

So .SHOP? Which major player would ever commit to that one? I don't see Walmart.shop? Woolworths.shop? Carrefour.shop? Not likely and like @betthelot says the maths at a "mom and pop" level ($30 reg) won't work either.

GMO Registry is just taking a stupid gamble and ironically strengthening .COM because when .SHOP fails all that money will come back and get a stern "I told you so"

.mobi isn't a nGTLD

 

[doubleU]

I have no doubt that .shop will have near half a million registrations in the first year. They will have no problem making that money back within the first 3 or 4 years.

No chance of that ... this is a long term investment, it will take 10-20 years to recuperate money invested.

 

[itsmeyall]

Maybe its some kind of future tax strategy

 

[Kate]

AFAIK .shop is not even a delegated string yet. So it doesn't have any track record, unlike those that were released a year ago. They all underperformed but that is another story.
I too would like to know why they think .shop is worth that much.
The amount of money flowing in this industry is impressive. It's just that too much of it is being wasted.

 

[brindle123]

Didn't you guys hear..google is going to block all .shop domains and websites from the google search engine.
Just kiddin'

I don't see the point of well established companies like amazon and google needing these domains. They have the .com and all these other tlds will just confuse their customers.
How is the general public going to remember which extension to use for Google or amazon?
They have sites that everyone on earth knows and uses already.

shop.google and shop.amazon sounds way better than google.shop

 

[Domain Lead Finder]

shop.google and shop.amazon sounds way better than google.shop

Exactly. In their place I would pass on .shop as well.

 

[Fancy.domains]

.SHOP is a great extension, but noone knows how, when, or even if, "average Joe" will accept it in ten years from now. It is a game. Either they will win or loose.

But I agree, $42M is a heck lot of money!

 

[-EM-]

The will get the money back in a few years if they have a good strategy. Dot shop is a commercial tld, it should have lots of regs

 

[Fancy.domains]

The will get the money back in a few years if they have a good strategy. Dot shop is a commercial tld, it should have lots of regs

I think the smartest strategy would be a reasonable pricing. 8 - 15 dollars per each (look at .XYZ and .CLUB). And not thousands of crazy-priced premiums.

Many new gTLDs are "failing" because of non-premiums reg / renewal fees of $50+. Personally, I think most small shops will never spend that much a year on their domain. Then they will go for the best .COM or ccTLD option.

 

[Kate]

Just to have an idea, look how many of the new extensions have crossed the 100K registrations threshold. A minority. In the case of .xyz this was achieved with lots of $1 regs of freebies. Other TLDs have inflated their counts artificially: reserved names or 'bought' by themselves (or a subsidiary).

Here is a basic projection of revenue:

unit price    regs    sales
$1.00     100,000    $100,000.00
$8.00     100,000    $800,000.00
$15.00    100,000    $1,500,000.00
$25.00    100,000    $2,500,000.00
$40.00    100,000    $4,000,000.00
$50.00    100,000    $5,000,000.00
      
$1.00     1,000,000    $1,000,000.00
$8.00     1,000,000    $8,000,000.00
$15.00    1,000,000    $15,000,000.00
$25.00    1,000,000    $25,000,000.00
$40.00    1,000,000    $40,000,000.00
$50.00    1,000,000    $50,000,000.00

If they sell 1 million regs at $50 a pop they recoup the investment. It won't be easy. Obviously it will take many years of registrations/renewals to make 42M.