Key Take Away From Sedo Market Study | DomainInvesting.com

Key Take Away From Sedo Market Study

19

Mike Berkens wrote a post about Sedo’s Quarterly Market Study, and there is an important takeaway that should be noted, especially by people who are new to investing in domain names or are exploring the space. 94% of all sales transacted on Sedo are for domain names that are sold for $5,000 or less. 48% of all public sales are for less than $500.*

If you look at the sales reports issued by Afternic, Sedo, and other venues, we are able to get a look at some of the higher end public sales. Platforms like Afternic and Sedo help domain owners move somewhere in the vicinity of $1 million in domain names each per week. While those big numbers are great, the majority of sales aren’t large transactions.

Week after week, I see overpriced domain names listed for sale in various places, some of them comically overpriced. I don’t know if they actually expect to sell them for a lot of money, but they certainly price them wishfully.

Let’s say you buy 100 domain names for around $1,000. Perhaps you have a sell through rate of 1-2%. If you are selling them at levels similar to what Sedo is reporting, you’re probably treading water. If you continue to buy domain names, you may be losing money, hoping the “big deal” comes next month. For many people, that big deal never happens. Despite this fact, people continue to spend money “investing” in and renewing bad domain names.

I know this isn’t going to be a popular post. However, I get frustrated when I receive emails from people who are desperately trying to unload domain names I wouldn’t even consider hand registering. I feel badly that they thought investing in domain names was a great way to make easy money and that some of these people spent money before fully learning about domain investing. I feel sad that many of these people probably didn’t have the money to waste in the first place.

There certainly are people making an exceptional living from domain names. These people have learned the markets, know how to buy and monetize valuable domain names, and are able to close deals regularly. The number of people who are in this category pales in comparison to the number of people who are trying.

I would guess this might be similar to the number of people who want to play football compared to the number of people playing professionally. At some point, you need to have a reality check. The good thing about domain name investing vs. football is that investing in domain names is something that can be learned and mastered, while genetics plays a major role in professional athletics.

To all those who are continually buying domain names without the successful sales, I urge you to stop what you’re doing and research the market. Spend time really looking at what makes a good domain name and why domain names are selling. You don’t need to be a genius to make money investing in domain names, but you do need to put the time and effort into researching the business.

*The company stated that 90% of all sales are reported, and a great deal of the 10% of sales that are private are most likely above $5,000.


About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. Elliot is also the founder and President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest.


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Comments (19)

    BullS

    48% of all public sales are for less than $500″

    Q: Who are those people that buy those crappy domains?

    August 15th, 2013 at 5:46 pm

    domainspotter

    Commentaries like this–and even more the first comment about people buying “crappy” domains for less than $500–always amuse me about the myopia of the “domain investor”. Thousands of people all over the world buy a “crappy” domain for about ~$10 every day. To the extent they are shown aftermarket domains, and the registrar has integrated the aftermarket in an effective way, they may consider alternatives, but for the most part, the aftermarket is a “shadow market” full of nuance and confusion. For example, when is the last time you heard the word “escrow” when you weren’t buying a house? So to expect the tens of millions of people looking for a digital identity to discover your domain, and then want to engage in Turkish-bazaar style negotiation, is so nostalgic. Domain investors want everyone to appreciate their omniscience in owning a great domain portfolio, but yet expect potential buyers to ignore the Amazon-instant-price-instant-delivery world that now exists. Especially for a digital product!

    August 15th, 2013 at 6:17 pm

      Adam

      This is exactly why aftermarket integration with registrars like godaddy works so damn well… there’s still a level of sticker shock I’m sure and confusion (think “why isn’t this domain $10 too) but they have the 1 click ease and brand power to provide the buyer with a sense of security. good post brotha

      August 16th, 2013 at 1:40 am

      mrx

      Whatever he said.

      August 19th, 2013 at 5:10 pm

    Mark

    Buying and selling domains is not so different from buying selling stocks, you have to buy certain domains and not always follow what other domainers are buying or selling.
    Sometimes you have to buy the future of a domain and not it’s past.

    I enjoy buying domains and selling some of them to end users as well.
    If I don’t sell a certain domain, and I like it, I just hang onto it for myself.

    August 15th, 2013 at 6:26 pm

      Elliot Silver

      “If I don’t sell a certain domain, and I like it, I just hang onto it for myself.”

      Are you investing or collecting?

      August 15th, 2013 at 6:27 pm

    Hugh

    Very good article Elliot. I have noticed the trend is drifting lower.

    August 15th, 2013 at 7:38 pm

    irfan

    Like your post and would like to repeat this text from your writing “You don’t need to be a genius to make money investing in domain names, but you do need to put the time and effort into researching the business.”

