The ups, downs, and persistence of acquiring RunningShoes.com.
Some domain name purchases are easy. Others are a series of ups and downs and lengthy negotiations.
The latter describes Chesterfield, Mo-based Cat5 Commerce’s purchase of RunningShoes.com for $700,000. The company went head to head with a major sports equipment retailer and negotiated for six months before finally completing the deal.
The story starts in August 2010. Cat5 Commerce had a number of successful online stores based on category domain names already. CEO Chad Weinman was looking for more killer domain names he could acquire. He did a Google search for “running shoes”.
“I noticed that RunningShoes.com was ranking pretty well on the first page for running shoes,” he said.
“All the other sites that were surrounding it were like New Balance, Asics, and Zappos.”
In other words, RunningShoes.com was surrounded by huge brands. Weinman sensed opportunity.
He emailed the current owner of the domain name, who ran a bricks and mortar shoe store in addition to the web site, asking if he’d be interested in selling the domain name.
As it turns out the owner had just engaged a domain name broker to assist with a sale. This was good news and bad news. It was good that the owner was willing to sell, but bad that there would be competition.
Weinman started negotiating with the domain owner and got close a deal that involved paying for the domain over time. Then the competition came to the plate in the form of mega sports retailer The Sports Authority.
The company flew out to meet with the owner and struck a deal. It looked like Cat5 was out of the running.
But Sports Authority’s deal involved a payment plan and internal issues resulted in some delays.
So the owner of RunningShoes.com reached out to Weinman again. Rather than deal with payment plans, Weinman made a solid, fixed price offer.
“We just said we’d do it all upfront and make it a clean transaction,” Weinman explained. “That’s why he ultimately went with us.”
In a category competing with the likes of Amazon.com-owned Zappos, buying the domain name may prove to be the easy part.
“Zappos is a formidable competitor,” said Weinman. “They set the bar very high. We distinguish ourselves by having a more focused site; a niche e-commerce experience. If you’re looking for running shoes, you’ll appreciate the fact that we’re all about running shoes.”
Cat5 commerce has experience selling shoes online. It has existing relationships with manufacturers for its HuntingBoots.com store. This experience gave the company confidence to make the purchase.
“For us it feels like the store has the potential, based on the experience with our other ecommerce properties, to do 7 figures revenue or maybe 8 figures,” he explained. “So to make an investment of that size is a good decision provided we can put all the other pieces together.”
As Cat 5 works to put all those pieces together, it’s about to complete another high dollar domain name acquisition. Most of its purchases have been between $20,000-$30,000. RunningShoes.com is an obvious exception, and the company’s latest deal is six figures.
After that I get the sense that the company’s focus will be less on category killer domains and more on putting all the pieces together.
With domain names like RunningShoes.com, the foundation is certainly there.
Great story and write-up, Andrew.
Personally Although I would have thought RubningShoes.com could have sold for $700k I would have never expected it to happen any time soon. Just goes to show our domains are worth more than most of us give them credit for. I doubt the real category killer Shoes.com would fetch $700k in am auction and most would have thought it was a good sale if Shoes.com sold for $500k to an end user. Suddenly domains like WinterCoats.com seem like two should be high 7 figures to me, whereas before $100k would have been a huge victoryfor something like WinterCoats.com
Hilarious that The Sports Authority wanted to make payments. Great story.
The domain ain’t worth more than $25k a most, but thank god for these suckers.
Do you know who the domain broker was?
That was a great domain purchase.
Look likes the buyer gets it.
Blow smoke up your ass jonty you moron!
Clothing/fashion domains have been VERY undervalued. Fashion is by far the most profitable category of tangible goods. Popular designer manufactures an item of clothing for $5-$20, then sells it for $100-$500. So there is plenty of profit to divide. Almost every other ecommerce category of tangible goods has outright pathetic profit margins next to fashion.
Another thing is women will always spend 10%-30% of their disposable income on clothing/shoes/accessories. Laptops, electronics, smartphones, anything with technilogy really, keep getting cheaper and cheaper until there is literally zero profit to be made. How about books, CDs, DVDs? Lots of profit to go around in the past. Zero profits today or in the future. Fashion will always have unique pricing dynamic related to perceived status, so it will always be largely immune to discounting.
Category killer descriptive .COM domain name, perfect for branding. The company clearly is flush with cash such that $700,000 is not that much. They also obviously have experience doing the same thing with other killer descriptive .COM domains so they know what they are doing. WIN for both parties.
Anyone still basing the value of domain names solely on CPC/affiliate sales/ SEO potential is a fool.
Anyone know email address of Chad Weinman by any chance, please let us know kindly?
Thank you!
@ DomainKingdom
This domain had an overture of “0”
One month it had an overture of 31.
In other words it gets 10 natural type-ins a day and is not brandable.
Plus, nobody is going to compete with zappos.com on price or service.
I like the keyword loaded links to hunting boots etc in this post. A little black hat seo in an otherwise white hat story. Very slick cat5.
lol, jonty
You know nothing about how to check keywords value, don’t you?
I know that runningwarehouse.com was bought for $8.95 and ranks higher than running shoes.
LOL
Shoes.com not worth $700k before now? come on jp seriously?
Fifteen years from now this investement will look just like someone buying 100 acres of Malibu beach property for $10,000 way back when.
Long time reader, first time commenter, wanted to let you know I appreciated you keeping me informed on domain news. We have sold domains for up to $1,000 but no higher as of yet.
They should make back their 700 K in one year, after that it’s all profit. Not only did they get the name they wanted, they also prevented a major competitor getting it. Plus they still own the name and can sell it at some stage if they decide to – a win/win/win situation in my books.
Another follow-up interview with Cat5 at PracticalCommerce:
http://www.practicalecommerce.com/podcasts/episode/1564-How-to-Spend-700-000-on-a-Domain-Name
well there is potential in the name for the end user, may be not for a domainer looking to buy and resell the name at a profit. i was negotiating with the owner of wintercoats.com with the negotiations ending at my final offer of $25k. havent heard back from the owner. End users always PAY MORE.
I think you are right on your doubts JB on the real category killer shoes.com reaching up tp $700,000. Here a link to my post on this after discovering that shoes.com is up for sale in sedo auction
http://domainpeak.net/will-shoes-com-reach-half-of-runningshoes-com-sale-at-700000/
I thing the owners of RunningShoes.com should purchase RunWell.net from me as it offers a good synergy for the company.