When Amazon paid $928 million for Zappos in July, it got a little something extra in the box: the Clothes.com domain. It turns out that Zappos bought the domain last year from Idealab for $4.9 million (Bill Gross strikes again).
The detail is tucked away in Amazon’s SEC filing about its acquisition of Zappos:
In May 2008, we acquired the Clothes.com internet domain name from Idealab. The domain name was recognized as a purchased intangible asset with a useful life of 20 years. The entire purchase price of $4.9 million was assigned to the price of the domain name intangible asset and will be amortized on a straight-line basis over its remaining estimated useful life.
The “we” in that sentence is Zappos (now Amazon). At $4.9 million, the Clothes.com sale would have been the second largest reported domain-name transaction in 2008 after Fund.com ($10 million), and the second biggest one so far this year after Toys.com ($5.1 million).
The Clothes.com URL goes to a Zappos landing page with a clothing product smackdown. Zappos is primarily known as an online shoe retailer, but sells clothing as well. Such a large investment, however, suggests that Zappos may have had plans to branch out more aggressively into clothing, perhaps under the Clothes.com domain.
(Thanks to reader George Kirikos for the tip).
On the same note, HushHush.com is also for sale.
As big fan of Zappos (what shoe lover isn’t?), I am stoked about this new development!
When will big companies learn?
Generic domain names DON’T make for great brands. Zappos is awesome, Shoes.com isn’t.
Someone needs to buy their managers a copy of “The 22 Immutable Laws of Branding” which says:
“The Law of the Generic: One of the fastest routes to failure is giving a brand a generic name. The problem with a generic brand name is its inability to differentiate the brand from the competition. At your local health food store, you’ll find Nature’s Resource, Nature’s Answer, Nature’s Bounty, Nature’s Secret, Nature’s Way, Nature’s Best, Nature’s Plus, etc. Will any of these generic brands break into the mind and become a major brand? Unlikely.”
@Matt,
You’re point is well taken, however the goal isn’t to use a generic domain name as a brand, rather as a point of distribution given the traffic that generic domains attract organically. For instance, Zappos was likely planning “Zappos Clothes” or some brand name using Zappos as the mother brand.
Best…
It’s undeniable that if zappos ran from shoes.com they’d have done better faster, brand awareness would have been so much easier. Sure a domain doesn’t make a business but it does a damn good job at helping it.
Your point regarding “nature’s [...]” isn’t valid in regards to domains.
If you only knew how the web worked. Seriously Matt. Learn how ppl actually find shit on the web, and then the little bulb in your head will go off.
Not only do search engines love generic domains, but the click-through rates on ads with a generic URL are 3-times the industry average. A generic domain is the best name to brand in this digital world because it is a gift that will keep on giving to your company in the form of maximizing and optimizing every single marketing dollar spent.
As the world continues to get more cluttered with brand messaging, the most basic, the most descriptive brands have an edge. The rise of generic domains as brands is very real. We’re going to be seeing a lot more of these, not less.
In an era of increased accountability and fiscal scrutiny, more and more companies will invest in generics because it is asset value that is rising and can bring measurable benefits on various key strategic fronts.
I guess that’s why I buy books from books.com, socialize through people.com (or is it ‘ppl.com’?) and sent email from email.com.
Yeah, in a pre-Google world, Matt might be a fool, but that’s not the world we’re living in.
Right, but some people use shopping.com for shopping and weather.com for weather forecast…
And these are only 2 examples.
Actually you do buy books from books.com. It is owned by Barnes and Noble. I could not think of a better way to get to the top of your industry than with a generic domain name.
Agreed.
We purchased our .net domain (.com owner wants $1M+) for its SEO value and the fact that it’s the second most searched term for our industry. We paid a premium for it, but it was worth it.
In addition to what others have said, I should point out that Zappos is generic. It’s just in a different language.
No it’s not, its a construction taking into account the spanish “zapatos”
clueless.
personalized, natural language, location based domains are the best. where would myspace be if it was called groupies?
Generic domains can, in fact, work spectacularly well as brands. Not just any domain will work — there are rules. But in some cases they can be extraordinarily clutter busting as well as seo friendly.
They’re worth $1BIL.
Typo in post: lareg
Sorry: lareg.com isn’t available… but the .net and .org are!
