February 22, 2016 (Mon)
Last year China introduced the world to bulk trading of domain names. The traditional approach is for investors to buy one or two good quality domain names at a time, and then wait for end user companies to buy the domain names in order to develop websites.
However, bulk trading is about buying much lesser quality domain names but at very cheap prices, and then flip them for a profit. Say, you buy a domain name for $10 and immediately flip it for $15. That gives you a return of 50%. If you buy and then sell 100,000 domain names of such quality, then the total profit becomes very significant. In this case, the domain names are never intended for website development. In other words, it's about speculation -- pure trading among investors. Bulk domain trading is not a new concept. In currency trading, for example, 95% of currencies are traded everyday among speculators with no intention of using the currencies to purchase products or services.
However, bulking trading has a big problem if you need to use several market places in order to get the number of domain names you plan. Once you start your move in one market place, other speculators may come in and follow suit, or sellers in other market places may become aware of your move and immediately raise their prices. This makes it difficult to gather enough domain names without pushing the prices up. Speculators may try different ways -- for example, using different buyer names in different market places or spreading rumor to keep the prices depressed.
One company is now trying to tackle this issue. China.vc is organizing an offline meeting on February 28 in Beijing for sellers owning large quantities of domain names as well as potential buyers. Apparently, all sellers at the venue must post their prices and cannot change them during the meeting, regardless of the quantity a buyer may want to buy. This kind of offline domain exchange is the first that I've come across, so I'm interested in knowing if it works. My feeling is that 2016 will be a year of bulk trading and a lot of new speculators will be flooding the market.