Domain auction process is fatally flawed and simply will not work well

[David G]

Some time ago I did a lengthy post regarding the fact my experience has been that auctions simply do not work for domains or websites. At that time I mentioned I had an excellent active website (this was several yrs ago when domains were in their heyday).

It had some great and costly Cold Fusion data based programming, it was up and running approx 2-1/2 yrs., had good traffic with about 35,000 (over 2 plus yrs) hits, was ranked well in the SE's, we even had more that 1,000 PAID MEMBERS who paid a $67-yr fee to participate and got some other benefits too, not directly related to the auction site,

Out of the 1,000 or so domains (some with developed sites) listed for sale (many good names), we had ZERO sales and few bids, that's right - no sales at all. Granted, the average asking price was more than the ridiculously low prices at DNF auctions, but I feel were still reasonable based on the overall quality of the domains.

The prices were NOT the problem except in only 1 case I was aware of. The fact is almost no one wanted to bid. Lots of traffic but little activity. We also sold finacial books on the same site and they always sold good. In fact, the books sold so well we ran out of inventory and stopped selling books.

After much thought and discussion and hearing from other domainers we came to the conclusion the domain auction process is totally flawed and fudamentally unsound. Few if any buyers want to engage in a bidding process on domains. I finally closed the website in disgust, after losing lots of money on it and untold thousands of hrs of time too over 2 plus yrs.

Why would buyers want to compete with others and drive up the price or deal with unknown buy prices beyond the reserve when there are zillions of names for sale? It is so much better to simply check Whois and send an email or PM and make an offer with no competition from others as in an auction environment.

It is a buyers market, not a sellers market, and auctions are often best used on something which is conceived as or is in short supply or a unique product and service, and in mostly a buyers market. Most of the domains are not that good and as such are far from being unique and in short supply as there are so many other options including similar names which are unreg'd.

These are reasons I have not been concerned about my total inability to even visit the live auctions since day one due to my computer setup not being compatable with the auctions Javascript. I would never use the live auctions as a seller or buyer, even if my Java worked so I did not worry about it.

P.S. I should make it clear my site was not a live auction site like dnf. It was an auction site but did not have bids only at certain times but 24X7, similar to Afternic. I really don't think that matters much, in fact I feel a live auction site may even be less successful overall, it simply is a flawed concept overall.

Just my opinion. Any thoughts from others, perhaps other domainers who had auction sites, I know there are several of them here (and understand they were also unsuccesful).

 

[Cash Is King]

People

Unfortunately with change you will lose some people in the shuffle. This is business and will always be business. Their is nothing personal here except trying to establish a direction for the live auction / business, while putting some money in all of our pockets.

Let the chips fall where they may and good luck to all.

 

[Edwin]

When I said "pool" I should clarify that I meant "points pool". In other words, Platinum members start off with 25 points in their points pool.

- Charge 1 point per listing (5 max)
- Every name that doesn't sell removes 1 point.
- Every name that does sell adds 2 points (or 3, etc. - the principle is important here, not the details)
- At 0 points, the member has to wait 30 days to be given more points and therefore to be able to list more names

Worst-case Scenario: Member posts nothing but "junk"

Week 1: -5 points (5 names in auction, no sales)
Week 2: -5 points (5 names in auction, no sales)
Week 3: -5 points (5 names in auction, no sales)
Week 4: -5 points (5 names in auction, no sales)
Week 5: -5 points (5 names in auction, no sales)
Week 6: has to sit this week out
Week 7: has to sit this week out
Week 8: has to sit this week out
Week 9: has to sit this week out; receives 10 free points
Week 10: -5 points (5 names in auction, no sales)
Week 11: -5 points (5 names in auction, no sales)
Week 12: has to sit this week out
and so on...

In the above worst-case scenario, the member will have been able to post 100 names on auction in total, during 20 out of 52 weeks of their year's membership. Even at this low level, that doesn't sound bad.

So in practice members will be able to post at the very, very least 100 names for sale in a year. Successful members will be able to post 52x5= 260 names for sale.

