In order for a company to be successful the most important thing that you can do is establish trust with your customer. Money is lost when the consumer doesn’t trust that the transaction with go smoothly from start to finish. There is no point in offering frills or expanded service until that basic need of trust is met. Godaddy is starting to lose that trust in the Aftermarket Domain Auctions with all the non paying bidders and names that are sold not being delivered.
Over the last few months I have heard more and more complaints about non paying bidders and domain owners not fulfilling their end of the transactions. Originally Godaddy sold their own domains so you always knew that if the name wasn’t renewed you would get the domain. It was already in Godaddy’s account so it became a simple transfer. The name getting renewed was an issue, but it was understandable as they were expired domains and it is simply how the process works. But then Godaddy started accepting outside names for auction.
I agree it was needed and Godaddy fulfilled the need. A simple way for anyone to put their names up for auction. They didn’t need to have a large portfolio or connections like Namejet. You can now simply add one or two names to portfolio of names that sees a HUGE market of buyers that already came daily to scan the auctions. The turnover time is quick and perfect for those needing to raise a little cash. From Godaddy’s side, why not make a little money letting outside names in. But there is a big problem. They take the word of the seller that they are going to sell the name at the final price (if it meets reserve). That simply is not good enough when you’re dealing with anonymity and people all over the world. The punishment has to fit the crime and if someone doesn’t transfer at $10K name then they simply lose their $5 a year account. Nothing else. In my opinion they need to match Namejet’s program. All names need to be in hand before auction. Namejet requires you bring them into Enom before the auction starts. Yes they make exception to clients that they have done a lot of business with, because the trust has been established. This is also more the exception than the rule. When an auction starts and meets reserve it’s transferred into a holding account. Guaranteeing the buyer the name. Godaddy could EASILY do this. They could give $1 transfers to make it easy for sellers to transfer a name into their registrar. If the seller doesn’t want to do this, then let them go to Flippa and scam someone there. It’s a way to get the names into the registrar and ensure that all domain name aftermarket sales go through. It would establish a trust of buyers that I guarantee would make people feel comfortable bidding on high dollar lots. Because right now I know for a fact people are saying “Let’s see if I really get it”. Even after spending $5K plus. Sending it to escrow.com doesn’t ensure anything other than they won’t take the money and run. Godaddy could easily handle it all in house. They do it all the time with the buy it now program. But the buyer side is no better. Waaaay too many people don’t pay.
To me it’s as simple as getting a credit card number from every buyer. If they don’t want to put up their credit card then they can’t buy. After $5K then they need to send in a formal document and their credit card to even be eligible to bid on domains over $5K. I realize not everyone has a credit card but in my opinion, if you can’t get a credit card, how are you going to pay for a $4,000 name? Some sort of financial trust has to be established and a credit card will do this. If someone can come up with a better form then use that, but I don’t see one yet. To add to even more trust let’s start ranking buyers and sellers.
This is the Sedo and Flippa method. Let’s start keeping track of successful transactions and make them public. Keep the user hidden but not their “trust” score. I guarantee a seller with a higher score will get a higher price. A seller should be allowed to reject a bid (like Flippa) if they don’t feel comfortable with the rating of the bidder. It could even be set up that would not allow any new bidders on an auction (I think that would be silly but could be done). If you saw that a bidder with a great history was high bidder you would feel very comfortable that the transaction was going to be successful. Right now it’s a guessing game.
All these things are very easy to set up for a billion dollar company. Godaddy rules the aftermarket game but they are the least trusted of the aftermarket players when dealing with 3rd party names (my opinion only) . And I said, trust is the most important builder of a business. Lack of trust keeps bidding down, and sellers away. While there is plenty of money being made by Godaddy in this aftermarket, there is also a lot being left on the table and a few relatively easy fixes would change that.