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.