Thus, the range of penalty/reward runs from 100-260 listings.

Under the above, members that contribute to the success of the auctions (by posting names that generate "action" in the form of successful bids) get rewarded, yet everyone gets a pretty good chance.

 

[Cash Is King]

Originally posted by DomainOgre
I agree with all of Edwin's ideas except the $15 min. The pooling of names for each seller, in particular, is an excellent idea.

I don't see why it would not work with $1 names. If each seller has only so many chances, that might discourage some of the $1 names already.

As far as the $15 min bid goes, you already have something similar on eBay with its usual $15 transfer fee per domain name. Are those high quality names being sold? No, because most are worst than the ones sold here for $1.

Ogre

Most of us are in the business to make money. Accountability needs to shift to the domain reseller. Edwin ideas hold the platinum member / reseller accountable for their actions. All DCG has to do is bring the traffic. The rest will fall in place.

 

[Cash Is King]

Originally posted by Edwin
When I said "pool" I should clarify that I meant "points pool". In other words, Platinum members start off with 25 points in their points pool.

- Charge 1 point per listing (5 max)
- Every name that doesn't sell removes 1 point.
- Every name that does sell adds 2 points (or 3, etc. - the principle is important here, not the details)
- At 0 points, the member has to wait 30 days to be given more points and therefore to be able to list more names

Worst-case Scenario: Member posts nothing but "junk"

Week 1: -5 points (5 names in auction, no sales)
Week 2: -5 points (5 names in auction, no sales)
Week 3: -5 points (5 names in auction, no sales)
Week 4: -5 points (5 names in auction, no sales)
Week 5: -5 points (5 names in auction, no sales)
Week 6: has to sit this week out
Week 7: has to sit this week out
Week 8: has to sit this week out
Week 9: has to sit this week out; receives 10 free points
Week 10: -5 points (5 names in auction, no sales)
Week 11: -5 points (5 names in auction, no sales)
Week 12: has to sit this week out
and so on...

In the above worst-case scenario, the member will have been able to post 100 names on auction in total, during 20 out of 52 weeks of their year's membership. Even at this low level, that doesn't sound bad.

So in practice members will be able to post at the very, very least 100 names for sale in a year. Successful members will be able to post 52x5= 260 names for sale.

Thus, the range of penalty/reward runs from 100-260 listings.

Under the above, members that contribute to the success of the auctions (by posting names that generate "action" in the form of successful bids) get rewarded, yet everyone gets a pretty good chance.

Your recommendations are right on as long as we have traffic, 200 to 500 people attending the auction. I believe that is and has been DCG's focus. Now let's marry the concepts together.

 

[bidawinner]

Then it's clear this forum will go to hell in a matter of 2 months..thats the direction you are taking it..

It's a shame youi are destrying this forum.. thats fine your investment to lose and I'll guarantee you will lose..

Originally posted by DotComGod
I am here watching and reading like everyone else and it is becoming clearer that this is like any other industry.

You have those that like to complain and you have those that offer solutions. The latter is clearly appreaciated and we will make changes that will help the latter group.

It is also clear that those selling domain names for $1 just like to see there name in lights and do not have any plans on making money in this industry.

If I had a domain that was worth $1, I would rather eat it that post it for sale.

It is clear that we need to change the forum to be better targeted towards business clients looking to spend rather than kmart shoppers. We need a good mix of both.

comments please!

-=DCG=-

 

[bidawinner]

Originally posted by WebHold
People

Unfortunately with change you will lose some people in the shuffle. This is business and will always be business. Their is nothing personal here except trying to establish a direction for the live auction / business, while putting some money in all of our pockets.

Let the chips fall where they may and good luck to all.

Problem is they arent your chips ..

 

[Edwin]

IMO, if you need $1 domain sales to keep going, you should not be in the domain game to begin with!

It's scary when I see people posting on the Sales forum that they'll trade any of their names in exchange for somebody paying for a new registration for them. That kind of behaviour smacks of addiction...

