A win-win for GoDaddy and most bidders.
A lot of people are frustrated with the bidding process at GoDaddy when it comes to closeout auctions.
The idea behind closeout auctions is smart. If no one bids at least $12 for a name during the regular GoDaddy expired domain auction, the domain goes to a Dutch auction where the price starts at $11 and decreases by a dollar a day until it hits $5.
Closeouts allow GoDaddy and its expired domain partners to get something for a domain even if it’s not worth the $12 starting bid price.
But how things work in reality is very different from how they work conceptually.
People don’t want to get into bidding wars in auctions. If no one else has bid on an expired domain as the clock winds down, they (or their computers) stand ready to ping GoDaddy the minute the domain goes into closeouts so they can get it for $11 rather than what is likely hundreds if they place a bid during the regular auction.
Think about what’s happening here. An auction will expire with no bids at even $12, but there are sometimes 5 or more ready buyers who would be willing to spend $100+ on the domain. The point of auctions is to sell things for the market price, but that’s no longer happening in these auctions.
That’s bad for people that don’t have automated means to snipe the closeouts. It’s also bad for GoDaddy and its partners because they are leaving money on the table.
The solution is fairly simple: raise the starting bid for closeout auctions.
Instead of setting a buy now price below $12, set it much higher. I’m not sure what the right number is. Maybe it starts at $75, drops to $50, then $25, then $10 and drops a few bucks after that. I know that I’d be willing to pay $75 or more for many domains that close with no bids.
Raising the price will have two effects.
First, people will be more willing to bid in the regular auctions rather than wait for closeouts. The potential savings of waiting won’t be as great.
Second, GoDaddy and its partners will make more money.
The only people who will lose out are those that have perfected their systems for sniping closeouts.
BellsDeals.com says
that sounds like an excellent fix…
Paul Nicks says
Can’t recall the last time I saw someone stumping for raised prices. I appreciate the input Andrew
Travis says
Huge Names, and a few others have ruined the whole platform.
Godaddy has not stopped them as they tax you on every bid, I am very sure many state auction laws are being violated with huge names automated bidding manipulation.
This is the very reason godaddy has resisted usernames, the only exchange that does not want bidders to know who they are up against.
Nick says
May work, but most likely no one ever bids at the $75 and $50 closeouts, and domainers and bots all wait and try to bid at the low price closeouts like they do now.
Andrew Allemann says
I’m not so sure. I’d jump in at the higher price on a lot of domains. I don’t know if my price examples are right, but there’s a price at which this works.
There are quite a few domains that almost go into closeouts and then I end up bidding over $100.
Nick says
just my opinion , but I think most of the people don’t want to bid on a domain cause they want to spend under $30 for it. No way to really know unless GoDaddy gives it a try. I think it’s worth a try. Smaller increments though. Instead of lowering $25 at time. Lower $10 or $5 at a time.
Andrew Allemann says
If people don’t want to spend the $12 on the domain, they can wait for it to go below that. There are certainly a lot of domains that won’t sell until they hit that price.
Travis says
Nick, you do realize a backdoor alkowed bots to backorder snipe closesouts before they were ever released.
Have you been looking for closeouts that never release, wonder who is listing them all on. Afternic for as low as $20 BIN’s.
JZ says
I buy closeouts because they’re cheap. If they would cost that much, I wouldn’t bother with them.
JZ says
Which is another segment of people you left out who lose out. Those who are willing to risk 20 bucks on a domain but not 75. There are a lot of closeouts I buy now that I would never spend 75 on.
CK says
I don’t think this is a logical fix. While a domain MAY go over $50, $100 etc if you place an opening $12 bid, it may also close below those prices if you bid.
So you might as well get the domain for less in the auction than the closeout. So if you bid, the price may go above $75. But if you don’t, the price will surely go to $75 as the closeout BIN, and you risk someone picking it up there. It totally changes the dynamics of auction to closeout, and you might as well take your chance and bid on the auction if these price increases are enacted.
This closeout system only favors deep pocketed buyers who doesn’t care about paying $11 vs $75. Maybe you feel it would benefit yourself and the types of names you used the backorder glitch to bid on, but I don’t see this as being a win for most people who buy in closeouts.
I sure know that the domains I buy in closeouts are worth paying $11 + renewal for, but rarely $75 + renewal. So the result is that someone else would pick them up.
The bot bidders are certainly not price sensitive. They would most likely snipe whatever they want at $75 still, while the rest of us would have to pay more for the leftovers (because you have to pick up the name before the prices gets too low). So I see the same inventory becoming available for human bidders, but at higher prices.
Surely more people would bid in auctions rather than wait for them to hit closeouts though. So it would be a win for GoDaddy. I see no benefits to regular domainers.
Andrew Allemann says
So if it pushes you to bid on the regular auction, that would drive the appropriate behavior for an auction I think
Ralph says
The Huge Domain bot, scans for last 5 min bids, and jumps in, and has a set min, anytime you bid last minute 80% of the time you are going to be run up by a bot leaning on human intel.
Andrea Paladini says
Agree with CK above when he says “This closeout system only favors deep pocketed buyers who doesn’t care about paying $11 vs $75. Maybe you feel it would benefit yourself and the types of names you used the backorder glitch to bid on, but I don’t see this as being a win for most people who buy in closeouts.”
The usual few “interested guys” with vested interests are trying to change the system to their favor … shameless people indeed …
Current GoDaddy closeout system works well, I see no reason to change it.
Paul Nicks, keep it this way, it’s a balanced system and it works well. 🙂
Ralph says
It is a whole bunch of newbies paying to much for domains based on godaddys appraised value, they don’t have a clue, they think they are buying a $1200 domain for $20.
Wait 3 years, and these clowns will be in hiding from the credit card collection companies.
All these shows make it like their is some overnight lottery in domaining, they don’t have a clue.
Godaddy regulate the API users, they are ruining the auctions.