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Why some Domain Name Auctions are Under-Sold

Why some Domain Name Auctions are Under-Sold
Why some Domain Name Auctions are Under-Sold

Sometimes we hear news about a Domain Name being sold in an online auction, for what we consider is less than its minimum deserving price. Is it really a Fixed/Fake Auction or there could be any other genuine reason for it too…?

I would like to make case-study of a domain sale here, which happened in 2009.

The Domain was – Toys.com

Toys.com earlier sold for $1,250,000 in 2009, as part of a bankruptcy court proceeding, and again sold for $5,100,000 after a re-auction was ordered by the bankruptcy court.

So, 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.

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.

I would like to quote Owen Frager here, who once said – The irony is that the domain business is all about advertising yet no one wants to invest in advertising their domains.

We all know one thing – If you have the right domain and the right bidders you will have a sale.

But if you have bidders but not the right kind of 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 kind of bidders.

I had also read somewhere that Frank Schilling was in until $2.9million.

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.

Many were 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.

But End user perception, need and valuation are having very little to do with metrics.

For example, Pizza.com would have gone higher if Pizza Hut, Dominos, Papa Johns knew about the sale.

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.

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.

We need to think creatively and find ways to come out of semi-closed circles.

Awareness and Exposure, not only by the Seller But by all of us who know about the auctions happening is essential. If we all work together we can boost up domain prices and exposure.

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