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]

Originally posted by RealNames
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).

This is some very good insight. My thought is to not abolish the live auction without trying a couple of different options first. If it then doesn't work, then abolish it.

 

[JMJ]

I believe its more of a sign of hard times that the powers that be don't want to admit. With a 6% unemployment rate and publications like USA Today stating they had the lowest want ads in the classifieds since 1966 people are tightening their wallets. Its not just the auction its even the sales threads its not just here its everywhere.

 

[Duke]

I think you have some valid points RealNames and I have been thinking along the same lines the last couple of weeks. Domains have never been a product that sold like "hot cakes". A domain has to be matched with the right end user to sell for a decent price. It can take weeks or months for those two entities to match up. So any short term auction scenario - be it here or on Ebay - normally produces poor sales results.

I'm sure the economy has something to do with it, but honestly outside the forum I have been having very steady sales the past few months and they have been at the price points I wanted for the domains (just sold a 3-letter .US Friday for $400). That is why I was initially surprised to see the auction sales falling off so dramatically. But after thinking about it, I don't think it is all that surprising.

The introduction of a LIVE real time auction was something new so there was a lot of initial electricity. After time though, the reality that domains do not lend themselves to quick sales (at least at strong prices) has started setting in. I noticed the same thing at DomainState with their extended time frame auction. A lot of listings initially, but very low selling prices and now very few listings at all.

Maybe some moves can be made to perk things up and still make it worthwhile but I won't expect any auction format to produce my important sales. Those are coming from personally designed parking pages for each domain that end users find when they come looking to see what is on that specific URL. I put an inquiry form on each page and the results are emailed directly to me when they hit submit. Most significant domain sales come from buyers seeking out good names and contacting the seller, rather than sellers seeking out buyers.

The reseller to reseller market may be poor but I think the enduser market is actually perking up. Recent sales prices are showing that too (paintball.net $45,000, malpractice.com $15,000, JCA.com $10,000 etc.)

 

[GiantDomains]

I don't think it has much to do with the economy, we are our own buyers and sellers, and we all want to buy or sell. That's a fact.

A quick look at the auction list, and most people decided it wasn't worth it. Most of the names were drop candidates not worth renewing.

Any suggestions?

 

[izopod]

Originally posted by GiantDomains
I don't think it has much to do with the economy, we are our own buyers and sellers, and we all want to buy or sell. That's a fact.

A quick look at the auction list, and most people decided it wasn't worth it. Most of the names were drop candidates not worth renewing.

Any suggestions?

Have a monthly Auction instead of weekly auction until the market picks back up. Make it the MAIN event people reschedule weddings around!!


D - N - F.....LIVE MONTHLY AUCTIONS---BE THERE!!!

 

[Duke]

Originally posted by GiantDomains
A quick look at the auction list, and most people decided it wasn't worth it. Most of the names were drop candidates not worth renewing.

I agree with that too. I looked at the list in advance and decided it wouldn't even be worth attending. I only checked the sales results after the auction was already over.

I don't have any suggestions for a quick fix. As RealNames said, there may not be a fix. I don't think that simply raising the starting bid price is going to solve anything. Then you'll just have bad names with a $15 starting bid rather than a $1 starting bid.

The problem is we are all resellers who want great names at dirt cheap prices. But because we are resellers, we are never going to offer great names at dirt cheap prices. So you have a conundrum that may be unsolvable.

 

[izopod]

Originally posted by Duke


So you have a conundrum that may be unsolvable.

For those in Broward County, the definition of "conundrum" is:

conundrum > noun (communication)

Meaning: A difficult problem.


:laugh:

 

[DomainOgre]

From looking at the sales thread, I dont think its the auction process at all. Simply put, people on this entire board want to only buy bargains. If a domain name is not grossly undervalued, it is usually passed up for those domains that are.

If you chop off the $1 bids then you will have a whole lot less domains being sold. That said, the $1 bids should be spread over the whole auction so the rest of the auction is not some big snoozefest like this one was.

Other than that, there is no real solution because you can't make people pay more than they want to. That goes for both good names and bad names.

 

[Cash Is King]

Starting bids less than $15 must go. This is spoken about in the what a joke thread.

 

[Mr Webname]

Let's not forget that the auction gives the site an "added value" for many who come here - take the auction away, keep slagging off the sales threads and soon there will be little reason for many to choose DNF over any other forum.

Just because the number of internal sales or the quality of sales has been reduced recently does not mean that we should destroy much of what makes DNF unique to domainers. For those who are serious domain pro's then DNF is only a part of their armoury - for others who are not pro and are perhaps hobby domainers, what we have may well be suitable and not found anywhere else.
There is a world outside of DNF but having paid to be here and obtain the "benefits" it would be a shame to write them off.
For those who don't wish to attend the auction the proxy bidding has been provided, with the ability to set a reserve then the seller should be reasonably pleased too, however if we keep seeing names grossly over-priced for a reseller market it will not be surprising to see that they are not sold. Having a "sales" platform here gives the opportunity to "trade" much like a trade between used car dealers - each gets some benefit but it is the outside retail customer that each is really looking for. If we view DNF as a sales tool rather than as THE only opportunity then we will not be disappointed.

