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Rob Monster

Ka-Ching

For clues as to who is making money during the economic downturn, take a look at the quarterly earnings reports for Amazon and NetFlix. Read to the end of this post to see how domainers can ride the same wave.

Amazon crushes it and Netflix impresses
In case you missed the news today, Amazon reported quarterly revenues of $5.45 billion. The company crushed the analyst estimates on earnings.  The stock rocketed to a new all-time high:

New all-time high for Amazon

On the same day, Netflix impressed analysts with the apparent traction of their streaming product and the continued traction of the traditional DVD-by-mail product. The cable companies should have had the on-demand video business in the bag but Netflix has a brand and a superior platform for social discovery of movie selection.  Netflix stock also popped to a new high today.

Why this matters to domainers
The Netflix result was not entirely unpredictable —  consumers are still hurting, so they are staying home and watching more movies. In past downturns, physical world theaters were so-called counter-cyclical plays. During the present economic downturn, the traditional theaters are competing with (1) dirt cheap DVDs that are being liquidated by retailers in the head-long run to higher margin Blu-Ray, and (2) video on demand made possible by cheap broadband.  By comparison, $5 for theater popcorn does not look so rational! Result: traffic for NetFlix is UP,  Fandango (a proxy for theater traffic) is DOWN, Blockbuster is BIG-TIME DOWN:

netflix-fandango-blockbuster

In the aggregate, the offline economy is still hurting but the online economy is not.

This is just the beginning — much of traditional retail is still on the wrong side of history
As commented previously, I am absolutely convinced that the web remains the most efficient platform for commerce. Business models are getting crushed by well-executed web strategies and the noose is tightening.  The clothing vertical is particularly ripe for further reinvention.  Amazon knew this when they acquired Zappos.com.  For more insight into Amazon’s philosophy, and Bezos’ logic for the deal, check out this video from Bezos himself:

To see why many traditional mid-market clothing retailers are toast, consider this story. Last weekend my wife, Jill, went to take our oldest boy, Klaas, out for some clothes shopping. Klaas has a 36″ inseam which apparently is a problem for mainstream retail who apparently no longer carry that size.  So they ordered the product online while at the store.  The product has not arrived yet.  In other words, traditional retail is not only weakening their offline presence by reducing SKUs, their online logistics are still far from benchmark (Amazon).  The consumer will figure this out. As traditional retailers drop SKUs and reduce service, consumers will initially complain, and then they will simply go elsewhere.

Why is this good news for domainers?
What Zappos did in online shoes is a repeatable model on the long tail. The big difference now is that today it can be done with a lot less capital.  What most people don’t realize is that Zappos actually raised a ton of outside capital. Their last round was a Series F round.  For those who don’t know venture rounds, a typical VC-backed company might go through a Series A, B and C rounds in order to get to positive operating cashflow with high revenue growth. In other words, Zappos required a tremendous amount of capital to build an online shoe store.  These days domainers can build an affiliate store for almost nothing. Think I’m kidding? Epik has just rolled out the first wave of online stores using a platform-based approach made possible through an exclusive partnership with Seattle-based Wishpot.com. While it is still early in the evolution of this jointly operated platform, it is a very efficient way to build new retail portals that offer consumers both selection and price. Here are a few of the first sites to go online:

harddrives.com
tennisrackets.com

flapper-dress.com

flightattendantcostumes.com
adultwitchcostumes.com
pocahontascostumes.com

halloweencostumesforbaby.com

bikinis.net

PearlEarrings.com

sterlingsilverheartlocket.com
rosependant.com
ipodstereo.com

CompactSpeakers.com

bluetoothphoneheadset.com
ereaders.net
audiobookdirectory.com
tripodadapter.com
internet-security-software.com
language-translation-software.com
computerlapdesk.com
idetousb.com
rcatousb.com

SOCKET939MOTHERBOARD.COM

duallayerdvdburner.com
computer-batteries.com
pc-notebooks.com
wireless-printers.com
network-switches.com

How domainers can get started
Businesses like Zappos are clearly not built overnight. That said, it does not have to cost a fortune to test the water. For starters, you can do what Epik network member Kenny Hartog is doing.  Kenny loaded a few product-related domain names onto Epik earlier this month.  We then produced online stores for him at no cost. Kenny is now watching his earnings ramp fast. Here is Kenny’s revenue share as reported on his metrics portal:

kenny

What is notable is that most of Kenny’s traffic is coming from search:

Traffic for Kenny Hartog's stores

Thanks for sharing, Kenny.

Some of Kenny’s stores will get queued for development into custom store formats like the ones described earlier. The product platform that we are developing allows us to go beyond affiliate feeds to work directly with manufacturers, wholesalers and dropship networks. This means that as volume grows it is possible to increase gross margins as well as take greater control of the customer relationship both within the individual store, but also across the network of stores.

Got product domains? Let’s talk.  Send me an email: rob@epik.com, or see you @ TRAFFIC.


Comments (17)

  • owen frager

    October 23, 2009, 6:52 pm

    Good stuff, Rob!
    btw, Tony Hiesh on CNBC this week, dropped more hints about Zappos/Amazon plans
    http://www.cnbc.com/id/15840232?video=1304333140&play=1

    Reply
  • D

    October 23, 2009, 7:32 pm

    I’m working with Rob now on the development of a product category killer .com. It was not previously ranked in Google, but after a week it’s #6 for the exact term in Google. Results to come!

