Important Changes to our Auction format

[AnthonyP]

We have been experimenting with different auction formats over the past few weeks in order to find the best solution format for selling domain names. On 21st October we will trial first price sealed bid auctions. In short, we will not show any prices on our auction platform, with all bids being fixed offers (being the price you enter will be the price paid [plus the buyers premium] – there will not be a proxy bidding system), and at the end of auction the highest offer wins. We will also be setting BIN prices on a selection of domain names. These will be set before that day’s auction starts, similar to eBay’s ‘Buy it Now or Best Offer’ option, giving everyone an equal chance at buying the domain for the BIN price.

If two offers for the same price are made by different clients, the first client to make that offer will be elected the winner. The same goes for whoever hits the BIN price first.

What this means is you will no longer need to monitor the bidding all day – you simply enter the price you are prepared to pay for the domain name, and walk away to get on with your business. When the auction closes at 2pm, you will see if you placed the highest offer, or hit the BIN price first. This also completely negates snipe bidding, which has been a common complaint and frustration for many of our clients.

We will publish that days prices from 2pm-3pm on our usual auction page, however once the new auction starts, we will only publish sales over $1,000. We think that publishing prices less than $1,000 may have a negative effect on the domain market, and as many of our clients have stated hurts potential resale opportunities. Our daily email will go out to all as usual, but include every domain sale for that day, so you will always have a record.

So, again these changes will come in to effect on 21st October when the auction reopens at 3pm (Sydney time), we hope you enjoy our latest trial of format.

If you have any questions don't hesitate to contact us via support.

 

[Shane]

You guys really hate domainers, right?

 

[Chris.C]

You guys really hate domainers, right?

They are just operating a business... so you can't hate them for looking for ways to make money.

Also changes like this have the potential to really benefit domainers if they reactivate the AMA.

And given that 80% of domains seem to sell for the minimum it stands to be quite lucrative for them too (assuming it doesn't piss everyone off to the point that they no longer bid - which I doubt will happen).

I know had over $500 worth of bids today across 8 different domains - and only paid more than the minimum for 1 of them...

So I'm sure NetFleet have just done the maths and worked out that they are leaving a fair bit on the table.

Looks like the good times might have come to an end for us domainers...



I just hope that if this is successful that you reactivate the AMA given that this structure I think will produce results that domainers would be much happier to list their domains under...

We will also be setting BIN prices on a selection of domain names. These will be set before that day’s auction starts, similar to eBay’s ‘Buy it Now or Best Offer’ option, giving everyone an equal chance at buying the domain for the BIN price.

This seems like an interesting concept at first - but it also has the potential to produce worse results as well...

It will be interesting to watch it in action nonetheless.

In short, we will not show any prices on our auction platform

I'd be careful with this strategy... I think I've said this previously but knowing someone else has bid on a domain gives other buyers confidence and I'd be surprised if it didn't encourage buyers to bid more aggressively (aka social proof).

If I were you I'd at least be highlighting domains that have had people bid on them, even if you didn't reveal what they have bid.

What might produce an even better result is indicating exactly how many other bidders have bid on the domain. Ie if you see 7 other people are competing for the domain you'd be less likely to put in a low ball offer thinking you are the only one bidding...

We will publish that days prices from 2pm-3pm on our usual auction page, however once the new auction starts, we will only publish sales over $1,000. We think that publishing prices less than $1,000 may have a negative effect on the domain market, and as many of our clients have stated hurts potential resale opportunities.

Agreed.

 

[Joel]

I'm not a fan at all of the proposed change/trial. It's essentially reverting it to a classifieds listing with a deadline. At $55 for a standard registration + $11 for the minimum bid, you're already making a tidy markup before the bidding even begins.

It's certainly not in the best interest of the purchaser IMO.

 

[Shane]

They are just operating a business... so you can't hate them for looking for ways to make money.

I didn't say I hated Netfleet, I just pointed out that they must hate (or at least have disdain for) domainers.

I say this because every change they make appears to have a negative impact upon domainers.

