[UPDATE: 03. September 2014]
It seems with the latest update to their website, flippa has made several changes to the domain auction/listings, especially in regards to the prices.
Since I have not since sold a domain, I did not look into this yet. I will be updating this post accordingly, as soon as I sell a domain again.
When it comes to selling complete websites, Flippa is the market leader, no questions asked. However Flippa also offers their users to only sell domain names without a website attached. Unfortunately in that area it seems, Flippa struggles to satisfy sellers and buyers. While the interest from both sides, the buyers and sellers, is definitely present, Flippa has so far failed to satisfy them both.
Why do I say that? Well let’s look at the statistics. To date (24. April 2014) Flippa had 32,657 domain listings. Only 6,682 were sold successfully and 25,975 listings didn’t sell.
If we look at the premium listings, we see that there were 464 premium domain listings to date, out of which 147 were sold successfully and 317 did not sell.
To put these numbers into perspective, if you are thinking about selling your domain on Flippa using the standard $9 auction, there is only a 20% chance that you will sell your domain. Using the premium listing upgrade for a hefty $250, the chances increase slightly to 32% of being able to sell your domain. These are certainly not odds that I like, especially not if I have upfront costs.
Okay, in fairness, there are many domain sellers that simply over value their own domain and end up not selling it because they have an asking price that is completely off the charts. There are countless listings where someone literally just registered a random new domain name like MySuperAwesomeDomain.com and then they think that this domain has a value of $10,000. All these day dreaming domain sellers do have a negative effect on the sales statistics, but are not solely responsible for the poor sales ratio.
So what seems to be the problem? The domain marketplace is quite big and brings along several big competitors. There are a only few domain auctions websites that stand out. Before we start analyzing all the different domain marketplaces, we need to have a look at the different kind of buyers and sellers that are in this industry.
First we have the domain flippers. These are people that buy domains and hope to resell them with a profit. Domain flippers are usually open to any kind of sources. They buy already registered domains directly from the owners, or try to snatch expired domains or even register new domain names themselves, as long as they see the potential resell value in the domain.
I know of several domain flippers who are active on DNForum.com, who have 1000s of domains in their inventory, buying and selling on a daily basis. They usually have their domain inventory up on DNForum.com. The majority of those big inventory guys buy and sell their domains for $10-$30 per domain.
Next up we have the SEO guys. This is where I am active myself. A crucial way of SEO is to create high PageRank backlinks to your money site. Nowadays it’s almost impossible rank on first page of Google without any real PR backlinks. The easiest way to receive such backlinks, is to purchase domains that are up for sale, that have a high PageRank.
Next we have the everyday Joe that buys something unplanned. He purchases a domain name simply because he just came across the sale of the domain name and purchases the domain on impulse.
The way I see it, Flippa currently is focusing on domain flippers (hence the name Flippa) as well as the everyday Joe. In my opinion, Flippa is not optimized for domain buyers that are in it for the pure SEO purpose. More about this later.
When we look at all the different kind users that are active in the domain buying and selling business, we notice that the majority is dealing with low end domains, priced at $10 – $30.
Flippa used to charge $29 per domain auction, but recently lowered the price to $9. On top of that Flippa asks for a 10% commission of the final sales price (aka. success fee) if the auction was successful, with a minimum success fee of $10 . While it’s nice that they lowered the price, it’s still not attractive enough for most of the domain sellers.
Let’s do the math:
I want to sell MySuperAwesomeDomain.com for a fix price of $30.
The domain cost me $7.99 to register
Flippa asks $9 upfront to start the auction.
If sold successfully for $30, I will have to pay another $10 on success fees.
To receive the $30 via PayPal, I will be charged a 3.9% + 0.30 cent commission by PayPal, which is $1.47.
This is a total of $28.46 on fees, leaving me with a profit of $1.54.
Now we compare this with Flippas main competitor. Well, not necessarily competitor, but where the horde of domain buyers seem to have their nest.
GoDaddy is not only the worlds biggest domain registrar, but they also hold the biggest and most active domain auction out there. Because GoDaddy hosts millions of domains, they also have a 1000s of domains that are expiring each day. Usually domains that are not being renewed would just be dropped, however GoDaddy realized a few years ago that there is a huge demand for dropped domains, so they decided that rather than letting the domains expire, they would put them up for auction. This business model turned out to be hugely successful and many other domain registrars followed this principle.
Not only does GoDaddy auction off dropped domains, but it offers domain owners to list their domains for free with a 10$ commission fee if sold successfully!
There is also Sedo. Which is quite established, but Sedo seems to be focused on long term listings with high end domains. There are not many low end buyers and sellers active on Sedo.
There is no big surprise why the majority of domain sellers didn’t hop on to Flippa. Flippa does have the necessary infrastructure in place and even more important, Flippa does have the potential buyers, to compete with GoDaddy.
The question is simple, does Flippa want to be some kind of Sedo or more GoDaddy auction? In my opinion, GoDaddys auction is a huge untapped market which Flippa could get a hold off.
To sum up, Flippa applies the same business model it has for selling websites, to their domain selling service, which does not work. As mentioned Flippa has already lowered the domain auction price from $29 to $9, which tells us they are willing to work towards a system that works for both, Flippa and the domain sellers. Even though, they are not there yet, it’s nice to see that they are always optimizing their services.
Especially in the IT world we see stubborn companies all the time that are run by CEOs who are not familiar with the industry they’re in, and only look at spreadsheets of numbers and are not willing to adjust to the always changing internet market, but rather hope the market will stay the same or feel that the market has to adjust to them. I am very happy that Flippa is not one of them.
So what needs to change? Well I can only offer my opinion as an end user who is avoiding Flippas domain marketplace because the competition has a service that suits my needs better, both as a domain buyer and domain seller.
In my eyes, Flippa needs to completely revamp their domain selling business model. This includes the pricing structure as well the way it handles it’s listings.
Flippa needs to have a look at the different types of domain sellers that exist (mainly the ones I mentioned earlier), and come up with a solution that suits all. Right now, Flippas domain marketplace is only valuable for domain owners who sell high value domains. Domain owners who buy and sell domains in bulk for prices between $10 – $30, Flippa is out of the question due to their pricing structure. Places like GoDaddy auctions and DNForum.com show that there is a huge demand for this low end domain market.
In regards to the user experience of Flippas website, I don’t need an overview that is limited to 30 listings per page, each listing 150px in height, with information such as a title of the seller saying “This is the best domain name”.
I want to see 200 domains listed per page, each listing only 30px in height, and I need information such as PageRank, Backlinks, SEOMoz Domain Authority and Age. The current way of displaying it is appropriate for websites, but not for domains.