part I, part II, part III are here
Let’s look at what a professional trader looks like. As I know a couple I will try my best to give you an idea here. So who is the professional trader and how does he think? The professional trader is not attached to the deal. He buys because there’s a good deal to buy and he is well aware there are others out there. He buys because he is interested in revenues, either recurring (with domains, PPC) or sales. At times, he buys because he collects. In the domain business, the professional trader may spend well into the six figures a month to build his portfolio. The number one asset the professional trader holds is his time. Bore him enough and he will walk away elsewhere, voting loudly with his money rather than with words. The professional trader is extremely patient. He works out methodically, systematically. He automates whenever possible, he collects data, he analyzes, he budgets. The professional trader knows waiting is an action, he understands that sometimes doing nothing is the best move he can possibly do. But don’t mislead that with hesitation, he is far from it. When he decides to act, he sets goals, and he acts with complete determination. When he does act, he is well aware he can stop at any time, take a step back, analyze, and act again if needed. He is well aware of his surrounding, the markets, other sellers, other buyers, and the marketplace in general.
Understanding the professional trader is a must if you try to cater to him. I happen to be one. Over the years there were many months we spent six figures a month buying domains. We bought from Snapnames, Afternic, NameJet, Sedo, rarely at eBay, other traders, but mostly, from individual domain owners. With most of these we’ve dealt with frustration, not because good inventory wasn’t available, but because there was endless amounts of useless inventory, inventory which to look over cost you time and energy, which equals of course to money, to opportunity cost. To give you an idea let’s take a quick look at eBay .com domain listings. While eBay was never great it sometimes had decent listings, it took 5 minutes to scan through if you sorted by “highest first” and went over listings until 500$ range. I used to do that a lot because the sweet spot was (and still is) between 500$ to 10K range. If you look at the link above, it takes some 60 pages to get to 10K range, and another many pages to get to 500$ range. I tried this earlier today, complete waste of time. eBay makes money on each listing but as a buyer, professional buyer, I cannot possibly justify going through this list, not even once. So.. I walk away, and since I went through this painful experience, likely to not come back anytime soon.
Many of the auction houses in the domain space have improved on eBay model. Instead of charging to list though like eBay does, they let you list your domains for free and only pay when a sale is made. In essense, they become to be a combination of auction + classifieds. With millions of domains in inventory, it’s good for them but does not do much justice for you, as your listing is really lost in the shuffle. Professional buyers for the most part are not interested in sorting through, so most buyers left are end users who accidentally find your listings. This sort of arrangement does not really serve your needs if you need to move inventory.
When there is balance the professional trader comes back. Years ago it happened, when SnapNames first came out and started to auction expired domains with low reserves (29$ if I remember correctly). There were a lot of weak listings, but much gold as well. There was enough balance for the professional trader to invest his time and money sorting through. These days, the balance is lost. Too much weak quality, too few deals to be found. The professional trader walks away.
Worse, it is not only the professional trader who walks away, it is other professional traders from other industries who cannot come in. They look at the marketplace, cannot understand how in the world they can trade here, and decide to go elsewhere, maybe invest with real estate, technology, startups, anywhere where there is balance. Back in 2004 things were a little different. We’ve seen the proof when Marchex got in the game, and later iReit. Professional traders could quantify their time and energy and could find balance. These days they cannot.
At Bido we take all this into consideration as we are building the platform. In order to create liquidation the auction house must cater to the professional trader. Until that happens none of us will have control over the sales cycle, all at the mercy of an end user finding us. I don’t know about you but we’re not willing to live like that anymore, hence why we have decided to tackle this problem heads on and change it.
Have a great day,
Sahar
you are welcome,
the accurate pricing series is definitely a good read, which leads to a question, which maybe some of the other readers may also be having. Every industry as a rough estimate of the target audience which it caters to. I was wondering In the domain industry. What is the estimated size of the market for professional domain traders, as you described in the above article. Is it 10, 100, 1000? For those interested in liquidating some of their premium domains, what size of pool of interested buyers can they expect when BIDO is running full force?
—-answer—-
I don’t have exact numbers of top of my head but I will ask a good friend of mine from Fabulous.com to come and participate here and shed some light about current numbers of participants in the marketplace. Ideally though, you want the largest pool in addition to bringing new traders to the game. If a new firm like iReit, NameMedia, or Marchex gets it that’s a market infusion of hundreds of millions of dollars, and usually fresh money pays the most, as they try to catch up to existing players.
Cheers
Sahar
The best appraisers are end user buyers. Speculators buy names to sell them to end users at 100s of multiples compared to what they buy them for. Everything else is kaotic static intended to deflate values to the speculators advantage. Liars figure and figures lie. Look at Wall Street if you dont believe me.
I agree with Jeff, the best appraisers are end user buyers