So as we all know by now Toys.com, which sold literally just days ago, for $1,250,000 as part of a bankruptcy court proceeding, sold today for $5,100,000 after a re-auction was ordered by the bankruptcy court.
What does that say about the value of domains or domain auctions?
How does a domain at auction sell one week for $1.25 million and the next week for over $5 Million.
Simple.
The first auction only a few people knew about or participated in, causing the end price to be below market value.
The re-auction had other participants who did not have knowledge of the first auction, like National A-1 and Toys R Us.
Last week my friend Rick Schwartz ran a series of posts on his blog, about domain auctions, the way they are conducted, the way they are organized, priced by the sellers and viewed by the buyers.
I love Rick
But I think as this auction demonstrated, he might have over thought it.
After the toys.com auction, something should become clear.
Domain values and auction selling prices depend on how well publicized the auction is, who is involved in the auction, and how desirable the domain is.
The venue, the auctioneer, how much food is served, how many people attend, none of it matters.
If you have the right domain and the right bidders you will have a sale.
If you have bidders but not the “right” bidders you will have a sale, but the sale will be at a fraction of the price it could be if you had the “right” bidders.
The auction houses need to concentrate on only two things.
1. Good domains.
2. Making the “right” buyers aware of the auction.
Publicizing the domain auction to the “right” buyer makes all the difference.
In this case its was a $4 Million dollar difference.
Precisely. That’s why auction houses, like bido.com must advertise to a broader audience, not just domainers. Reaching the “end users” is a key factor in higher pricing and bigger sales. A tremendous asset for Toys’R’us. I hate them 🙂
I read somewhere that Frank was in until $2.9million.
Funny that the most valuable asset will be the domain name.
Same thing happened when Moniker auctioned off Excite.com assets way back in 2001 or so.
Well said.
It is all about reaching out to the right buyers. In this case, it was just two who bidded up and went at it for over an hour from $3m – $5m.
I predicted and was 99% confident that Toys R Us would pick up this domain in the re-auction because they already have toys.co.uk and just bought the other week eToys.com which they were already including in press releases, so they obviously were digging it and could use all the help they could get as far as “image” and branding goes… Would give em a big time boost.
It was a good investment… We’ll see what they do with it.
A simple redirect to ToysRus.com is what I am betting on. LOL 🙂
Good day for domains. One for the record books.
Until next time…
Mike
Toys.com now redirects to ToysRus.com like you predicted it would, Mike!
@MHB – “Domain values and auction selling prices depend on how well publicized the auction is, who is involved in the auction, and how desirable the domain is.”
Well put Mike. I’ve been saying this for a long time. End user perception, need, and ultimately their valuation having very little to do with “metrics”. A mega-brand portal carries market cachet that supercedes traffic clicks exponentially.
Good job on the part of ToysRus for at least understanding the value of this domain. They’re not the only player in the toy business. It was mainly ToysRus and A-1 that were in the hunt.
Did Pizza Hut, Domino’s, Papa Johns know about the pizza.com auction/sale a few months ago? I think it would’ve gone to at least what toys.com got if those big corp’s knew about it. Now, if only I’m the owner of pizzadelivery.com…
While I agree with what you are saying Mike I think it is naive to say things like “Pizza.com would have gone higher if Pizza Hut, Dominos, Papa Johns knew about the sale” . I know sedo is very proactive in contacting potential buyers. How can we just make broad assumptions like this? It’s pretty irresponsible imho. The auctioneers need to prove they are doing the legwork but to assume they are not is a reach.
Just because the buyer you THINK should be buying a domain doesn’t mean that they haven’t been contacted. Some buyers don’t get it, some buyers don’t have the cash at the given moment the auction takes place, and other factors. Many buyers can’t spend during certain parts of the fiscal year, many potential buyers are locked in to other obligations or have no available financing to cover big expenses like this. You need to consider MANY MANY factors in making these sales. This is why the commissions are high. The work involved in digging up a buyer should be difficult and thus the commissions justifiable. Auction companies make more money selling domains for more money and getting more bidders, it’s silly to assume they aren’t looking for more buyers.
Per DNW, ToysRUs was part of the first auction, but was outbid.
If that’s the case, someone gave them a very quick education in the value of domains, as it was worth $4MM more to them today than it was the first time around.
The attorneys who ran this are probably gloating about their success tonight, but they should be working pro bono after they screwed up the first round by not publicizing.
$5mill will be cheap looking back on this five years from now.
Agree with most of what you’re saying, but want to point out that MTN (#7) is correct. Toys R Us was at the original auction and actually won eToys.com and associated property.
I don’t know if they learned about the value of the domain afterward; I think Toys R Us and Faculty Lounge kind of agreed to go after different auction lots rather than fighting each other.