    August 15th, 2013 at 9:10 pm

    Domenclature.com

    @Elliot,

    This will be a long post, but it’s inevitable in order to make the point. Below ae this weeks Top DNJournal.com sales, and it’s very typical of weekly reported sales. Can you take a look at the names sold, and emphasize what is it exactly that is selling, and what is not? From my stand point, there doesn’t seem to be a discernible pattern:

    The DN Journal Top 20

    1. Xylem.com $47,100 Afternic
    2. BXE.com $40,000 Afternic
    3. PremierOutlets.com $26,000 Sedo
    4. Meifa.com $25,655 NameJet
    5. PatriotSecurity.com $25,000 Afternic
    6. MUI.com $24,999 NameJet
    7. TeethInADay.com $22,500 MostWantedDomains
    8. MesoLawyer.com $21,000 NameJet
    9. Solutions4.com €15,000 = $19,950 Sedo
    10. Lakrits.se
    (“licorice” in Swedish)” €14,542 = $19,341 MissDomain

    11. OnlinePaydayLoan.com $16,900 NameJet
    12. MoneyCard.co.uk €12,031 = $16,001 Sedo
    13. Nanji.com $15,800 NameJet
    14. GoldenSea.com $15,777 Afternic
    15. Excitement.com $15,500 NameJet
    16. LTV.com $15,100 NameJet
    17. DWI.org $14,000 NameJet
    18. Vimla.se #13,000 Sedo
    19.
    tie Clams.com $12,500 Sedo
    19.
    tie Kodo.com $12,500 NameJet
    19.
    tie MyHair.com $12,500 Afternic
    19.
    tie TheFood.com $12,500 Sedo

    Additional Sedo .com Sales Between $2,000 – $4,500
    haatch.com $4,500 hybridevent.com $2,500
    cruzeirosbaratos.com $4,200 idick.com $2,500
    sfilter.com $4,000 lieblingsstueck.com $2,500
    superdenim.com $4,000 speakingforacause.com $2,500
    omnipub.com $3,750 waqf.com $2,500
    worldofdrinks.com $3,724 womenandgolf.com $2,499
    lkid.com $3,025 freudig.com $2,394
    6115.com $3,000 cafex.com $2,325
    biosym.com $3,000 drvn.com $2,300
    c-flow.com $3,000 kobitos.com $2,300
    likeinmind.com $3,000 aimpossible.com $2,250
    loyco.com $3,000 mlin.com $2,250
    taxinsurance.com $3,000 doctorimplant.com $2,200
    yourtask.com $3,000 foodblogger.com $2,009
    mysummary.com $2,905 cashbackcasino.com $2,000
    tuscantan.com $2,726 getmobile.com $2,000
    beclub.com $2,600 itfocus.com $2,000
    xxss.com $2,511 skyers.com $2,000
    bounceuk.com $2,501 webto.com $2,000
    heavyhelp.com $2,500

    Source/Credit: DNJournal.com

    August 15th, 2013 at 10:34 pm

      Tim Davids

      I see a pattern. But, if I told you I’d have to kill you.

      kidding aside, the biggest pattern is it has to be usable as a business address in that it has to make sense. No business or blogger would buy 48fjv47.com but they would buy 12.com or myblog.com.

      See its easy :)

      August 16th, 2013 at 7:33 am

    Elliot Silver

    That is a great point. It shows the importance of experience over casually looking at one weekly sales report. I know what sells based on observations and my own sales/inquiries. Looking at a sales report gives you a small bit of data and I don’t think that can easily be interpreted to become better at finding good names. Most of those buys are likely for specific projects, and it doesn’t necessarily make “similar” names more valuable. Even if it did, most people couldn’t identify “similar” domain names with good accuracy.

    People shouldn’t just read DNJ and go out to try and register similar looking names because that probably won’t lead to sales.

    August 15th, 2013 at 10:38 pm

    Kevin

    The Sedo and Afternic reports have always been challenging to comprehend for the logic of what some domains sold for. The majority of domains sold each week make you shake your head and think “WTF LOL”.

    If you check back on them months later you’ll see most never end up going anywhere beyond parked pages and even not resolving to any page. It’s bizarre.

    My guess is there are so many people that either don’t know what they are doing or have so much money they don’t care about the price paid or maybe they have a nutty idea for an online biz and think that’s the magical name for it.

    Go figure . . . . lotta very strange cats on the Net.

    August 15th, 2013 at 11:19 pm

    Mark

    “If I don’t sell a certain domain, and I like it, I just hang onto it for myself.”

    Are you investing or collecting?

    Both, but I do not fall in love with a domain name, so every domain has it’s price.

    August 15th, 2013 at 11:46 pm

    Anon

    I’d suggest everyone in the ‘domain industry’ read “A Random Walk Down Wall Street.”

    The 10% who actually comprehend it will definitely benefit from what it says.

    August 16th, 2013 at 1:53 pm

    Jerry

    Now for the newbies who actually have names to start off with, how can he tell they are bad or good domains? is there any expert that can help me determine if my names are bad or good?

    August 18th, 2013 at 8:53 pm

      Elliot Silver

      You can probably get feedback in the appraisal section of DNForum or Namepros.

      August 18th, 2013 at 10:27 pm

      Jerry

      The appraisals on namepros are rather demeaning or too harsh or too truthful, that i dont know which side to sit on. If there is any top domain guru who wants to help me out, i’ll gladly appreciate. What i want is i’ll send you some names then tell me why they are bad or good, just a little mentorship to get me on my way. Thanks.

      August 19th, 2013 at 3:31 am

      Elliot Silver

      Sometimes “too truthful” is what you need.

      I’d rather get the truth from unbiased observers than a candy coated fallacy that continues me on a path to wasting money. I doubt you’ll find a top domain guru willing to spend time mentoring someone else. If you do, make sure there are no ulterior motives.

      August 19th, 2013 at 7:25 am

      Adam

      If you have to ask “are my domains good” , they probably aren’t.
      If you can’t handle feedback from a forum, they probably aren’t good.
      If you want to get advice from a “guru” go look at their portfolios and see what they own. They probably have about 50% that aren’t “good” too. :)

      August 19th, 2013 at 11:25 am

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