And given that 80% of domains seem to sell for the minimum it stands to be quite lucrative for them too (assuming it doesn't piss everyone off to the point that they no longer bid - which I doubt will happen).

I think it will.

I'm a $xx,xxx bidder for the right domain for my business (and have paid this much in the past) but there is no way I would submit a fixed bid of this amount.

If I was competing against someone in an auction (or negotiating with someone privately) then I'd pay what I had to pay, but I just couldn't submit a $20k fixed bid knowing that the next highest could be $5k or $50 etc.

This auction format is more suited to charity events when bidding on a signed football jersey after a few wines, not domain names...

 

[neddy]

I'm a $xx,xxx bidder for the right domain for my business (and have paid this much in the past) but there is no way I would submit a fixed bid of this amount.

If I was competing against someone in an auction (or negotiating with someone privately) then I'd pay what I had to pay, but I just couldn't submit a $20k fixed bid knowing that the next highest could be $5k or $50 etc.

Excellent post Shane - there you have it in a nutshell.

And I'll go even further:

1. For the many of us that are worried about existing lack of transparency (no live bidding history etc), this makes the situation even worse imo.
   
   
2. You've made other changes before ("marketing initiatives") that affected your core customer base, and it didn't take long for you to reverse these decisions (after a backlash).
   
   
3. Personally, I believe you are making a big mistake again. But it is your business, so I guess you are entitled to do whatever you want.
   
   
4. I for one will be voting with my feet and will not participate in your latest "marketing initiative" (unless there is a domain I simply have to have). I will take my chances with Drop.com.au.

 

[netik]

Huh, I think this "experimenting with different auction formats" affected their success rate. I noticed more and more domains went to drop.com.au these days. Or is it just Drop improved their technology? If yes, then it's a no brainer to move to Drop after these changes...
They moved from "positive emotion" (Oh, somebody outbid me, I'll bid more) to "negative emotion" (I'll bid half the price I'm willing to pay, because I don't want to be a donkey and overpay). Let's see how long it will last.

 

[findtim]

using this new system netfleet would have got $3001 for weddinginvitations.com.au

tim

 

[Link]

Excellent post Shane - there you have it in a nutshell.

And I'll go even further:

1. For the many of us that are worried about existing lack of transparency (no live bidding history etc), this makes the situation even worse imo.
   
   
2. You've made other changes before ("marketing initiatives") that affected your core customer base, and it didn't take long for you to reverse these decisions (after a backlash).
   
   
3. Personally, I believe you are making a big mistake again. But it is your business, so I guess you are entitled to do whatever you want.
   
   
4. I for one will be voting with my feet and will not participate in your latest "marketing initiative" (unless there is a domain I simply have to have). I will take my chances with Drop.com.au.

Great summaries Shane and Ned. I couldn't agree more. These changes remind me of a couple of things.

1. The guy who owns the goose which lays golden eggs. He profits for a long time getting a golden egg everyday. Then he gets greedy and comes up with a great idea to kill the goose and get all the golden eggs at once....only to find that there are none there and he's killed his profit source.
2. This is a great 2 minute video called "I Miss The Mob" with some uncommonly taught lessons about business, profit and happiness - http://vimeo.com/25492897

I guess we'll see how this plays out. Good businesses change, experiment and evolve, so I applaud Netfleet for that even if I don't think these changes will end up benefiting anyone.

 

[findtim]

So will netfleet need to change their stationery to "domain tenders" ?

tim

 

[Glady]

Great Posts Shane and Ned you are both spot on
I to will be voting with my feet and Drop may be the big winner out of this. They have had to back track before and will have to do again, we are being treated like fools.

 

[Chris.C]

Wow!

So much NetFleet hate flying around...

I'm still an occasional buyer of domains - but these days I'm more often on the other side of it (ie the sell side) so this move potentially doesn't effect me as much as others.

So I'm supportive of anything that produces better price outcomes for sellers, be that NetFleet itself or private domain sellers via the AMA and catalogue.

I'm actually really surprised so many people here are anti this move - yeah at first glance it looks like we'll be paying more for domains purchased via NetFleet - but if you have any sort of portfolio of domains or minisites a move like this has the potential to substantially increase your portfolio value (if they reactivate the AMA using this model).

