Would You List and/or Buy Domains on a New AfterMarket Auction Platform?

[Chris.C]

In the past I've suggest that I felt an AfterMarket Auction platform for AU domains could be both viable as a business and useful for the AU domain community.

Alas to date the obvious candidates for launching such a platform have yet to do so (yes I was told by numerous people that the relaunch of the NF AMA was unlikely), which makes me wonder if there is indeed a market for such a platform and if someone was willing to develop it would domainers like yourselves be both willing to buy and list domains for sale?

What do you guys think? Is there potential for such a platform if someone was willing to build and manage it?

If you think there is some potential to this proposal, what would be the most important things you think the new platform would need to both make your more inclined to buy and list domains for sale and maximising it chances of becoming a successful marketplace for AU domains?

 

[Ashman]

Are there enough quality domains on the secondary market not already listed via Netfleet, Fabulous, Acheeva and so on to make this a via business venture?

Personally, I can't see it happening unless someone like UniRegistry entered this market and started a drop catching platform that combined the aftermarket domains with the dropping domains like Netfleet did for a while.

At the moment I think most enquiries to buy domains come via direct navigation to a landing page not via direct navigation to a sales platform, so sellers have little motivation to list with numerous brokers.

 

[eBranding.com.au]

I went for 'Probably not', as I run my own platform. I took all my .au domains off other marketplaces some time ago. In my experience wherever the .au domain resolves to is where the vast majority of enquiries come from (the rest mostly coming from whois lookups). Given that a domain is only going to be pointing to one place at a time, I found that listing on multiple platforms was a waste of time and simply increased my admin overheads.

If you're looking to sell domains wholesale (i.e. to other domainers), then I guess the more marketplaces you list on the better.

Imho the problem with many of these platforms is that they just don't attract many end users / 'retail buyers'.

I answered 'Probably not' rather than 'No, definitely not!' - because if there was a marketplace that attracted retail buyers, I would absolutely list my domains there.

 

[Chris.C]

Thanks for voting and the feedback. I appreciate it.

Are there enough quality domains on the secondary market not already listed via Netfleet, Fabulous, Acheeva and so on to make this a via business venture?

I may not have been clear - I was referring to a new platform that allowed you to put your domains up for auction (not a catalog listing/parking) - ie an auction site like NetFleet/DomainShield but for existing domain owners rather than expiring domains.

ie if there was an auction platform like NetFleet but for domains being sold by existing domain owners would you consider bidding and/or selling your domains on that platform?

I went for 'Probably not', as I run my own platform. I took all my .au domains off other marketplaces some time ago. In my experience wherever the .au domain resolves to is where the vast majority of enquiries come from (the rest mostly coming from whois lookups). Given that a domain is only going to be pointing to one place at a time, I found that listing on multiple platforms was a waste of time and simply increased my admin overheads.

Imho the problem with many of these platforms is that they just don't attract many end users / 'retail buyers'.

I answered 'Probably not' rather than 'No, definitely not!' - because if there was a marketplace that attracted retail buyers, I would absolutely list my domains there.

What if the auction platform achieved similar (or slightly better) sales results as what are achieved on NetFleet presently, would you consider listing some of your domains for sale or be willing to bid on domains being auctioned on that platform?

 

[Andrew Wright]

Thanks for voting and the feedback. I appreciate it.

I may not have been clear - I was referring to a new platform that allowed you to put your domains up for auction (not a catalog listing/parking) - ie an auction site like NetFleet/DomainShield but for existing domain owners rather than expiring domains.

ie if there was an auction platform like NetFleet but for domains being sold by existing domain owners would you consider bidding and/or selling your domains on that platform?

What if the auction platform achieved similar (or slightly better) sales results as what are achieved on NetFleet presently, would you consider listing some of your domains for sale or be willing to bid on domains being auctioned on that platform?

Are we talking end user or wholesale? Because, generally, end users don't buy from sales portals, unless directed there (Sedo, Domain Name Sales Parking pages etc).

 

[Scott7]

if there was an auction platform like NetFleet but for domains being sold by existing domain owners would you consider bidding and/or selling your domains on that platform?

I would like to list some domains using Netfleet's blind bidding system.