Wow what a gift. in time both acquisitions will pay off in the end. domain Clothes . com really made a lot of people money.
Why they werent redirecting the clothes.com domain to http://www.zappos.com/clothing which ranks on the first page of google for the term clothes is beyond me.
The Bill Gross link is broken (has a “-2″ on the end of it).
What would 1800fatfree.com and the telephone
number be worth?
T-V.COM and T-V.NET are available – any interest?
Says here they depreciated it over 20 years. But have seen many people use the method that a domain is not owned, but “rented” (you have to pay fees yearly to keep it) so you could do a total write off in the first year.
@Matt
Thank you for your post. This has segmented you into the clueless category.
Great Article and Commentary on the Aquisition of Zappos and the Generic Domain Clothes.com by Amazon!
Generic Domains are worth their virtual weight in gold! They not only attract instant and relavent visitors to a site but also bring about instant savings in both traditional and internet advertising and marketing
Cheers,
Sumbini
Matt is absolutely right! Anyone who thinks a generic domain is the answer is stoned in my opinion. Ya, pets.com did well? Not The first candy.com did well? Not. Both went out of business. Lets see…the first and second toys.com owners went out of business!! First AND second…most of the posters above are young kids in my opinion…learn your history kiddies…
@Red
A generic domain name is not a business. A generic domain name will not make a failed business succeed nor vice versa. A generic domain name will make a sound business, better.
Have you seen advertising lately – TV, web or print, don’t matter. Most ads promote a url. It’s about recall and traction. Generic urls are a boon for marketers.
Why did Microsoft just buy office.com? Why does Disney sit on video.com? Why did CBS buy TV.com last year? I could do this all day…
Wake up dude.
“dude” – Blue – are you 15? or just a reject from the 80s? You are wrong 100%
The only way you are right is if you bought the one word generic domain at a good price of say 100K or something like this…
When large or small companies buy a domain for millions it will take 20 years to break even – in 20 years will domain names still exist and if they do will .com domains be the big thing still? Now use your brain and try to visualize…
Now you mention big companies making big decisions…ok…lets see..
Microsoft…back in early 90s Bill Gates did not believe in the Internet. Now Office is getting killed by products like openoffice…and the Zune is like an Edsel…Explorer is getting killed by Firefox…Bing is the best thing they have now.
Disney – they let a huge search engine in it’s day fail (infoseek.com) and wasted their time with a trademark lawsuit (their horrible engine go.com) fighting goto.com.
cbs.com – let CNN grow huge in the early 80s while they sat on their hands…
Please..use quality companies to make an argument.
Are you up past your bedtime? Oh…it’s Friday night – don’t have a date AGAIN! So sad…
@Red
“When large or small companies buy a domain for millions it will take 20 years to break even”
If your marketing budget is 50K then I agree, you have no business buying a generic domain name for millions.
However, you clearly have zero clue about marketing and corporate-sized marketing budgets. Furthermore, until you have experience marketing a generic and actually see first-hand the measurable benefits it can provide, you truly don’t know what you are talking about.
“Are you up past your bedtime? Oh…it’s Friday night – don’t have a date AGAIN! So sad…”
LOL. You are so right. I haven’t had a date in almost 10 years. I pretty much spend most nights on the couch surfing the web with my wife while my kids sleep.
What other drivel are you going to serve up? I can’t wait.
I have more experience than you will ever know with marketing in Fortune 500 companies…so don’t try that one. and yes! I once owned a very generic domain and know all about this too.
The benefits are NOT what you state. You forget that most people visiting toys.com or pets.com etc. are just messing around – they are not true buyers – to pay off millions of dollars will never work – they will lose money. Period.
Even if the company is large they made the wrong decision – just because they are large, in your words, they are allowed to waste money? Not to mention you cannot trademark generic domain names – look at the recent case law. Not owning a trademark is violating marketing 101 rules.
Please provide examples on how having a generic domain makes money…please…the floor is yours.
You surf the web with your wife? hugh?
One company that did it right was CreditCards.com. Built their entire business off of the back of the domain.
I could see credit cards doing well because the margins for signing up a customers are so high
…but toys, candies, pets…no way – no how – the margins are slim selling commodity type items…
isnt the idea ravashing people who buy shoes also buy cloths duh!!!