I'd rather the next 20 domains I buy to be more expensive, but the hundreds I already own to be worth twice as much...



And if you feel robbed by all this you can always run off and only bid on Drop (but it'll mean more domains for the rest of us)...

 

[pacifier]

I don't think the model will work for sellers. With fixed bidding nobody will risk to bid as much as they will bid with proxy. I'm not keen to bid fixed.

Netfleet will have to change or face extinction

 

[neddy]

So much NetFleet hate flying around...

It's not "hate" at all. It's just consumer reaction to unnecessary change. When Netfleet do good stuff, many of us praise them.

Ask yourself why are NF doing this?

Is it to benefit the enduser who hasn't put in a high enough proxy? No. That's codswallop.

In simple terms, NF see the proxy bids we put in - and often these are much higher than what the domains actually sell for. So they see all this money "left on the table", and are trying to find a way to grab it.

But it won't happen for the reasons that Shane said. If they change the system, most people will change their bidding habits. Some won't bid at all.

And I'd be surprised if the AMA is re-incarnated anytime soon (based on various comments).

 

[findtim]

It's not "hate" at all. It's just consumer reaction to unnecessary change. When Netfleet do good stuff, many of us praise them.

Ask yourself why are NF doing this?

Is it to benefit the enduser who hasn't put in a high enough proxy? No. That's codswallop.

In simple terms, NF see the proxy bids we put in - and often these are much higher than what the domains actually sell for. So they see all this money "left on the table", and are trying to find a way to grab it.

But it won't happen for the reasons that Shane said. If they change the system, most people will change their bidding habits. Some won't bid at all.

And I'd be surprised if the AMA is re-incarnated anytime soon ( based on various comments).

Neds right, there is no "hate" just knowledgeable feedback.

last year in Sydney at the dnt meetup just after the "eels" issue, NF stated to me and others face to face that they "hate snipers" (and then there is a long conversation but you can guess the rest.) we discussed it and the system but it obviously hasn't been taken as good feedback by NF.

this change is RUBBISH, it will NOT work, its "new coke" all over again, of course we will change our bidding habits BIG TIME, this is NOT going to gain you more revenue.

I see a "Trojan horse" coming.

tim

 

[domainlover]

Netfleet is that an iceberg I see ahead?

 

[findtim]

Netfleet is that an iceberg I see ahead?

i'm contemplating building an interesting iceberg

just for fun, if you read dnt a lot you will know what I mean.

tim

 

[findtim]

ride your horse, walk with your feet, communicate, this post has 16 posts and 254 views so far, GET OFF THE FENCE.

if you are a dnt member then say something, if you are a lurker then join dnt ) its FREE ) and have a say, as this will affect you.

here is some motivation:
http://www.youtube.com/watch?v=lEOOZDbMrgE

YOU HAVE 10 DAYS !

tim

 

[findtim]

and once you have seen that youtube, this one will make sense
well worth 5mins of you time on this subject

http://www.youtube.com/watch?v=pK2WJd5bXFg

tim

 

[Ashman]

ride your horse, walk with your feet, communicate, this post has 16 posts and 254 views so far, GET OFF THE FENCE.

if you are a dnt member then say something, if you are a lurker then join dnt ) its FREE ) and have a say, as this will affect you.

here is some motivation:
http://www.youtube.com/watch?v=lEOOZDbMrgE

YOU HAVE 10 DAYS !

tim

Tim,

If you feel so strongly about the proposed changes by Netfleet, lodge a formal complaint with auDA and point out the fact those upcoming amendments to Netfleet's auction platform constitute a possible breach of the auDA constitution with regards to the following policy:

auDA will enhance the benefits to Internet users through:

Adopting open and transparent procedures which are inclusive of all parties having an interest in use of the domain name system in Australia.

auDA must enforce this policy with regard to Australian registrars. If they fail to do so I suspect auDA might face imminent legal action or possible adverse publicity.

Netfleet's proposed changes clearly breach this policy and is without regard to the National Interest objective of the domain name system.