 

[findtim]

wouldn't it be nice if a whois search said " this domain may be for sale"
tim

 

[Chris.C]

Are we talking end user or wholesale? Because, generally, end users don't buy from sales portals, unless directed there (Sedo, Domain Name Sales Parking pages etc).

I think creating a place where AU domainers could sell domains even at wholesale prices would be a good thing for the industry, but obviously the dream would be to have a platform where end users also bid.

What do you guys think?

That said, I'm not implying that getting to end user would be easy in the beginning and @Andrew Wright your point is a good one - I suspect it would take some time as the platform would need to have/build a database of end users and developers who wanted to be notified of domains in their niche coming up for sale and who were willing to bid.

My thinking was that if the platform had a NetFleet or DomainShield format (ie more of a tender than English auction) then some good old fashioned outbound marketing to end users on the phone (by either the seller or the platform) coupled with the time constraint of an auction could potentially produce more effective results.

I would like to list some domains using Netfleet's blind bidding system.

Good to know!

I was hoping that there would a be at least a few domainers who would be willing to list domains on a system like NetFleet or Domain Shield and I was hoping that domainers/developers/end users would also be interested in bidding because the quality of domains would hopefully be higher thank on the expiry auctions (ie the sort of domains most business/developers/domainers don't let just expire).

What do you guys think? What would be the impediments to its success?

 

[neddy]

I would like to list some domains using Netfleet's blind bidding system.

But would you require a reserve price?

 

[Scott7]

What do you guys think? What would be the impediments to its success?

Low profit margins for the platform seemed to be the reason that Netfleet discontinued its aftermarket auctions. They only made 8% commission on customer submitted domain names.

 

[Scott7]

But would you require a reserve price?

No. I don't think that a blind bidding platform with reserve prices would work very well. Sure, there's the risk that your domain will sell for $10, however, there's the opportunity to overachieve on price with an ordinary, and in some cases, sub-standard domain (e.g. TafeOnlineCourses.com.au $10,000, FamilyLawyers-Sydney.com.au $7,250).

 

[Chris.C]

But would you require a reserve price?

I don't quite understand what you mean by "require a reserve price"?

My thinking was that an auction platform makes its money when transactions take place, so it would want to disincentive people having reserves (ie reserves only reduce transactions).

That said, I appreciate that most sellers don't want to put domains they value at $X,XXX+ at risk of selling for $10, but I suspect a balance would need to be struck because buyers also dislike reserves because it means they may be wasting their time with someone who is not a genuine seller or ready to meet the market.

My thinking is that the happy medium would be having an auction platform where all domains are no-reserve by default, but sellers could opt to set a "minimum bid" rather than a "hidden reserve" so that way buyers know that if they bid the minimum and win they will get the domain, and the platform might charge some failed auction fee if a minimum bid was set but didn't sell (ie got no bids).

My thinking is that the platform would give itself the best chance of success if it aspired to build a reputation for being a place where only genuine sellers are placing their domains for auction so buyers can have confidence that they are not wasting their time with sellers who are holding out for more.

Is that what you were asking Ned?

Low profit margins for the platform seemed to be the reason that Netfleet discontinued its aftermarket auctions. They only made 8% commission on customer submitted domain names.

I agree Scott7, I suspect the ROI was mediocre from their last AMA - though that was with an English Auction system - though I suspect they would have produced better results with their current system (ie higher commissions) from more sales.

I also tend to think that NetFleet's commissions was a bit on the low side for the service that they were providing and I think any future auction platform might be better served by having a tiered commission structures, ie a domains that sells for $100 should pay a higher commission rate than a domain that sells for $1000 or $10,000.

At the end of the day any business needs to be sustainably profitable to be able to continue operating and finding the right balance would be needed for success.

No. I don't think that a blind bidding platform with reserve prices would work very well. Sure, there's the risk that your domain will sell for $10, however, there's the opportunity to overachieve on price with an ordinary, and in some cases, sub-standard domain (e.g. TafeOnlineCourses.com.au $10,000, FamilyLawyers-Sydney.com.au $7,250).

May I ask why you don't think a blind bidding platform would work very well?

And who are your referring to when you say it won't work well (ie won't work well for sellers, buyers or the platform)?

