Recently, domain investor Michael Bilde of Embrand found a story in a Danish newspaper that revealed that a company called CoolShop acquired the CoolShop.com domain name for $100,000. This fee surpasses many other “shop” domain sales prices. It beats:
- PopupShop.com for $57,000
- BookShop..com for $47,500
- VideoShop.com for $30,990
So why did CoolShop pay $100,000 to acquire CoolShop.com? In this edition of Strategy Scrutiny, I’m going to take a look at the possible reasons why the company paid this significant fee.
Firstly, if you aren’t aware, CoolShop is a Danish native brand co-founded by Jacob Risgaard, a businessman and co-star of Løvens Hule, the Danish version of the US hit show Shark Tank. CoolShop was founded in 2003 and now employs a sizable team to work through the thousands of orders the company receives via its e-commerce site.
The purchase of CoolShop.com isn’t a recent one. It was acquired from a Texas tattoo artist back in 2010. Initially, CoolShop redirected CoolShop.com to CoolShop.dk as a means of brand protection. Since .COM is the most widely used domain extension in existence, it made sense to acquire the domain to stop traffic and email leakage.
It quickly became clear that this wasn’t CoolShop’s ultimate strategy, though. A year after acquiring the domain, CoolShop.com becomes the hub for the company’s expanded shop front. Moving from simply serving Denmark, CoolShop grew to serve Sweden, Finland, Norway, and the UK too. CoolShop.com was the main directory for the company, directing customers to the right country store.
Using the .COM domain as a directory hub is something that has been commonly done by large e-commerce chains in the past. It isn’t so prevalent today though, with many sites preferring to offer redirects based on a user’s geographic location (Nike and Adidas, for example).
As CoolShop expanded into other territories, it used CoolShop.com as the base for some of its country-based stores. Denmark’s CoolShop remained active on CoolShop.dk, and the company had acquired CoolShop.co.uk for its British store. But for Finland and Norway, the company used CoolShop.com/fi, and CoolShop.com/no respectively. Subdirectories.
Leveraging a central .COM domain name and operating country-specific stores on subdirectories is a common practice. Again, Nike is a prominent example of a company that currently does this.
It seems that CoolShop decided that it required a more local approach, however, and by 2016, CoolShop owned and operated CoolShop.fi (the country code for Finland), as well as launching CoolShop.nl, and CoolShop.de, the country codes for Netherlands and Germany respectively. By 2018, CoolShop had also added CoolShop.se, the country code for Sweden.
Why did the company invest money and infrastructure in acquiring and maintaining various country-code domain names?
The extensions that CoolShop use (.de, .uk, .nl, .se, .fi) are popular in their respective countries amongst home-grown companies. According to Dofo, .DE and .UK are two of the five most popular extensions globally, which demonstrates their desirability.
Giving the impression of being a local store may help improve the adoption rate and trustworthiness that the company receives. In some circumstances, a .COM can feel impersonal. Amazon has a similar strategy, using Amazon.de, Amazon.co.uk, and Amazon.nl as local presence stores.
[click_to_tweet tweet=”‘When you’re a sizable e-commerce business, consumers expect you to own the .COM’, by @jamesiles ” quote=”When you’re a sizable e-commerce business, consumers expect you to own the .COM”]
So why did CoolShop pay $100,000 for CoolShop.com? Firstly, when you’re a sizable e-commerce business, consumers expect you to own the .COM. Secondly, as a central focal point for its brand. The .COM extension is known globally. As an online brand that acquires 100% of its visitors and customers online, owning the .COM gives the company a central location where visitors can intuitively navigate to in order to find information about the company, or be redirected to their local store.
Owning the .COM also gives a certain amount of protection for the brand. If a customer accidentally visits CoolShop.com instead of CoolShop.co.uk for example, they are a click away from being back at their local store. Not having ownership of CoolShop.com in that scenario may lose them numerous sales.
Email leakage is another strong factor to consider. The number of emails with sensitive customer details or payment information that an e-commerce company receives is staggering. A small percentage of those emails may be delivered to the wrong address. Sent to [email protected] instead of [email protected], for example. By owning CoolShop.com, that data stays within the confines of the company. By not owning CoolShop.com, you run the risk of your sensitive customer information getting in the hands of another company or person. That’s surely worth a $100,000 payment over the course of a company’s lifetime.