No, we will keep charging sellers the 8%...which I extremely low as it is I think.
I agree your commission rate is great.
That said, the low commission rate is more than offset by the introduction of the new "buyers premium" which makes AMA domains $50 more expensive to buy than they were previously if the seller is looking to make the same margin.
I think this, in combination with bids starting at $10, will SEVERELY reduce the number of domains that sellers will be willing to list on the AMA.
And given that the average sale price in the first 10 months of the AMA was $138 I think it's safe to assume that the majority of AMA domains sold for the $100 minimum bid.
Now obviously NetFleet needs to make money, but at the same time, given that NetFleet makes $11 commission on the average AMA sale currently, and the BULK of its AMA sales going forward are likely to remain domains that are going to sell for <$250 I suspect you guys will make more money out of the AMA by increasing the volume of transactions.
In this sense removing the $100 minimum bid, is a good thing, but it will be a waste of time if sellers stop listing their domains (because they don't net an acceptable return via the AMA) or have to put on higher reserve prices (which will reduce sales) to justify selling the domain, which is what I suspect will happen under the new system given the new buyers premium and removal of the $100 minimum bid.
I've seen hundreds of domains listed on the AMA that aren't terrible but probably aren't worth $100 at a domainers auction, but that would have fetched between $15 to $25 on Snapper. So whilst they have passed in previously, under the new system I think if they were re-listed they would have a reasonable chance of getting bids.
However, I suspect many of the same owners who were willing to sell in the past won't bother listing them again because they know they are pretty much guaranteed they won't get a $50 bid (when you add a $50 bid plus the new $50 buyer premium you a price equal to the $100that the domain failed to achieve on the AMA last time).
So knowing that at best their domain will only sell for $20 or $30 on Snapper AT BEST and once you take the commission out they will be left with an amount so small that they will question whether it's worth their time to list the domain at all when and they can just hold it until they find an end user, which isn't what is in NF's best interest either because you guys get paid when people list and sell via your auction.
That was the great thing about you guys changing the rules to make listings free and offer free reserve (which were strokes of genius) because they substantially increased the volume of domains being listed by offering current domain owners the chance to make a reasonable return without any risk.
And whilst I have no idea what sort of costs goes into running the AMA, I would think that if it were possible to make it more attractive for current domain owners to list their domains for sale, it would help the new AMA, ie if $20 of the new $50 buyers premium went back to the seller, I think that would be enough to incentivise domainers to sell these <$200 domains with low or no reserve, and I suspect it's these domains that will likely make up the majority of domains listed on the AMA for the next couple of years.
This would still see NF making a minimum of $11 per transaction plus commission (which is still more than it does currently) and I feel creates more of a win-win-win-win for the buyer, seller, netfleet and the industry.
You could even take it a step further do something like, giving the seller $25 of the buyers premium if they opt to put their domain up with no reserve. That would really spice things up and help generate some turnover.
This might sound crazy but I also think having a successful AMA where sellers are willing to liquidate their domains at fair market prices has bigger ramifications for the entire industry as well, ie if the NF AMA becomes a cost effective place to liquidate ALL calibre of domains (not just domains that will fetch $250+) it reduces domainers portfolio holding risk and that will give domain investors more confidence to go out and both buy more domains (both on Snapper and when hand registering) because they will know that even if their original plans don't work out they have a low cost place to recoup some, if not all, of their initial domain costs.
Not to mention being able to being able to tell retail buyers, hey even if you pay $XXX - $XXXX for this domain today, it isn't a sunk cost, you can always recoup some of your investment at any time by selling it on the NF AMA if things don't work out!
Plus I think it will help to build more industry data which will aid in legitimising the industry as a whole.
We are discussing this at the moment. Either way, by setting a reserve you wouldn't be risking selling for $0.
True, but for a lot of the <$250 domains reserves aren't of major use, I think the most important thing is that the seller has incentive to sell.
No - domains pushed to auction will use the current price as the starting bid and there will be no reserve possible. Essentially the domain will sell if you push to auction.
Yeah I think did this once under the old system and I remember it being a stupid mistake.
From memory I got an offer on a domain for $600 via the Standard Catalogue - I thought it was worth at least $1000, and naively thought rather than negotiate the buyer up to a fairer price I'd try pushing it to auction and let the the competition for this decent domain do the work for me...
Of course that isn't how reality played out.
Ultimately all it did was piss the buyer off (no one likes negotiating a price for a domain only to have the seller then push it to auction to try and pressure more out of them), but in this case no one else bid, which meant that rather than get $600 +GST and the buyer paying COR which is what I would have got if I had of concluded the sale via the SC, the domain sold on the AMA for $600, with GST included, with me needing to pay COR and the 8% commision...
So I went from netting $600 (with the ability to still negotiate for more) to netting $442...
Worst of all was that after the sale I accidentally left the domain listed for sale on NF SC and received an offer for $1200 about 3 months later... if I had of been able to set a reserve higher than the current offer price I could have ensured that I'd earn at least what I had been currently offered or in the best case scenario the domain might have passed in and I'd have gone on to push it to the AMA with a minimum bid of $1200 3 months later...
Once again, it always comes comes back to risk/reward.
It doesn't make sense to push domains to auction if you get a healthy offer via the SC given that the chances of getting another end user who is educated on the value of domain and willing to bid more is always very low and it will cost at least 8% for the privilege to even try and you are guaranteed to piss the buyer off who might have been willing to buy more domains...
Just saying.