Yesterday, TechCrunch wrote a story about Toys R Us winning a heated battle for the toys.com domain against domain holding company National A-1. Apparently, several bidders were active early on but dropped out around the $3M range. Toys R Us ended up winning the bidding war for the paltry sum of $5.1M.
To me, the fact that Toys R Us was willing to shell out so much cash for a premium domain is indicitave of just how important online retailing has become to traditional brick & mortar retail stores. Today, any retailer without a strong online presence is going to fall behind. Amazon is eating many retailers lunch right now (see Circuit City) and they have no brick & mortar stores.
For those not familiar with the practice of domain squatting/parking I can only tell you it can be very lucrative with a premium domain such as toys.com. National A-1 was willing to pay over $5M just to be able to park the domain and sell ads against the hits to the site. Some of National A-1′s domains are free.com, boys.com, girls.com and divorce.com. Clearly, Toys R Us had to have this domain based upon the price they were willing to pay. Toys R Us is already the first result on Google when the words toy or toys are entered into a search. This give Toys R Us a huge competitive advantage over the likes of Amazon and Wal-Mart when it comes to online toy sales. The only thing I am curious about is why was Toys R Us was willing to pay so much for the domain when they already have such good search engine juice. I guess they just had to own the domain as the largest toy retailer in the world.
No comment yet