Comments on: Looking Back to the Sale of Toys.com http://www.dnunderground.com/09/29/looking-back-to-the-sale-of-toyscom/ The Best Domaining Blog on the Web Tue, 26 Apr 2011 04:32:44 +0000 hourly 1 http://wordpress.org/?v=3.1.3 By: Ben Padnos http://www.dnunderground.com/09/29/looking-back-to-the-sale-of-toyscom/comment-page-1/#comment-4616 Ben Padnos Wed, 30 Sep 2009 16:27:12 +0000 http://www.dnunderground.com/?p=323#comment-4616 I attended the eToys bankruptcy auction in Wilmington, DE back in February and the original bidding for Toys.com ended around $1.25MM. National A-1 was unaware of the auction and petitioned the Bankruptcy Court to re-open bidding, at which time they and Toys R Us went head to head until National A-1 pulled out @ $5MM, and TRU closed the trade @ $5.1MM. For TRU, the domain is "priceless" as it knocks out a potential competitive threat. They'd have probably paid $10MM if necessary. Had National A-1 won @ $5MM, it would have taken a very long time for them to make it a profitable investment from running an eCommerce toy business, which has proven to be very difficult due to seasonality, pricing competition, the "fad" element of the toy business, and other factors. Lesson is, if two deep-pocketed, serious buyers exist, you can throw out all market comps -- it's just like a rivalry game in sports....the other factors at play supersede "worth". More coverage from the February Toys.com http://www.benpadnos.com/2009/02/etoys-bankruptcy-auction-february-4-2009/ http://www.benpadnos.com/2009/02/toyscom-sells-for-51mm/ I attended the eToys bankruptcy auction in Wilmington, DE back in February and the original bidding for Toys.com ended around $1.25MM. National A-1 was unaware of the auction and petitioned the Bankruptcy Court to re-open bidding, at which time they and Toys R Us went head to head until National A-1 pulled out @ $5MM, and TRU closed the trade @ $5.1MM.

For TRU, the domain is “priceless” as it knocks out a potential competitive threat. They’d have probably paid $10MM if necessary. Had National A-1 won @ $5MM, it would have taken a very long time for them to make it a profitable investment from running an eCommerce toy business, which has proven to be very difficult due to seasonality, pricing competition, the “fad” element of the toy business, and other factors.

Lesson is, if two deep-pocketed, serious buyers exist, you can throw out all market comps — it’s just like a rivalry game in sports….the other factors at play supersede “worth”.

More coverage from the February Toys.com
http://www.benpadnos.com/2009/02/etoys-bankruptcy-auction-february-4-2009/
http://www.benpadnos.com/2009/02/toyscom-sells-for-51mm/

]]> By: Patrick McDermott http://www.dnunderground.com/09/29/looking-back-to-the-sale-of-toyscom/comment-page-1/#comment-4615 Patrick McDermott Wed, 30 Sep 2009 16:13:44 +0000 http://www.dnunderground.com/?p=323#comment-4615 "Why does a company need to spend so much money to buy a generic dictionary word domain name when they can buy a brandable name for so much less and most likely do just as well with it." Hi, I believe you are missing the point about a domain like Toys.com. Domains like Toys.com, Candy.com, etc, are not just dictionary words or just generic domain names. Toys and Candy and such are Category Defining Domains. Imagine every toy having the imprint Toys.com or every candy bar proclaiming Candy.com. The prestige, the Instant Credibility, the $ saved on advertising is priceless. No brandable domain is comparable right from the start as those powerhouse domains are. “Why does a company need to spend so much money to buy a generic dictionary word domain name when they can buy a brandable name for so much less and most likely do just as well with it.”

Hi,

I believe you are missing the point about a domain like Toys.com.

Domains like Toys.com, Candy.com, etc, are not just dictionary words or just generic domain names.

Toys and Candy and such are Category Defining Domains.

Imagine every toy having the imprint Toys.com or every candy bar proclaiming Candy.com.

The prestige, the Instant Credibility, the $ saved on advertising is priceless.

No brandable domain is comparable right from the start as those powerhouse domains are.

]]> By: NameSugar http://www.dnunderground.com/09/29/looking-back-to-the-sale-of-toyscom/comment-page-1/#comment-4610 NameSugar Wed, 30 Sep 2009 13:03:47 +0000 http://www.dnunderground.com/?p=323#comment-4610 I think you're completely underestimating the size of the market toys.com completely dominates. PayPal.com is in a completely different class. IMHO Toy-r-Us STOLE Toys.com for "only" 5 mil. I think you’re completely underestimating the size of the market toys.com completely dominates. PayPal.com is in a completely different class. IMHO Toy-r-Us STOLE Toys.com for “only” 5 mil.

]]> By: Eric Borgos http://www.dnunderground.com/09/29/looking-back-to-the-sale-of-toyscom/comment-page-1/#comment-4606 Eric Borgos Wed, 30 Sep 2009 12:13:29 +0000 http://www.dnunderground.com/?p=323#comment-4606 It might have been a mistake for them if they overpaid for the domain, but the price they paid seems fair, so in addition to using it, it is also an investment. It may not ever be worth more than they paid, but it is not like they threw $5 million out the window like they do when they pay to advertise offline. Mainly, if they spend $100 million a year on advertising, then spending a small percentage of that on having a very memorable domain is worth it. Plus, it gives them clout and makes them sounds like the biggest company in the industry (which they are). Maybe it would have been a better domain for an up an coming toy company, like what happened with the candy.com sale, so it would instantly catapult a small company into the big leagues. But, it is also a risk for a small company to spend that kind of cash. For KB Toys, it was chump change. They can always sell the domain if they need the cash back. It might have been a mistake for them if they overpaid for the domain, but the price they paid seems fair, so in addition to using it, it is also an investment. It may not ever be worth more than they paid, but it is not like they threw $5 million out the window like they do when they pay to advertise offline.

