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.
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!