Godaddy Has Some Auction Problems: Including Losing Trust in the Completion of the Deal

Jan 21 2014

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.

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Outsmarting the Dumb, Outworking the Smart

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20 comments

  1. Paul Nicks

    Hi Shane, you’re absolutely right that marketplace integrity is of paramount importance when transacting online. As 3rd party marketplaces have grown, so have users who abuse the relative anonymity of the Internet in order to game the system.

    Protection is needed for both the buyer and seller, of course, so here’s what we’re doing to address your concerns:

    On the seller side we invested in Afternic so that we can move towards a registrar-enabled sales platform. As we grow the DLS registrar network we will be able to use partner registrars to ensure that all domains listed are owned by the individual who listed the domain. Transfers will also be secured within the registrar network using Afternic’s Fast Transfer technology. This will create a fluid and secure marketplace where buyers can trust that the domain being purchased is not only available, but will be moved into their account automatically. Once Afternic has been fully integrated with GoDaddy we will be moving all public inventory from the GD Auctions platform into Afternic DLS, which will increase visibility/reach for the seller while subsequently increasing integrity of the listings.

    As for buyer qualification, we currently use escrow.com to ensure transaction security. Our current implementation, however, leaves much to be desired as the escrow claim can be opened by a buyer without any upfront money being paid. We are working with the escrow team to remedy this situation within the confines of escrow rules and hope to be able to announce a change on this front soon.

    As 2014 rolls on, our primary goal is to remove friction from the aftermarket, setting it up as a secure and easy industry for investors to be involved in. The acquisition of Afternic was the first sign of our commitment to the frictionless aftermarket and we have many more planned for this year. I appreciate your feedback and trust that you and your readers will be positively impacted by the changes we will be implementing this year.

    -Paul


    1. Post author
      ShaneCultra

      Paul,

      Thank you very much for the public reply. Afternic is a fantastic purchase but this article is about the auction process. Particularly 3rd party inserts into the daily auction. Afternic tends to be a wait for offer situation. As for escrow. Escrow merely makes sure one is not delivered without the other side completing the deal. Godaddy could easily handle that and really doesn’t need Escrow. The buyers need to be qualified way before handed to Escrow. Again, much like Namejet. The prequalification is not foolproof but it is a step in the right direction. But anything that requires complete trust of the buyer and seller will lead to problems. From our talks in the past you know what needs to happen, hopefully you billion dollar company behind you will invest in your ideas.

    2. Rolf Sonne Rasmussen

      I’m an unhappy customer at GoDaddy. Not a pedantic nut complaining about everything. However, GoDaddy.com LLC:

      1. Does not adhere to their contractual obligations.
      2. Service stinks. The phone employees are insufficiently trained.
      3. Problem might be a too rapid expansion. Not the customer’s problem.
      4. Site problem solving is constantly down.
      5. GoDaddy appears to want to reap profits short term only. Service offered is not transparent, effective or by any standards close to what should be expected of a publicly traded company.

      I’ve lost at least USD 25.000 on their auction platform, can not get Adobe products on their Linux Panel and spent frustrating hours and hours on getting a correct answer.

      GoDaddy does not survive long term and apologies doesn’t do it. Charge more for your products and services and give people what they believe they are paying for. It appears more like a Ponzi Scheme or as street vendors.

      Yours sincerely

  2. Len

    Last summer I had a Buy Now on a domain at Godaddy for $13,950
    A buyer agreed to the buy now an even went as far to start escrow with Escrow.com
    Then the buyer never paid, after a week or so waiting for payment I emailed the buyer through Godaddy and the buyer said they didn’t want it anymore and that was that.

    Godaddy never contacted me to inform me of this I just had to find out for myself that the buyer had backed out.
    The transaction is still listed in my Escrow.com account as “Waiting for the buyer to select payment method”
    I cant cancel it or Escrow.com says I could be liable for fees and that it has to be cancel from Godaddy’s side but Godaddy wont do it.
    This is not the way to do business.

  3. Amir

    According to the existing TOS of GoDaddy’s Aftermarket, the company is allowed to charge non-paying bidders if they don’t honor their bids and complete the sale in 48 hours. However, I’m not exactly sure if they are currently exercising this option.