 

[DomainOgre]

Setting the starting bids at $15 will solve nothing. All it will do is severely lessen the number of names sold at each auction.

Just look at the auction tonight after the $1 names stopped. Do you want that for every auction?

 

[CoolHost.com]

PS. What was the exact ATTENDANCE for last night's Live auction?? I went in for a while and literally fell asleep. I went in to "chat" for a while, as well and another member swore at me for no reason, so I left. I think he was frustrated his names were selling for only $1 a piece.

Gregr used to come into "chat" during the Live auction and give us a count of the members logged in to the Auction client. That was pretty , though unconfirmed. The NEW owner has never published ANY attendance figures, that I'm aware of ... or bothered to enter the chat room during key auction times.

Can new ownership (not moderators) please post on this site sometime, somewhere TODAY?
Thank you.

 

[Tippy]

Would it really matter how many people (Resellers) attended the live Auction when they are all bargain hunters, I dont think so?

Mike

 

[CoolHost.com]

Originally posted by Tippy
Would it really matter how many people (Resellers) attended the live Auction when they are all bargain hunters, I dont think so?

Mike

I'm more interested in seeing statistics which may reflect attendance by some of these NEW Platinum members (who may of may not be, "bargain hunters")... and who were formerly guests (ghosts)!
Has attendance for the Live auctions increased as proportionately as the increase in the new Platinum memberships (which is always being 'plugged by the moderators)??

Tippy ... you need to dig a little deeper, my friend. Thank you.

 

[Jack Gordon]

Originally posted by RealNames
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.

Economics 101

Thank you for sharing your insights RN, I think you hit the nail on the head here.

The fundamental flaw is that the product in the auctions is just not that good, not that unique, and not that valuable. That is why I quickly lost interest in the auctions, and why they are failing now.

I am not sure this is a solvable problem

 

[CoolHost.com]

Originally posted by FrontRow
I am not sure this is a solvable problem

Grrrr. Will the refunds for "Platinum" membership be pro-rated, or for the full amount?!?

 

[Tippy]

Refunds, lol

I find this to be a real funny request, prior to becoming a Gold Member I was against this Paid Membership thingy right from the start. I and others, where called whinners and cheapskates. The time to stand up for ourselves I feel has passed, not many Members backed me nor the other unhappy Members when this Paid Membership thingy was first introduced.

We could have stopped it dead but no, everyone who could afford it, paid the fee. At the time I couldn't afford it, wippty-doo I'm not rich, that's life. A few sales at DNF certainly doesn't provide that much monitary profit. It then became a " I'm better then You" situation which was not fun at all for some Members.

I was just wondering if everyone was aware that WE provided the bulk of the content at DNF, thus, WE had the power, not me and a handfull of supporters. I guess everyone is ok working/providing content to a site then having it sold back to them, lol.

To me this is a Domain Name Forum, a place to talk Domains, the "Sales Section" is just that. It isn't ment to be the main section is it? If so perhaps this site is headed in another direction, not that of a "Forum".

I've always seen it as a bonus to being a DNF Member, a place to sell/buy Domains once in a while, to other Resellers an the odd Guest perhaps. just like the Live Auction.

I upgraded to Gold because I was locked out off my PM and couldn't complete ongoing transactions.

I then went Platinum to be able to sell some names and get appraisals. I knew I could usually make a few quick sales, not big ones but sales the same.

I don't think it's fair to blame DNF and it's new Owner's. They purchased DNF as a profitable site with mostly happy Members. To request a refund isn't nice is my books.

Perhaps it's not DNF which has changed but the Biz and Members, yes us

Mike

PS : Did I dig deep enough this time

 

[DomainOgre]

There could be a "fix" for the quality of names at the auction, but it would cause its on set of problems and the auction would be less automated.

Simply have a great domain appraiser (or appraisal board) approve all the names submitted to auction. If the quality is not good, either do not allow the names or relegate them solely to the $1 bargain bin.

 

[Cash Is King]

Originally posted by DomainOgre
Setting the starting bids at $15 will solve nothing. All it will do is severely lessen the number of names sold at each auction.

Just look at the auction tonight after the $1 names stopped. Do you want that for every auction?

The number of names sold is unimportant. How does $1 domains benefit anyone? If the goal is to get thousands to attend this auction at one time, then we must raise the minimum starting bid.

This question falls on DCG and the strategy of Dnforum.

If the goal is to keep the site as is and not grow it, then yes I believe the auction should stay the same way.

I believe the goal is to grow this site and somehow incorporate retail buyers to attend the auction along with the resellers. With that strategy, now is the time to drive the starting bids and prices of domains up.

Maybe guests and silver members should be able to attend the live auction and purchase only. Platinum members would be the only ones authorized to sell at this auction. That would be the perk.