Practical Ecommerce

A tale of two domain purchases

We’ve all been there. We have a great idea for a company and we log on to a domain registrar. We type our dream domain name, hit enter, and bam. Someone is sitting on it, doing nothing. We try a few other permutations and they’re already taken, or worse, the names are terrible.

Where do we go?

I’ve bought only two domains over the years, both on the secondary market. I paid $25,000 for the first one, and $1,200 for the second. Here are the two stories.

Kegerator.com: Take a bag of money and light it on fire

In the early 2000s, I worked for Living Direct, a network of consumer-based ecommerce sites. Our major property was CompactAppliance.com, a seller of small-space appliances. We directly sourced most appliances under our own private label.

We had seen a strong growth in our beer segment. We were sourcing slightly modified refrigerators from factories in Asia and kitting them together with CO2 tanks from a U.S. supplier, and keg tapping and pouring components from another. Put all these together, add a one-half keg of beer, and you’ve got a kegerator (keg + refrigerator) on wheels for around $500 that fits in a dorm room or man cave.

We had a good deal of success selling kegerators on CompactAppliance.com, but there was (and is) a strong community of enthusiasts in the space and we thought that a branded microsite would convert more and rank higher, in organic search results, than the product and category pages of CompactAppliance.com.

We had the product. Launching the microsite on our existing site architecture was simple. We were using Demandware, the ecommerce platform. A new site launch was straightforward with a new category structure and content.

All we needed was a brand.

We had known for a few years that the domain Kegerator.com was parked — someone had purchased the domain, but was not otherwise using it. We also knew that we could buy a two-word domain — e.g., kegeratorstore.com — for $10 or so.

The more we discussed it, the more we thought the Kegerator.com domain would convey the most authority to buyers. We thought, “We are the kegerator experts. It’s there in our name!” Additionally, we thought a one-word, branded domain would help us rank higher in organic search results.

We decided to make a play for Kegerator.com.

We emailed the owner of Kegerator.com. He indicated that he was interested, but insisted that we make the first offer. We met with our AdWords employee, did a little keyword research, and projected the value of the domain, assuming the Kegerator.com would enable us to rank a little higher.

Based on our paid ad spend, we determined that the Kegerator.com was worth about $80,000 per year to us in “free” ads via organic search.

And here’s where we made our big mistake.

We offered $20,000 for the domain. The owner countered, and we ended up at $25,000. This was a year or two after CreditCards.com sold for $2.2 million. So we figured this was a great deal. And, sure enough, search for “kegerator” now, 10 years later, and the first organic result is from Kegerator.com.

We launched the site, did over $1 million in revenue on just that microsite itself in the first 12 months, and grew it from there.

So it worked out!

But, there’s a postscript to this story.

A few months after we bought the domain, I met with an Internet marketer friend. He owns Kegerators.com (note the “s” at the end). It’s an affiliate site, driving traffic to other retailers.

He asked me about the Kegerator.com domain story. Since he is a good friend, I told him. When I got to the part about offering $20,000 for the domain, he laughed (a lot). But asked me to finish the story. I did, and asked him what was so funny.

It turned out he had attempted to buy the same domain, just before we did. He offered $2,000, and the owner accepted. But before my friend wired the funds, the owner emailed him again and said that the deal was off.

And the deal was off because we had naively offered 10 times more.

FringeSports.com: Slowly, inexorably, politely creep the price up

Kegerator.com was still a good deal. We paid an acceptable price based on the value the domain provided. However, we paid more than 10 times the amount that we could have.

When I launched FringeSport.com, someone had already registered FringeSports.com (note the “s” again). We initially didn’t worry about it. After all, we are Fringe Sport, not Fringe Sports.

But from an early stage, many people verbally called us Fringe Sports. And our Google Analytics showed that one of the top searched terms for us was Fringe Sports. So I began negotiating with the owner for FringeSports.com. I found his email address from a Whois.com search.

I emailed him from my personal (not FringeSport.com) email address and offered $200 for the domain. He responded. I was even able to obtain his cell phone number. But he politely declined, stating that he had a dream to have a web business at that domain.

After that, I emailed, texted, or called him every month for two years, raising my offer price slightly and politely asking him to sell. Sometimes he responded (in the negative); mostly he ignored me. Finally, when my offer crept past $1,000, he responded that he was considering my offer.

We negotiated a bit further and landed on $1,200 with the understanding that he could keep a FringeSports.com branded email address for six months. I never told him I owned FringeSport.com until after the domain transfer completed — and he never asked.

We redirected FringeSports.com to FringeSport.com, and moved on.

Have you ever purchased or sold a domain? How did your experience go?

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Comments ( 5 )

  1. John Zabkowicz September 1, 2016 Reply

    I have purchased several domains in the past. None of them came with stories quite as interesting as yours.

    I’ve found that when it comes to domain names short and easy to remember works best. Keywords in the domain help but it doesn’t guarantee higher ranks in search engines.

    There’s an almost limitless amount of combinations, or modifiers that can be applied to make up a domain name. I haven’t run across a situation yet requiring me to pay more than the standard $10 for a domain name.

  2. Chuck September 1, 2016 Reply

    Been down that road several times, that is being offered. Once looking for a special domain. I wanted JAZZ.FM for a radio station I was running at the time. Found the owner’s e-mail and phone and called him straight up. He said no at first, then asked why I wanted it. I told him my purpose and we didn’t have any money :-). He sold it to me for $1,500. One time I got a call from a guy who wanted to buy one of my domains. I wasn’t in the mood so I said I wanted $40k. Upshot, he bought it and paid me $40k. He must have later gone out of biz because the domain was back in the system for $10 about a year later. I’ve sold around 15 domains from phone calls or emails. It’s a great business that I was never in.

  3. Mitch Powell September 1, 2016 Reply

    My immediate impression was that “keggerator,” with two g’s, like you would use with the word ‘kegger,’ (you certainly wouldn’t spell ‘kegger’ with one ‘g,’ (keger?)), so why wasn’t the fight over ‘keggerator’ instead of ‘kegerator?’

    • Fred September 7, 2016 Reply

      Probably because when you look at the keyword data, the one ‘g’ version gets the lion share of searches.

  4. Elizabeth Hollingsworth September 5, 2016 Reply

    Great story about people’s online search for plural objects. I am about to sell my old website domains for It’s In The Stars, my astrology site I ran for nearly 9 years. I would have done much better if I’d begun with itsinthestars.com.au from the start, being an Australian site, but launched with itsinthestarsonline.com. Will be curious to see how much – if anything – I get for it.