What format do you think would work better?

 

[Shane]

IMO the only way it will work is if the leading drop catcher of the day (currently Netfleet) includes the aftermarket names in the daily expiry auctions.

I don't think the type of auction is of any real significance in comparison to simply getting the maximum number of potential buyers seeing the names.

I also believe there is next to zero chance of a new stand-alone platform having any real success.

It's a tough one for portfolio holders. The only way to achieve some level of liquidity seems to be via outbound marketing.

 

[snoopy]

I think the % of people who would want to sell .com.au at wholesale prices and be willing to let them go for that type of price would be low. There would be a market but not a big market. The main issue is the selling side.

I think as soon as it turns to "getting endusers" that is really where these types of ideas fall apart, people put in unrealistic reserves, expecting a price higher than any offer than they've had in the past. 99% of the time that won't happen in an auction environment and the whole platform turns to mud. Expired auctions work because "the seller just sells", there isn't resistance on the selling side.

Probably a good question would be how many people are willing to auction off high quality .com.au's with no reserve? (e.g. names that they bought 10-20 years ago or paid a premium for on the drop).

 

[Shane]

Agree with Snoopy. Sellers can definitely be an impediment.

I've sought out names for a few projects in the past, and sellers ask some pretty wild figures. I get it, I have plenty of domains too, but deals don't happen because the seller thinks they're going to get $50k for a domain that would ordinarily sell for like $500 on the expiry auctions.

I've had plenty of $x,xxx offers rejected by sellers for domains which would sell on the auctions for far less.

So as well as getting willing buyers involved, you also need realistic sellers.

 

[neddy]

IMO the only way it will work is if the leading drop catcher of the day (currently Netfleet) includes the aftermarket names in the daily expiry auctions.

This was a failure in the past Shane. Snoopy's comments above are dead right. If I take a punt and put a few half decent names up for sale (and they only sell for $100 to $120), I'm going to be pissed, and never want to use it again as a seller. And I am speaking from experience - it happened to me when I gave it a try first time round!

However, speaking as a buyer, I would love it to be introduced again - I picked up some of my best bargains back then.

I also believe there is next to zero chance of a new stand-alone platform having any real success.

Totally agree!

 

[snoopy]

Agree with Snoopy. Sellers can definitely be an impediment.

I've sought out names for a few projects in the past, and sellers ask some pretty wild figures. I get it, I have plenty of domains too, but deals don't happen because the seller thinks they're going to get $50k for a domain that would ordinarily sell for like $500 on the expiry auctions.

I've had plenty of $x,xxx offers rejected by sellers for domains which would sell on the auctions for far less.

So as well as getting willing buyers involved, you also need realistic sellers.

The thing is, those sellers probably have no interest in selling to other domainers or that the fact that the asking price is far more than what it would get on auction.

$500 -> $50k isn't an unreasonable markup in my view. Pretty sure Frank Schilling recently said he tries to at least get a 50 fold gain. It needs huge individual gains to make up for the fact that most names will never sell. Sometimes that would still not be enough to make a profit if the quality is low. (e.g. names bought for reg fee).

The problem occurs in my view when you try and mix that type of seller above (which most people are to varying degrees) with an auction market.

 

[Scott7]

May I ask why you don't think a blind bidding platform would work very well?

And who are your referring to when you say it won't work well (ie won't work well for sellers, buyers or the platform)?

What format do you think would work better?

I am saying that a blind bidding platform wouldn't work very well if reserve prices were used. Reserve prices can put off buyers and are not needed because not knowing what others are bidding gives incentive to put in more than a minimum bid.
I also agree with what Shane said about the only way it could work:

IMO the only way it will work is if the leading drop catcher of the day (currently Netfleet) includes the aftermarket names in the daily expiry auctions.

 

[Chris.C]

Awesome feedback guys. I really appreciate it.

IMO the only way it will work is if the leading drop catcher of the day (currently Netfleet) includes the aftermarket names in the daily expiry auctions. I don't think the type of auction is of any real significance in comparison to simply getting the maximum number of potential buyers seeing the names. I also believe there is next to zero chance of a new stand-alone platform having any real success.

Yeah that "free" advertising or database of buyers would be a real advantage to launching a new AMA.