    Reply
  • fred_p

    October 23, 2009, 7:35 pm

    Thanks for this insightful post! Keep up the good work and the justdropped.com move seems so smart given the dynamics right now and especially with domain tasting done.

    Best of luck!

    Reply
  • Jim

    October 23, 2009, 8:03 pm

    Keep up the good work Rob. You’re really taking the domain industry by storm! Epik is a solid way to get even more out of our domains, and I’ve heard nothing but positive from a few friends that use you.

    Reply
  • Bob Lange

    October 24, 2009, 2:31 am

    Nice sites, once you get them ranking they should make you a lot more than parked pages.

    Reply
    • Rob Monster

      October 24, 2009, 3:27 am

      @Bob Lange – Thanks. As for the ranking, most of these sites went live in the last 24 hours. We are also planning to add regular original editorial content as well as attract guest bloggers using and embedded Wiki technology for content management. This will be going live shortly. In addition, link development has just started. Also, keep in mind that we are operating these are mini-businesses so best to measure progress in months, not days. Each site will take on a life of its own even though its foundation was made possible through a unified technology platform.

      Reply
  • Dave

    October 24, 2009, 6:31 am

    Rob..This is amazing. This is what people have been looking for..Puting their domains to work..great job.

    Reply
  • Steve

    October 24, 2009, 7:24 am

    A clean look & easily navigated – your new retail portal shops look really sharp!

    Reading through your earlier blog posts; one in particular caught my interest (actually, it was your REPLY to the 1st comment regarding your Sept 19th post – Domain Development…).

    {cue the lightbulb for an ah-ha moment} Ah-ha!

    http://www.epik.com/blog/domain-development-the-real-reasons-why-minisites-are-not-the-answer.html/comment-page-1#comment-5

    Your succinct ‘roadmap’ for a sustainable and (more) equitable partnership between content writers, domainers & end users makes total sense. It had never occurred to me that a domain sale ‘revenue sharing’ agreement (between pooled content writers & domainers) could be done at an enterprise/macro/’semantic web network’ level.

    Perhaps republish your comment as a stand-alone blog post – it deserves the attention!

    Steve
    Vancouver, BC

    Reply
    • Rob Monster

      October 24, 2009, 9:47 am

      @Steve – My comment on September 19 was a preview of what we are working on. Portable identity and the semantic web are the catalyzing enablers for federated reputation. Why? Federated reputation is contextual: no one person is an expert in every field. For example, we have the domain names Questions.com and Comments.com in development for exactly the same reasons — federated aggregation and distribution of user-generated content with attribution back to the author. You will see a Questions.com widget appear on pretty much every Epik site to allow federated collection of questions with federated answers, but with attribution back to the unified profile of the person who answered the question. The web as it should be.

      Reply
  • Mark Fulton

    October 24, 2009, 9:27 am

    Very impressive looking sites. I wish you the best!

    I would sign up, but unfortunately Amazon gave all North Carolina affiliates the boot!

    Reply
    • Rob Monster

      October 24, 2009, 9:31 am

      @Mark – Epik is based in the State of Washington. So, I think you are good on Amazon affiliates so long as Epik is the representative agent handling content and monetization. We issue a revenue share at the rate of 50/50 in exchange for an exclusive, terminable license. I will send you a template agreement which your counsel is welcome to review.

      Reply
  • Bob Lange

    October 24, 2009, 6:37 pm

    Regarding ranking on the search engines one way links seem to be the way to go,I just found this service I have never tried it, but looks interesting
    http://www.directorymaximizer.com/

    Reply
  • […] only to reference content, but also to products as Epik has started to do with the launch of the product portal platform, e.g. HardDrives.com as well as descriptive names, […]

    Reply
  • FuckingAustria.

    November 6, 2009, 11:04 am

    >> Jim says:
    >> October 23, 2009 at 8:03 pm
    >>
    >> Keep up the good work Rob.
    >> You’re really taking the domain industry by storm!
    >> Epik is a solid way to get even more out of our domains,
    >> and I’ve heard nothing but positive from a few friends that use you.

    @Jim , yes , v agree w/ u , v’r also the happy users of epik

    Reply
  • FuckingAustria.

    November 6, 2009, 11:07 am

    >> Epik has just rolled out the first wave of online stores
    >> using a platform-based approach made possible
    >> through an exclusive partnership with Seattle-based Wishpot.com.

    @Rob ,

    ynot send a newsletter to notify your users w/ every roll-out or pre-release ?
    ?

    sorry , v did just not aware your online stores !!

    cheers , 2w

    Reply
  • […] – Transfer Ka-Ching Chapter 2: Build – Operate – TransferThe blog post entitled Ka-ching was a popular one and continues to get reactions and comments.  It described where I believe money […]

    Reply
  • […] The implication here is that as the global economy struggles to resume a sustainable and endogenous growth track, the fundamental risks are still largely unchanged.  At the same time, the list of attractive alternatives to the US Dollar is shrinking — this at a time when the US Dollar is not all that attractive! The silver lining for Domainers is that the online economy is healthy, capital efficient and increasingly profitable. […]

    Reply

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