ToysRUs pays $5m for toys domain

ToysRUs could be looking to increase its online presence

Toy retailer ToysRUs has paid $5.1m (£3.6m) for the Toys.com domain name.

The amount has surprised onlookers and hints at a deeper commitment to online retailing for the toy giant.

It is believed to be the biggest payout for a domain this year but has some way to go to beat the $14m paid for sex.com in 2007 or the $9.5m paid for porn.com.

UK domain name seller Sedo said it had seen prices halved for .co.uk domain names since the economic downturn started to take hold.

Brand kudos

But, said Sedo's business development manager Nora Nanayakkara, more small- to medium-sized businesses are buying domains.

"Sales have tripled as businesses see the value in having a presence online," she said.

"In the case of ToysRUs it could be that they are thinking of rebranding or increasing its online presence," she said.

"Toys.com is going to put them in the top search ranking and is likely to give them kudos in terms of brand recognition," she added.

In the US, domain name prices have remained stable, according to Ron Jackson, editor of the Domain Name Journal.

He said that the average .com domain was selling for $2,688 (£1,904) in the fourth quarter of 2008 compared to $2,788 (£1,976) for the same period in 2007.

Selling online

For many online, it is a way to buck the downturn, he thinks.

"The severe recession is forcing businesses to look for the most cost effective, efficient way they can possibly operate and for many that means establishing or reinforcing a web presence," he said.

"This is especially true of brick and mortar retailers. There is much less overhead involved in selling toys for example online than through hundreds of cash-draining big box retail stores."

The Toys.com auction, which took place last week, saw a series of bidders for the domain. But as the price hit $3m (£2.1m), only two were left - ToysRUs and National A-1 Advertising.

The domain had previously been up for auction and went to a company called Faculty Lounge for $1.25m (£886,000).