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Is Domain Flipping a Viable Business Opportunity?

Is Domain Flipping a Viable Business Opportunity?

I am asking you.  Is domain flipping really a good business opportunity?  I’m not an expert on this subject, but I wanted to discuss the potential for this niche idea in today’s post.

You see, this is one of the ideas that was submitted by you, the readers, on my page set up for submitting business ideas for me to consider!  So, thank you for submitting this idea because it has really gotten the wheels turning in my head.  I am going to write about 2 or 3 more ideas in the next week or 2, and then voting will begin before the end of April!  I will put up a poll, and allow everyone to decide on the business idea that I will pursue over the next few months.  My future will be in your hands.  So, if I haven’t written about the business idea that you want to see yet, head over to my niche idea submission page and tell me about what venture you want to see.

Okay, a few of you expressed interest in domain flipping.  I am specifically talking about buying and selling undeveloped domains.  There are obviously variations of what could be done here, but I am most interested in the potential for buying and selling domain names, not websites.  Got it?  Think of it as raw land.  I will be making speculative purchases in the hopes that I can attract others that find value in my “raw domain”.  The people buying the domains will most likely go on to build and develop the websites on the domains.

Market Potential of Domain Flipping

As always, I want to take a look at the overall market potential for this idea (and I’m interested in your input as well).  So, is this a good market?  How much money is actually made buying and selling domain names?  Here is what I was able to find.

According to BusinessWeek, the amount of sales on Sedo.com for buying and selling domains in 2008 was $77 million.  This is according to a great interview you can find right here with the founder of Sedo.com.  I’m unable to find any recent exact figures, but it appears the market for buying and selling domains is probably closer to $2 to $3 billion a year.  In 2010, Sedo.com did $100 million in total sales, according to their own Market Study for Q4 2010. So, honestly I’m unable to determine the exact size of the market or how viable it is for someone “new” to enter the market.  However, with $100 million in transactions being done on just Sedo.com, there is at least a decent market to take a look at.

Strategies for Buying and Selling Domains

When considering whether or not to get involved in domain flipping, there are a number of strategies that could be pursued.   I don’t claim to be any type of expert here, but I have purchased over 300 domains in my time so I know a little bit about domains in general.  However, I have only sold 1 of my websites, the rest I have developed and monetized for my own portfolio (which continue to do very well with Google Adsense – yeah!). Here are a few that I have come up with (there could be several others):

  • Buying and Selling Keyword Rich domains. My specialty is finding exact match keyword domains, but I usually only buy domains that I know I can rank for very quickly and easily in Google.  If I were flipping domains, I would broaden my search to include terms that get searched for more often, but may not rank as easily in hopes that I could re-sell it to someone that is willing to put in the effort.  These could be new domains that I register or even resold/premium domains if the price is right.
  • Buying and Selling Dropped domains. There are lots of services that allow you to monitor and then bid on domains that are expiring.  Its an intricate process, but I understand you can find some real gems.  Here is a VERY interesting article about buying a dropped domain.  Its revealed at the end of this article that the domain this person was seeking was the popular NewsVine.com.  He bought the domain for $369, now its worth millions.
  • Type in Traffic Domains. Believe it or not, lots of people still type in their search engine queries in the browser address bar, rather than on Google, etc.  And they will often put the .com after it.  So, someone might want to search for “buy a car”, but instead they go to the address bar and type “buyacar.com”.  So, buyacar.com gets some free type in traffic.  Its hard to fathom how often this occurs, and entire businesses have been built on this fact.  It does happen, but as this great article lays out, relying on type in traffic is probably not a viable business for most people.  If you can find the right domain, it would work – but probably hard to find.
  • Domain squatting. This was real popular in the early days of the internet.  Essentially, you can buy domains of products, movies, or other potentially brandable names that you know the entity will be interested in paying money for.  You have to be careful here as Cybersquatting is not legal for certain things.  However, if you are able to predict domain names that might be popular in the future or possibly brandable, you can still make some cash.
  • Typo Traffic Domains. Instead of “ebay.com”, someone accidentally types in “ebau.com”.  This is typo traffic.  The person that owns “ebau.com” is a domainer that is hoping to make money off of ads on their site.  There are millions of examples of this, and people do make typo errors all the time.
  • Developing the domain. Okay, this is simply buying a domain that has potential whether search engine traffic or otherwise, generating some revenue, and then selling it for a quick profit.  I am looking to move away from just search engines (which is what my primary business is focused on), but this is certainly a viable option, and perhaps the most viable.