So why do the virtually all the “show” auction houses wait until 3 or 4 days before the auction to announce the names?
Shouldn’t it be obvious that work needs to be done to bring buyers other than domainers to the table? And, with the exception of the show-stopping domains it’s up to the seller to do the work.
Dumb. Really dumb.
Pat
I have spoken with some of the “auction houses” and I think the sellers are as much to blame for the late arrivals of the domain auction list.
It seems submissions for the auctions are late to arrive.
People seem to wait until the deadline for the auction submission to submit domains.
On the other hand the auction houses are at fault for not placing hard deadlines for submitting domains.
If you look at moniker.com right now they advertise that they are accepting domains for the Santa Clara show, have the dates of the auction and the show but do not have a “deadline” for submission, so there is no urgency on domainers part to submit their domains.
If Moniker set a deadline of 2 months in advance for submitting domains and stuck to it, they would have enough time to get the list together well before the auction and publicize it.
If the auction houses loosened up their TOS regarding how long AFTER the auction the names are exclusively theirs to sell, I think you’d see a lot more good names going to these big auctions. 60 to 120 days after the auctions are over is ridiculously long in the current environment. 15 to 30 days is more reasonable.
Also, if they allowed a “live auction only” option when submitting names for consideration, I think they would greatly increase the number of top names. I know that I’m afraid of putting anything great in with a low reserve because of the fear that it’ll go into the silent auction which clearly does not get optimal prices for sellers.
Publicity does more than draw bidders into the auction, it creates buzz and conversation which often effects valuation.
When this domain was auctioned off for $1.25M, much of the conversation focused on what a good deal the high bidder got, which may have awoke the sleeping yet outbid giant.
The problems with domain auctions are two fold.
Problem 1: Most of the auction houses notify sellers of acceptance only days before the event takes place leaving little if any time to properly market the name. The sweetheart names get a bit more exposure since the auction house may use a few select names in press releases. I would like to see a change in TOS that requires that the exclusivity period only last as long as the notification time. If I submit names for a July 1 auction and the names are accepted on May 1 my exclusivity period would expire September 1 allowing the auction house to have a lock on my name for 120 Days. If they accept on June 1, I am only locked in through August 1. It is irresponsible for them to provide anything less than 30 days notice just as it’s unreasonable to expect them to waive exclusivity periods.
Problem 2: Most sellers are lazy and assume that just by having a premium domain entered into auction is enough. Folks, there is no reason why you shouldn’t be doing your own marketing to get word out. A few months ago we received a post card from the seller of a liquor domain name letting us know that the name will be featured at sedo. They also provided us with comps on related domains. Postcards can be printed at home and mailed for 25 cents. Want more exposure and less work? Write a press release and email to industry contacts.
If we all work together we can boost up domain prices and exposure
Good Luck!
AIM: webuythedotcom
@Adam. You prolly right… Dallas cowboys were there at cowboys.com but they didn’t go the distance.
In general: I agree lists need to be out sooner…there are some conferences in April for example, no mention yet on deadline and who the auction house will be.
No time for name owners to call end users and work-it
While this is not the best exempe for what I am going to write (since ToysRUs was aware of the first acution), it often comes back to the same problem: too many of the sales take place among domainers, and mostly domainers will spend time scouting for available website on an extended period of time.
We need to think creatively and find ways to come out of semi-closed circles. I agree with Adam: Sedo IS proactive in alerting potential buyers. But it is not an easy taks to identify all of them, and more generally an awareness of the value of some domain names still needs to be intensified.
Although I have not yet a clear idea of the right way for doing it (I am toying with some ideas), the best would be to find ways to auction regularly at least some quality domains in environments not meant for domainers. It is not something easy to reach, but I do not think it would be impossible, provided the right partnerships can be created.
Educating and informing end users go hand in hand. It is our responsibility as domainers to do our part if we want to see this industry move forward.
It looks like one auction can demonstrate the value of having even one more interested party bidding on a domain….Now that it has been proven, can we work together to get the word out to the end users?
There has been enough constructive advice written for years to work with, and we can now add the power of social networking to reach our goals.
“I don’t know if they learned about the value of the domain afterward; I think Toys R Us and Faculty Lounge kind of agreed to go after different auction lots rather than fighting each other.”
WHAT! !? I think there’s a word for this . . . and it isnt pretty ? Starts with a C
@ Adam – not really. The first auction wasn’t an auction in the general sense of the term. Each of the domains was “auctioned” separately, and then they were packaged together. From what I understand it was a screwy process. So bit of horse trading makes sense under this type of “auction”, if we’ll call it that.
The irony is that the domain business is all about advertising yet no one wants to invest in advertising their domains.