    Not only the company is losing its hard-earned trust, but they are also losing money. Last week, a domain name sold for $18,000 but the highest bidder didn’t complete the transaction. Finally the domain name was sold to another bidder for only $7,000.

  4. Blake S.

    I hope Paul sees this. He’s an innovator and is not afraid of new ideas and change.

    I think there’s a fine line separating what’s required for ease of use and buyer/seller confidence. Godaddy has to hit that sweet spot

  5. Ms Domainer

    *

    I also think that Go Daddy should address the issue of former owners renewing or transferring out expired domains that buyers have bought. Total BS.

    I recommend that auctions start later in the expiration cycle, perhaps day 35, to help circumvent this BS. It would stop that practice of getting a real valuation at the expense of buyers.

    *

  6. Konstantinos Zournas

    Shane your complaints are reasonable. I don’t understand why a seller won’t transfer a paid auctioned name. It happened to me in a Sedo auction too.

    About domains that appear to be in Auction at Go Daddy: For the Go Daddy situation there are a lot of parties to blame including Go Daddy and Sedo. A lot of Sedo customers have found their domains listed in auction at Go Daddy without them knowing. Sure the seller made a counteroffer and the buyer accepted… But strange things are happening and not everybody understands it or accepts it.

    Adding a credit card will not solve the non paying buyers as there are a lot of low limit credit cards.

  7. Len

    Hi Sandra,
    I just checked my account and to my surprised it had been canceled on Jan 8th. It was started on July 8th so I guess it takes 6 months for failed transactions to be canceled.
    Thanks anyway for chiming in 🙂

  8. Adam

    I’d like to see my deal with Armando Gutierrez closed, maybe this month it’ll happen. I’ve only been waiting since November. The domain was purchased from Godaddy auctions and paid for at Escrow but I have yet to receive an EPP code. Maybe one day.

  9. Pat Hd

    I agree with Shane and thank you for sharing this thought.Let me share u a small example of my experience regarding this:for a side note I had been a happy and with a good standing godaddy customer since 2001. Never had any problem(nor creating problems) till some months ago, a llll domain I purchased from 3rd party through godaddy action, which had been received and paid for, cancelled out of my account 2 months later. Reason was (after I open a ticket)a backcharge and they said I can have the domain restored if I pay the exact amount backcharged which is $aa (its less than the amount I purchased it). They also said that they have cancelled the blacklisted credit card on file.Fact is: there had been no backcharge made from my end (its a prepaid visa, doesn’t have a backcharge facilities. It either have enough fund to pay or it doesn’t and in my case it had enough funds)also the card still in file and active. I assumed the previous owner(buyer)flipped this name once again at godaddy failed to pay GD. However I decided to pay (again) to get the domain back w/o hassle bec. luckily it was a small amount. Question I had: didn’t GD staff shall check before cancelling??and then shall they not look into the cases carefully? and shall they not blacklist the seller? I saw him still actively selling domains in gd platform. After this experience I did somehow lost trust in Godaddy and have moved out some domains.

  10. Robbie

    @Adam

    Doesn’t Armando have a lease obligation on that D######.com sale, I think he wasn’t to happy with the sale price, otherwise no reason for you to be held up.

  11. Robbie

    As well many bidders at godaddy do not have the cash in their wallet to be bidding the prices they do, that is why many go unpaid for, I think unless you are a VIP client, you need further verification to bid over $1000.

  12. Adam B

    Sedo is even worse. 2013 was the worst year yet for Sedo not upholding transactions on both ends re: domains within their platform (not partner domains).

    Sedo refuses to close accounts of their larger clients even if they break the rules and don’t transfer the domain. I’ve had this happen twice in 2013 with Sedo. They don’t enforce their rules on their larger clients, and that is completely unacceptable.

    If you break the rules, your account should be closed no matter who you are. End of story.

    Sedo disgusts me. No integrity whatsoever.

  13. Mike

    This is why Ebay is the best place to buy Domain Names! There is seller and buyer protection and you always know full details of who you are dealing with. Call me crazy I dont care….its making me money!

Comments are closed.