The internet domain name, or the internet website name, is seen as a key success factor for any organization dependent on the internet medium for direct business or marketing purposes. The importance of a good domain name is underlined by the fact that the “right” domain name can not only enhance the brand and prestige of a business enterprise, in much the same manner as a good logo or jingle in the traditional marketing world, but also directly influence the ease of accessibility of a portal by the average customer – thus influencing the probability of earning more business, in much the same way as a well-decorated storefront.

Needless to say, the importance of domain names makes them an important commodity in the world of online commerce.

Factors / Forces:

The value or demand of an internet domain name is mainly driven by the following factors:

1. intuitiveness: thus, “pizza.com” is more attractive than “breadwithtopping.com”

2. precision: thus, “pizza.com”, as opposed to “this-is-a-pizza-site.com”, is expected to be more valuable

3. universality: an interesting difference in the forces driving the market for internet domain names, as opposed to traditional markets, is that the value of a domain name likely to be in common or universal demand, as opposed to a niche area, is higher – thus, “pizza.com” is likely to be a good investment!*

*In fact, the domain name of www.pizza.com , bought by Chris Clark in the 1994 for $20, fetched the investor in excess of 2.6 million USD in 2007!

Strategies:

The strategies employed in this area are primarily dependent on the status of the enterprise – i.e. whether the seller is an individual or a commercial enterprise.

1. Individual: Typically, an individual will act as the middleman, and may choose to buy a small number of domain names, based on and banking on one’s understanding of future demand. This is similar to the strategy of an individual trader in the world of stock markets, but is relatively less risky as the prices of individual domain names bought are typically not high. The success of this strategy is dependent on the individual choosing a few but high Quality domain names. An example of a successful instance of this individual strategy is that of www.pizza.com mentioned above.

2. Commercial Enterprise: Commercial enterprises involved in this space act as primarily as wholesale dealers. Thus, these enterprises typically offer a large number of domain names, often multiple variations on each category of domain name or subject, for sale to both individuals as well as organizations. The success of this strategy is dependent on Quantity – the commercial enterprise that is able to acquire and offer a vast permutation of domain names for a given subject is more likely to succeed.

The keys to success in the area of selling domain names and making money in the process are, thus, quite like those in any other commercial area, and are greatly influenced by the market forces of supply and demand, not to mention the quality of the entrepreneur’s foresight and ability to predict future trends.