Domain Buyers Clubs – Good or Bad?

A domain buyers’ club or domain buying club or domain club in short is in essence a consortium of buyers who pool their cash to buy domains. That’s the short version. The long version is most ‘clubs’ have ‘membership fees’ and unless you sell enough to cover these fees and make a decent profit, the club won’t generate revenue for you.

I think most domain forums have at least one club, then there are fractional ownership clubs like fusu, DotSauce recently launched it’s Domain Club as well and Gene has one of the oldest the Domain Profits Club.

Each has a different take, with fusu you buy ‘shares’ of a domain at a price pre-determined by sellers. The downside is not all prices are realistic or can ensure that you get a decent ROI on your investment. So to realistically invest in fractional ownership, the investors grasp on the subject has to be exceptional. I’m not even going to get into the controlling interest issues with fractional ownership – unless you own 51% or more, you don’t decide when to sell and for how much.

Forum Domain Clubs operate a little differently – they mostly pool cash to pick up domains from drop auctions and sell them for a profit to end users. This is a low risk strategy for the newcomer since he could buy in for only 10% of the entire domain, knowing fully well that the people who invest the remaining 90% would provide the correct information. Sounds good in principle, but what happens if all stakeholders in a particular domain are newcomers? Or if all investors in a particular domain overvalue it, decisions by committee suck, most so in investment scenarios. Which brings us to the fact that the buyer still needs to be aware as to what constitutes a good domain brand value and acquisition price. And again, the fractional ownership control issues exist.

DotSauce’s club charges a slab based subscription model – you pay $14 a month, you can get the privilege of acquiring 4 domains at a ‘discounted’ rate of $19 ea. So if you take the pro account, it would cost you $49 + 20 x $19 = $429 per month for the privilege of not purchasing your own portfolio. You could register 50 domains a month with the same budget at GoDaddy, of course that’s assuming the pros haven’t got all the good stuff first.

Gene’s club charges a subscription fee and it allows you complete database access to the entire available inventory for display on your own site. Presumably to allow you in principle to sell a domain before you pay the club the $18 and keep whatever you can sell the domain for yourself. Problem is, given that the inventory is shared across many members, a simple google search will throw up a ton of competition and if the buyer contacts more than one seller then the chance of the domain not being available in the inventory too long arises. $37 + 20 x $18 = $397 per month or 48 hand regs at GoDaddy.

While I have no doubts about the capabilities of these clubs at picking good names, the nature of the business will demand that a large number of domains get registered and offered to the club members almost everyday. From these a club member is expected to pick those which will bring him/her the maximum ROI, again, not a job for a person with no knowledge.

Also keep in mind, all these non fractional ownership clubs require that you sell the domains to people and keep the difference between the end user price and your cost, so in effect you’re paying to help them sell their inventory at 2x reg fee. You’d need 5 x $100 sales to break even on the membership ‘fees’, not a terrific prospect when you consider that $400 in sales for someone with no knowledge about domains isn’t as easy as you’d like it to be.

What do you think about Domain Buyers’ Clubs and do you know of any other clubs which are not listed above?

Published by MediaWizard
Samit Madan is an advertising professional with over 25 years of experience. He's known as the MediaWizard due to his expertise in all related industry verticals including design, promotions, brand development, corporate communications, printing, web development and search marketing. He currently heads MediaWiz, a leading Media Publishing and Services Company.

5 thoughts on “Domain Buyers Clubs – Good or Bad?

  1. Thanks for mentioning the new DotSauce Domain Club. I appreciate your insight, but feel that you are not giving the membership benefits enough credit.

    Members are not required to purchase the full alloted amount of $19 domains. I don’t expect them to, but the option is available.

    Yes, you could register twice as many domains at GoDaddy, but the quality of domains provided to Domain Club members is exceptional.

    Your first resale of a domain could essentially pay for your membership fees for over a year. There should be no concerns about breaking even.

    I hope to address this issue by publishing a preview of the full inventory. Stay tuned.

    • Hi Mark,

      Thanks for the info about the DotSauce Domain Club (DDC).

      Like I said, I have no doubts about the quality of inventory you and DPC offer, but without knowledge I don’t see it benefiting newcomers to the industry, which I assume is the target audience.

      From what I gather the DDC requires a $49 x 12 = $600 approx for just the membership, plus cost of domains at $19 / pop.

      Maybe this would benefit currently active domain investors, who would be capable of making $600 domain sales and have the info required to pick the required domains from your inventory.

      I look forward to your preview of the DDC inventory, cheers!

  2. Many thanks for the conversation regarding Domain Profits Club. To clarify, the $18 is not charged to the member until the member has a committed buyer. The member has access to a portfolio of over 500 domain to sell, at any price they wish, and need not invest until they are sure a buyer has been found. And if the sale falls through, the member is allowed to return the domain name for 100% full credit, within 10 days.

    Regarding the speculated issue of a buyer searching Google and finding many “sellers”, this simply has not been an issue, because the DPC member would not obtain the domain from the club until they have negotiated and received a commitment from the buyer.

    Also note that the monthly membership fee may be completely avoided by purchasing a lifetime membership at $197 (which is just 5 to 6 months at $37).

    Lifetime members are allowed to sell the membership itself for 100% of the money. That means just one membership sale can pay for the sellers own membership.

    It should also be noted, that $18 is not double our cost. There are many domains in the portfolio that do not sell within a year, and we either renew or replace with another. The $18 is typically below our expense when it is all averaged out. We make up for that with the membership sales and sales of other products to members.

    Thanks again,

    Gene

    • So $197 up front and $18 for a domain with a 100% refund for upto 10 days sounds pretty realistic.

      I was also told that each affiliate could have a fully qualified domain name which would display the entire portfolio, which is why I assume availability of the same domain at multiple locations.

      I’d appreciate it if you could share some figures regarding number of sales per month for the entire inventory. Thanks Gene!

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