That said, I'm surprised you don't feel there would be a difference in the success of the platform between and english auction format and blind tender. May I ask why?

What does everyone else think?

I think the % of people who would want to sell .com.au at wholesale prices and be willing to let them go for that type of price would be low. There would be a market but not a big market. The main issue is the selling side.

I imagine the degree to which sellers are willing to list domains would largely correlate to the results being produced by the auction.

So assuming it achieves similar results to what is achieved on NetFleet I think there would be a market, but not a "big" market, ie I imagine owners of domains worth more than $3000 retail would probably hang out for end user approaching them and negotiating directly, but there are still A LOT of AU domains that are worth between $300 and $3000.

That said, if you could improve the success of the platform over time I think the market of interested domain sellers would also increase.

Reckon that's being too optimistic?

I think as soon as it turns to "getting endusers" that is really where these types of ideas fall apart, people put in unrealistic reserves, expecting a price higher than any offer than they've had in the past.

Again I agree.

Unfortunately there isn't a lot you can do about the "unrealistic sellers", if someone doesn't want to meet the market I don't know if there is much you can do to force them to sell.

I think the best thing you can do is build a platform for those sellers who are ready to "meet the market" by providing a stable ecosystem of buyers that have the incentive to put in their best bid in on domains that they can be certain will sell.

For me, I see the primary function of an AMA's is to provide domain liquidity, ie it's primary job is to be the "fastest way" to sell numerous domains not necessarily the best.

Of course, an AMA should always be trying to get the best results possible whilst offering that liquidity, but the "price of liquidity" will always be a willingness to "meet the market".

99% of the time that won't happen in an auction environment and the whole platform turns to mud. Expired auctions work because "the seller just sells", there isn't resistance on the selling side.

I agree.

Do you think something like requiring sellers to pay for and pre-approve the COR would give buyers the confidence to know that at the end of a no-reserve auction there would be no resistance on the sell side?

I am saying that a blind bidding platform wouldn't work very well if reserve prices were used. Reserve prices can put off buyers and are not needed because not knowing what others are bidding gives incentive to put in more than a minimum bid.

Oh yes I agree - reserves tend to disincentivise buyers.

I'd be interested to know if anyone has any suggestions on ways/features to incentivize sellers to list domains without reserves?

Probably a good question would be how many people are willing to auction off high quality .com.au's with no reserve? (e.g. names that they bought 10-20 years ago or paid a premium for on the drop).

Given that there has been no decent way to liquidate domains since NetFleet's AMA I suspect there would be at least some pent up demand. And NetFleet's past AMA suggests that there was certainly a number of people willing to list intially.

Of course past that first rush of people I assume that the willingness to list will depend on the results being achieved up to that point.

This was a failure in the past Shane. Snoopy's comments above are dead right. If I take a punt and put a few half decent names up for sale (and they only sell for $100 to $120), I'm going to be pissed, and never want to use it again as a seller. And I am speaking from experience - it happened to me when I gave it a try first time round! However, speaking as a buyer, I would love it to be introduced again - I picked up some of my best bargains back then.

I agree Ned and I also had a couple of disappointments on NetFleet's AMA and I think that is why listings on the AMA actually dropped off after the initial spike - I think sellers realised the results they were getting were "mediocre".

I feel that for a marketplace to stay viable it has to produce acceptable middle ground for all three stakeholders - buyers, sellers and the platform - which is never easy because all three parties have conflicting interests, but I believe it is possible.

 

[neddy]

I feel that for a marketplace to stay viable it has to produce acceptable middle ground for all three stakeholders - buyers, sellers and the platform - which is never easy because all three parties have conflicting interests, but I believe it is possible.

Chris, I'd love you to be my bank manager - I've never met a more optimistic person when it comes to selling domains. LOL!

I do not believe it is possible for an aftermarket auction marketplace in Australia to "produce acceptable middle ground for all three stakeholders - buyers, sellers and the platform". Domain8 / Drop and Netfleet have tried it in the past, and it was a miserable failure. Not enough of the "right eyes" looking at what's on offer.

On the other hand, an platform for liquidating domains at wholesale prices may indeed work well. And I'm talking $100 a name on average.

Imho.