 

[Cash Is King]

Originally posted by bidawinner


Problem is they arent your chips ..

No one said business is risk free. This debate is good for any forum. It sure beats paying a consultant big bucks so to get the same answers.

I'm sure DCG will listen to all and then mold his own plan around the concepts.

In order to be a ten, you must have tens around you. Listening is a skill.

 

[bidawinner]

Originally posted by Edwin
IMO, if you need $1 domain sales to keep going, you should not be in the domain game to begin with!

It's scary when I see people posting on the Sales forum that they'll trade any of their names in exchange for somebody paying for a new registration for them. That kind of behaviour smacks of addiction...

You dont get it Ed, I dont "need" $1 sales what I need is for EVERYONE to be able to enjoy the DNF..the DNF THEY paid for.. once you start playing this elitist game you will LOSE 90% of the people in here...

but you snobs have your heads up your asses and cant grasp that simple concept..WE run this forum not a few elitist...

And I'll tell you what ..most will leave as soon as they understand what the "few" are trying to do.

They you all wil be stuck whith your thumbs up you arses trying to figure out where everyone went..

dont think for second this is the only place to talk, and sell domains..

Walmarts are the foundation of economies NOT the Daytons of the world..

 

[DomainOgre]

Its not about "need" at all. Its all about being practical.

What you are suggesting with the $15 min simply wont work. Why dont these people who are complaining, buy and sell high quailty names at the auction instead of talking about it here? Where were you last night? Why didn't you buy names for above $15 last night? Nobody was stopping you.

Edwin, I like your "pooling" idea but nobody should insult somebody for buying names at under $15. You are just pissing people off instead of solving a problem (and no I am not pissed off).

 

[_Yakov_]

Hire me as a strategic partner and everything will go well =)

 

[bidawinner]

Maybe a vote of paying members on how high of a min we want.. ? I dont have a problem raisingthe min a few bucks...just that if you raise to $15 then all you are doing is creating an auction even more boring then it was yeasterday AND these small transactions are foundations for larger purchases as people learn th process , lern who they are dealing with and gain experiance from doing these small transaction..

they are foundations for creating more experianced DN members leading to larger deals and creating a better sense of community .

good night.. no hard feelings.. just animated discussion

 

[DomainOgre]

Agree 100%, bidawinner. Well said. The small deals are a great way to build up to bigger ones.

 

[CoolHost.com]

It's only "animated" because we all care! To some degree, I think those that continually say, "Stop whining" or "Stop complaining" underestimate the constructive comments that come from those complaints. Remember, too, folks here have PAID ... "complaining" now is much different than when the site was free, in Greg's early days. People who pay have a right to offer criticism, I'm sorry.
Now, I totally appreciate the comments left here by WebHold, Edwin, and others ... my hope is that management will now incorporate some of these ideas and the outline a strategy for us moving forward. This communication to the paid membership is essential IMHO.
Thanks and goodnight everybody.

 

[Ed30]

Originally posted by bidawinner
these small transactions are foundations for larger purchases as people learn th process , lern who they are dealing with and gain experiance from doing these small transaction..

they are foundations for creating more experianced DN members leading to larger deals and creating a better sense of community .

That is an excellent point. We have to remember that at some point we were all new to this business and I doubt that there are any people here who didn't register rubbishy names when they were starting out - it's only by doing that you can learn from your mistakes.

There are newbies joining and participating in the forum every week. If we are not going to give such people a chance of success in this business and subsequently turn it into some kind of ridiculous elite club, we are all going to suffer the consequences.

 

[beatz]

I dunno.

There seem to be quite some people that have the idea of regging names and selling them to resellers is a solid business plan.

Maybe someone should point out that this is a bad idea.

As the only way to make *real* money when it comes to resale is selling to ENDUSERS, as long as your names are not top-of-the-cream names that even sell for good profit to resellers.

So, as the auction so far has mainly been reseller to reseller, what do you expect?!

Of course prices are low as reseller wants to buy from reseller for dirt cheap only - normal.

