Walmart, Safeway, Amazon Share Same Domain Strategy: Mine, Mine, Mine
Walmart (NYSE:WMT) and Safeway (NYSE:SWY) are each trying to privatize .grocery, so no competing chains can use it. Barring an unexpected change, one of the two will lock it down. Meanwhile, the spotlight has been on Amazon (NASDAQ:AMZN) for attempting to get exclusive use of .books. Other retail-friendly top-level domains (TLDs), including .toys, .kids, .tools, .shoes, .fashion and .food, are also in play.
Why all the attention now for the vanity TLDs, when the list of who applied for what was made public last June? Mainly because Wednesday (March 13) is the deadline for filing objections to those applications. And although eight other companies—including Google (NASDAQ:GOOG)—are also vying for .books, the biggest fears are about Amazon.
That may not be as paranoid as it first looks. Amazon filed (and paid the $185,000 per TLD application fee) for 76 separate vanity TLDs—all of which it intends to restrict to Amazon and its subsidiaries. (Yes, we looked at all 76 applications.) The Authors Guild and the Association of American Publishers filed objections over Amazon's .books application, using words like "enormous competitive advantage" and "monopoly."
Amazon isn't alone. Walmart and Safeway have filed dueling applications for .grocery, and both chains say in their filings they'll restrict use to just their own corporate families. Unlike .books, there are no other competing applications for that name, so either Walmart or Safeway will eventually get the vanity TLD. If, somehow, .grocery becomes wildly popular and Kroger (NYSE:KR) or Costco (NASDAQ:COST) wants to use it, they'll be out of luck.
That type of lockdown wasn't supposed to happen with generic names, only brands. About three dozen retailers did apply for vanity TLDs consisting of their own brands, but that list is dwarfed by Amazon's 76 applications (all just for Amazon's use) and Google's 101 filings (some just for Google, others open to wider use).
Some of the most obvious TLDs that retailers might conceivably be interested in—.shoes, .toys, .fashion, .jewelry and .tools—have no retailer applicants. They've all been applied for by companies that actually believe they can sell domain names ending with those TLDs. There's also .food, which is the focus of a three-way competition among two domain registrars and the Food Network, which wants to take it private. Amazon, Google and a Hong Kong foundation are each fighting for .kids.
No one knows at this point when any of these new TLDs will actually become available for use—they're all officially still in the "initial evaluation" stage. Unopposed applications with no competition might start being approved as early as April, but that sounds optimistic.
What is clear is why there's this explosion of TLDs. In a word: money.What is clear is why there's this explosion of TLDs. In a word: money. The Internet Corporation for Assigned Names and Numbers (ICANN), which hatched the pick-your-own-TLD scheme, thought it might get a few hundred applications. Instead, it got 1,930 and has already collected $185,000 for each one. Not bad for a "product" that costs nothing for ICANN to produce (in fact, ICANN didn't even have to dream up any of the names it sold).
Meanwhile, money has driven the rest of the process, too. Amazon and Google each spent more than $10 million on applications. In some cases, they're clearly targeting each other: Amazon applied for .search and .play, while Google filed for .book and .shop. Another huge applicant calling itself Donuts Inc. has spent more than $50 million applying for more than 300 TLDs. It intends to sell domain names.
Is anyone actually going to get a return on that investment? Are Internet users—and, particularly, E-Commerce customers—actually going to go looking for .books or .tires sites? (Incidentally, Goodyear [NASDAQ:GT] and Bridgestone are each trying to take .tires private, while Donuts wants to sell .tires domains.)
Out of 246 million currently registered domain names, 105 million end in .com, 14.9 million end in .net and just under 105 million end in one of the 280 different country-based TLDs (including .co, which is actually the country TLD for Colombia). Consumers have been well trained to expect .com. Previous TLD expansions haven't made a dent in .com's dominance—the most successful is probably .biz, with a few million registrations.
How likely is it that .book—owned by Amazon or anyone else—will have an impact? Barnes & Noble (NYSE:BKS) owns both book.com and books.com, which both redirect to the chain's own site. That doesn't seem to have given B&N much of a monopoly.
Until now, the big concern for retailers has been that they would have to spend triple-digit sums to buy their domain names all over again as TLDs, or chase away domain-squatters in hundreds of new TLDs. In 2011, the National Retail Federation predicted that chains would have to fork over $250,000 per TLD, plus another $50,000 to $100,000 a year afterwards, just to nail down their brands. Fighting off challenges and cybersquatters could jack up that cost into the millions.
Today, that's a little hard to believe, especially because so many E-Commerce players have declined to go near vanity TLDs. Kroger, Walgreens (NYSE:WAG), CVS (NYSE:CVS), Rite Aid (NYSE:RAD), Lowe's (NYSE:LOW), Costco and even eBay (NASDAQ:EBAY) couldn't be bothered to pay again for their own names. On the other hand, JCPenney (NYSE:JCP) and Best Buy (NYSE:BBY) did. Maybe that's the ultimate indicator of how good an idea vanity TLDs are.