Your Thoughts

Anyway, that is just a quick rundown of a few ways that I can think of making money with domain flipping.  As I said, I’m no expert here and would love to hear what you have to say about it.  Are there some other methods that you can think of to make money with domains?  Overall, is this something that you would like to see me try out over the next few months?

Remember, if you have any other business ideas that you would like to see me try out, leave your ideas right here!

 

 

21 Comments for this Post

  1. Money Making Videos

    Money Making Videos

    Hi Spencer,

    I’d like to suggest for your next post you should write about how to buy and sell domains on Sedo, how much do they charge for listing etc.

    Thanks for sharing.

    • Spencer

      Spencer

      Definitely, if this idea of domain flipping is what you and others want to see me pursue and blog about, then I will be writing LOTS of in depth posts about the entire process. This would of course include Sedo and the process/fees involved there. This initial post, I just wanted to do a general overview…

  2. Claudio

    Claudio

    I think this is a great idea.

    2 weeks a go I sold a domain at $2,000
    (Escrow Closing Date: 3/22/2011).
    Was a domain I had sitting, waiting for adsense development. I have sold domains in the past.
    The best results is to find the owner of a similar domain or niche and offer the domain, googd if you have offshore staff to do the digging, email, etc.

    • Spencer

      Spencer

      Claudio – that’s awesome to hear a success story! Thanks for sharing. Was your domain developed at all (i.e. any content)? Or was it simply a parked domain?

      The more I think about this idea, the more I like it; especially since its a natural fit with my current business. I am already out searching for keyword rich domains…
      I’m sure I could expand this to include domain flipping.

      • Claudio

        Claudio

        That domain was not developed. It was a jocker domain, related to home decor, I used this domain to test different markets like bedding (ecommerce) or interior decoration, at the time of the purchase it had a blog with some content waiting to put my adsense code. I do well with adsense (not as well as you :)) and it is a fit and when I see a domain that is short and .com, I’ll buy it. I have sold like 8 in the last year worth to mention (betw $800 to $2,200). This last one I asked $2,500 and sold for $2,000.

        • Spencer

          Spencer

          Claudio – Thanks for the great information. If I decide to pursue this idea further, I would love to pick your brain a bit.

        • Claudio

          Claudio

          Anytime, I see this idea more as a compliment business rather than a main one. Again, I try to pursue it but honestly didn’t do enough so I decided to focus on adsense, forex and clickbank. Now forex is discarded as it took way too much time (you get obssesed quickly) and started with clickbank again.

  3. Hetal Shah

    Hetal Shah

    what about buying domains with some catchy words or short slogans which can be memories easily. Do you prefer to buy such domains if they are available to buy?

    Nice insight. Thanks :)

    • Claudio

      Claudio

      I have had success with domains like http://www.uwrite.com rather than http://www.greatwriters.com.

      If you buy a domain make sure it is .com as I have only sold those.

      If you want to do adsense, I have read everybody saying get only .com, .net or .org but my main domain that makes $20 a day is .info and 19 characters long :)

    • Spencer

      Spencer

      I believe these types of domains – which I called “brandable” domains are a good option as well. They may be generic, but if the correct party is interested; Im sure you could see a nice return on investment.

  4. Gus

    Gus

    Great article Spencer. I’m looking forward to more like this and hope that you choose domain flipping as the business idea to pursue.

    Perhaps you can also review some of the courses, books available. I recall there were some decent domaining courses some time back.

