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Less is More - The Sales Boom in Short Character Domain Names

Tobias Flaitz

Insights on the Increasing Demand from China

Much of the domain industry has seen a huge surge in sales of 2, 3 & 4 character sales. More specifically numeric domain sales are ever increasing mostly driven by Chinese buyers. As such domain marketplaces are utilizing and developing stronger connections in China to foster this growth even further while creating awareness for why this is occurring.

When talk turns to economic and trade growth, China is never left out of the conversation. This talk extends to the domain market as well. China has demonstrated dominance in domain investing especially among shorter 2, 3 & 4 character dot com names. This is due to a few different factors. One of which is that Chinese investors are in recent times very cautious on investing in more common avenues such as the stock market or real estate. As the mainstream media has been covering extensively, both of these areas have become increasingly volatile in China. With investors still seeking lucrative outlets for their portfolios they've turned to seeking out alternatives such as domains which is viewed as the "real estate of the internet".

The reasons behind the growing interest in 2, 3 & 4 character and numeric domains also vary. For one, Chinese culture is very superstitious about numbers in general therefore making these domains extremely popular with Chinese buyers. These numeric superstitions stem from numbers sounding similar to Chinese words that have positive or negative connotations. Also, in China remembering numerical or random letter domains is much easier than Latin characters. Thus much of their web presence is dominated by the use of these types of domains versus branded domains we're used to in the Western world.

From 2014-2015, the increase in volume of shorter domains is staggering but by all accounts we can only expect this trend to continue. Conversely, some have speculated that this trend could be on a path typical of other market fluctuations. Only time will tell and markets do rise and fall but for now signs are pointing to a continued steady and consistent incline versus decline because interest in these domains is not waning. On the Sedo marketplace, we've seen many sales pull in upwards of five and even six figures such as give.com ($500,000), pax.com ($200,000), 1905.com ($57,000). These are randomly selected examples of high grossing sales of short character names and are not all-encompassing of top sales in this category, for more in depth information please visit our market trends page.

Driving Success within the Chinese Market

Companies seeking to gain entry into this unique market need to first establish reputable presence within Asia which can be especially difficult to achieve due to language and cultural barriers. Negotiations and business dealings such as domain sales in this region are handled very differently than in the Western world and sensitivity to this is crucial. Businesses need to be knowledgeable on the particular idiosyncrasies within the Chinese market as well as ensure their resources are easily accessible. To address these needs, in 2012 Sedo introduced a marketplace fully translated into Mandarin and have since expanded our country management team to include native speakers. Whatever the nature of your day to day operations, expanding into the Asian market and continuing to grow your earnings within this customer subset should not approached haphazardly. Thoughtfully allocating both technology and human resources will pay off in the end.

A testament to the potential for end users of numeric and short character domain names are big name companies, such as Vodafone using 360.com for their corporate website. Within the domain world, registries like TLD Registry who represent new names in Chinese characters .online (.在线) and .website (.中文网) have demonstrated their ability to reach this type of audience with ease. They have hosted live auction events including one co-hosted with Sedo in Macau during the launch phase in 2014. Macau, a known gaming and gambling destination in Asia was a smart choice to showcase their premium names for sale. .Club is another registry who has implemented a very successful marketing strategy in China as "club" is a term with universal meaning in most languages including Chinese dialects. Recently they hosted two very lucrative auction events featuring premium numeric names with the .Club ending. Heavy bidding traffic along with bidding wars ensued due to the demand for these short memorable names. Results such as these, China's current fluctuating economy coupled with increased interest in shorter and numeric domains prove this market spike is likely to continue.

By Tobias Flaitz, Chief Executive Officer at Sedo Holding AG

Related topics: Domain Names

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