Now, if you think the solution is to bring enduser/retail buyers to the forum - you are wrong.

First, this is a FORUM.

NOT a sales platform; as someone already pointed out earlier, the "for sale" section and the auction are just one of many sections, its not like DNF was built around those.

Second, as a serious seller, its your *own* duty to market your names to enduser buyers, not DNFs.If your not able to sell your names to enduser, better get out of the business or find a broker.

For instance, my chances are 1000% better to sell Casting.us by posting the name for sale on a model/casting forum than posting it here - now, you just CANT bring the right endusers here for that name as the RIGHT endusers(i.e. the ones that would pay most for the name) have no interest in domain forums; at least to improve my chances of selling the name HERE you would have to bring ALL those casting people that visit the casting boards to this place - at least, and thats just for *one* name.Impossible thing.

Third, on what basis do you wanna decide whats you asking price as soon as retail buyers have access to the for sale section and the auction?

Like, "$100 asking price for reseller, $1200 for retail, please identify yourself" ?

Ridiculous.

All in all, my point is, the idea of all you have to do to sell your names is sitting here waiting for the retail buyers to come(be redirected) here and theyll pick a name they like and thats it is just wishful thinking.

You have to do the work yourself.

Nature of the game.

Really,i could care less if retailers are brought to this place or not, as i always felt its part of *my* job, if not the most important one, to find enduser buyers *myself*.

Even more, i think the idea to bring retail buyers here could destroy the nature of what DNF was and is good for - that is exchanging info amongst DOMAINERS.

This is not afternic, you know.

Btw - i always said and still will say - AUCTIONS simply dont work for endusers for a dozen of reasons anyway.

Now if the new owners want to prove the opposite on the risk of destroying what DNF was made for actually, go on and try - youll see.

 

[Cash Is King]

Originally posted by beatz
I dunno.



Now, if you think the solution is to bring enduser/retail buyers to the forum - you are wrong.

First, this is a FORUM.

NOT a sales platform; as someone already pointed out earlier, the "for sale" section and the auction are just one of many sections, its not like DNF was built around those.

Beatz

I'm listening to you and getting a little confused. I'm sure DCG realizes he bought a Forum. This forum brings in membership revenue which is a sales platform from an ownership standpoint.

Like any good business owner, the question is how do you expand your platform? Dnforum could raise there membership prices or close down the forum and redirect the traffic to more profitable site.

The point is, leadership is looking at the whole forest not just the trees from within. With new ownership you must accept change. If there is a way to bring retail buyers and traffic to increase participation at the live auction, I am all for it.

You are correct that this is a forum. I believe there is a way to bring non members to the live auction that do not participate in the forum. I also believe there is a way to convert these non members to dnf members so to create a win win for Dnforum and the members own pocketbooks.

In order to marry these concepts, one must clean up their own house a bit so to be able to present the new concepts / business strategy outside the walls of this forum. Aka -- Forest viewpoint.

 

[Edwin]

Originally posted by beatz
First, this is a FORUM.

NOT a sales platform; as someone already pointed out earlier, the "for sale" section and the auction are just one of many sections, its not like DNF was built around those.

You make several valid points, but I can't agree with this. What members are being asked to pay for is the sales side of this site/service, not the forum.

As such, it's the sales side that needs fixing most urgently (after all, a forum is a forum is a forum) since that's what's driving the revenue machine.

 

[CoolHost.com]

Originally posted by Edwin


You make several valid points, but I can't agree with this. What members are being asked to pay for is the sales side of this site/service, not the forum.

As such, it's the sales side that needs fixing most urgently (after all, a forum is a forum is a forum) since that's what's driving the revenue machine.

Precisely!!
Thanks.

 

[Tippy]

A small increase in starting bids would be ok, $5 seems fair to most I believe, not $15

I am not for the "Point System", I paid to list names in the Auction and thats what I shall do, 10 a week if I wish, or none. Why would you punish someone because there name simply didnt sell. It will make the Auction system more confusing then need be.

Mike