    • Spencer

      Spencer

      Gus – glad you liked the post! Yes, there will be lots more articles that similarly discuss unique ideas in the future.

      If this idea is chosen (or whatever idea is), I will definitely be reading/buying some courses or books and be sharing those with everyone here. I will go through a learning phase and then begin developing my own business after that.

  5. Chris

    Chris

    Spencer,

    I noticed your Adsense site about 6 months ago and like most people, I found it really inspiring that you were able to transition out of the 9-5. Congratulations. I keep coming back because I know there is a lot I can learn from you. I look forward to the day when I get there myself.

    I too have considered flipping dropped domains as a business. I got the idea from this guy Dan Rubin’s website: justdropped dot com. On his site you can search for dropped domains and he has an opt-in news letter which he sends you daily finds that he’s purchased and is reselling for approx. $99 each, some more, some less.

    I did have a few concerns:
    1. It probably takes a while to find the gems. There is definitely a learning curve to figure out what sells.

    2. You have to build up an audience somehow or utilize sites like Sedo (mentioned above) or Flippa (I think that might be just for developed websites). I think an exclusive audience might be the best option.

    3. The operation costs are high. Say you buy 10 a day/5 days a week at $10 a piece, that is about a $500 a week investment. This could get costly as you learn the market and build up an audience. Maybe this could be ramped up over time by just buying a couple a day to start off.

    4. I wonder what is the best resource for dropped domains? The site mentioned above sells a subscription to daily lists that compiles all the dropped domains from a whole list of hosts. I wonder if they scrape the best ones before they distribute the list though?

    5. Do you think this business is scalable? If you outsource someone to search for domains for you, what is to keep them from getting good at it and becoming your competition?

    6. There are already lots of people and companies in the domain resale business with much more resources. Is the market already too competitive?

    All that said, I am putting all this thought into the idea because I do think there is a lucrative business in domain reselling. I think off all your potential businesses so far, this one is the most promising. Good luck, I’ll be rooting for you.

    • Spencer

      Spencer

      Hey Chris – great comments here! I think you make some valid points that certainly need to be considered before diving head first into the domain flipping business. I agree with your first 2 points. However, the 3rd point is debatable – it all depends on how fast you want to grow. Yes, you probably should buy a bunch of domains – but you should probably do so slowly so that you can get past the initial learning curve before making too many mistakes.

      Just a thought on #6 – Is the market too competitive. Yes, its extremely competitive. However, with anything where lots of money is exchanging hands – I believe it would be possible to find a specific niche or some other way to approach the market a little bit differently that could make you successful despite the competition. I will discuss this further if its the “winning” idea.

      By the way, I like you blog – sounds interesting!

  6. Vote for Your Favorite Niche Pursuit! | Niche Pursuits

    Vote for Your Favorite Niche Pursuit! | Niche Pursuits

    […] 7. Domain Flipping. Essentially, this idea consists of finding valuable domains that others are willing to pay for.  There are lots of techniques which I discussed in detail in the post.  I would focus on undeveloped websites – so I’d simply be selling domain names. […]

  7. Chandan@makemoneyonlineinindia

    Chandan@makemoneyonlineinindia

    Still domain flipping is viable business opportunity but beginners should not consider domain flipping as an easy source of money.

  8. Ben

    Ben

    I flip domains and build niche-sites….send me an email, I’d be more than happy to chat about domain flipping

    -Ben

  9. Em

    Em

    Hi,

    Just wondering if you are buying and selling domain names as a business should you get some sort of business insurance?

    Thanks

  10. Waheed

    Waheed

    That is an amazing Place.

  11. Domain Flipping

    Domain Flipping

    I think it became more difficult to find great domains to flip now and it will be even harder. For you to be successful in the domain flipping business you have to be creative and think out side of the box.

  12. Karl

    Karl

    I have been getting a ton of bites on one of my domainsthat I first wanted $5k for but seems like it won’t sell for that amount.

    So, I am cutting the price all the way down to $900.

    I will let you know what happened. OnlineGamesCom.com

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