Mainly, if they spend $100 million a year on advertising, then spending a small percentage of that on having a very memorable domain is worth it. Plus, it gives them clout and makes them sounds like the biggest company in the industry (which they are). Maybe it would have been a better domain for an up an coming toy company, like what happened with the candy.com sale, so it would instantly catapult a small company into the big leagues. But, it is also a risk for a small company to spend that kind of cash. For KB Toys, it was chump change. They can always sell the domain if they need the cash back.

]]> By: lumpenfolk http://www.dnunderground.com/09/29/looking-back-to-the-sale-of-toyscom/comment-page-1/#comment-4605 lumpenfolk Wed, 30 Sep 2009 09:45:02 +0000 http://www.dnunderground.com/?p=323#comment-4605 = about the same as a 60 second slot during Superbowl = not much to big business = about the same as a 60 second slot during Superbowl = not much to big business

]]> By: Ritz http://www.dnunderground.com/09/29/looking-back-to-the-sale-of-toyscom/comment-page-1/#comment-4603 Ritz Wed, 30 Sep 2009 08:26:53 +0000 http://www.dnunderground.com/?p=323#comment-4603 Simple! I had never heard of National A-1 before the auction. But I know what Toys are ! And now, everytime I type in Toys.com on my browser, I end up on ToysRus. now repeat that with the millions of others who were not aware of the auction but who visit Toys.com Tough luck for National A-1 , that's millions of potential customers they would have connected with. Now, think Toys, Get ToysRus. (National A-1 is out of the picture! forever..) you gotta love the power of generic names! Simple!
I had never heard of National A-1 before the auction.
But I know what Toys are ! And now, everytime I type in Toys.com on my
browser, I end up on ToysRus.

now repeat that with the millions of others who were not aware of the auction but who visit Toys.com

Tough luck for National A-1 , that’s millions of potential customers they would have connected with.

Now, think Toys, Get ToysRus.
(National A-1 is out of the picture! forever..)

you gotta love the power of generic names!

]]> By: David J Castello http://www.dnunderground.com/09/29/looking-back-to-the-sale-of-toyscom/comment-page-1/#comment-4600 David J Castello Wed, 30 Sep 2009 06:04:23 +0000 http://www.dnunderground.com/?p=323#comment-4600 The irony is that it is the non-Internet usage that can make a great generic dotCom worth millions off the bat. Do you know why businesses pay Madison Avenue millions of dollars? It is simply so the public can remember their client's name on a billboard, newspaper page, magazine page, radio spot or television commercial. Yep, that's it in a nutshell. It all comes down to the herd's memory factor. A domainer blogger wrote that the #1 dilemma facing Madison Avenue is that they'd still rather sell a client a $2,000,000 eight week advertising campaign than buy their client a $2,000,000 mega-domain that will pay dividends forever. The irony is that it is the non-Internet usage that can make a great generic dotCom worth millions off the bat. Do you know why businesses pay Madison Avenue millions of dollars? It is simply so the public can remember their client’s name on a billboard, newspaper page, magazine page, radio spot or television commercial. Yep, that’s it in a nutshell. It all comes down to the herd’s memory factor. A domainer blogger wrote that the #1 dilemma facing Madison Avenue is that they’d still rather sell a client a $2,000,000 eight week advertising campaign than buy their client a $2,000,000 mega-domain that will pay dividends forever.

]]> By: nSathees http://www.dnunderground.com/09/29/looking-back-to-the-sale-of-toyscom/comment-page-1/#comment-4598 nSathees Wed, 30 Sep 2009 04:57:08 +0000 http://www.dnunderground.com/?p=323#comment-4598 (btw your form doesn’t work well-seems to delete text when you click on anything) Check before clearing the form. If you are using Javascript then add a if loop to check ob the form is empty. (btw your form doesn’t work well-seems to delete text when you click on anything)

Check before clearing the form. If you are using Javascript then add a if loop to check ob the form is empty.

]]> By: nSathees http://www.dnunderground.com/09/29/looking-back-to-the-sale-of-toyscom/comment-page-1/#comment-4597 nSathees Wed, 30 Sep 2009 04:52:35 +0000 http://www.dnunderground.com/?p=323#comment-4597 Consider looking from the point of Organic and type in traffic and add the competition to obtain such domains. Many dropped off at 3.1 million on this toys.com auction. Consider looking from the point of Organic and type in traffic and add the competition to obtain such domains. Many dropped off at 3.1 million on this toys.com auction.

]]> By: Jon http://www.dnunderground.com/09/29/looking-back-to-the-sale-of-toyscom/comment-page-1/#comment-4596 Jon Wed, 30 Sep 2009 04:49:59 +0000 http://www.dnunderground.com/?p=323#comment-4596 Candy.com will have close to 100% recall rate after one ad. Their competitor without a great name will have to show their ads to people at least 10-20 times before people may remember their name. For internet-centered company it's so worth it to spend some percentage of their advertising budget on the best name this amount will buy. Candy.com will have close to 100% recall rate after one ad. Their competitor without a great name will have to show their ads to people at least 10-20 times before people may remember their name. For internet-centered company it’s so worth it to spend some percentage of their advertising budget on the best name this amount will buy.

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