Building a marketplace is hard, even in the domain name business.
It’s crazy to think that it’s been 20 years since the first auction on eBay (then AuctionWeb).
So much has happened since then when it comes to the internet.
eBay created a market of buyers and sellers, much like the two predominant domain name marketplaces (Sedo and Afternic) did. Here are a couple take-aways from this:
1. Creating a market is hard.
A lot of people gripe about paying 20% commissions to Sedo and Afternic. I don’t*, because I know it’s extremely difficult to build a market.
You need sellers and buyers to make it worthwhile for both sides of the equation. It’s a classic chicken and egg problem.
If you think it’s easy, tell me where Amazon and Yahoo’s “eBay killer” auction platforms went?
If a company invests these resources and pulls it off, they deserve outsized margins.
* The exception is if a buyer finds out about a domain being for sale on the marketplace from a parked page.
2. People don’t have time for auctions.
eBay was all about auctions at first, but now only 20% of its sales come as a result of auctions. Who has time to check in on an auction for a $25 item? In a world of Amazon Prime shipping, you don’t want to wait seven days just to purchase an item.
The same thing is happening with domain name marketplaces. Every week, about half of Sedo’s domain name sales are “buy now” sales. Buyers not only don’t want to participate in auctions, but they also don’t want to negotiate.
The same goes for new top level domain names. Landrush auctions are a thing of the past. The smartest approach to landrush was Early Access, a model started by Donuts. Now its competitors are copying the approach.