Cheesecake.com Sells for $100,000 -- Buyers Redesign Website and Add Hundreds of Products

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There was an existing business running at cheesecake.com, but for $100,000 the only thing that buyers David Clements and Harvey Kaplan would be purchasing was the domain name. This is their reasoning behind the acquisition and the business development since its purchase.

A premium domain name like Cheesecake.com is the online equivalent of having a premium physical address on New York's Fifth Avenue

Domain Names - this is a world that everyone at this point has heard about but that many still don't understand. It's a world where a single domain name like "toys.com" sells for $5.1 million dollars, another domain name, "candy.com," sells for $3 million dollars. In fact, hundreds of individual domain names have sold for $100,000 or more. Why do these domain names fetch such outrageous prices? That is the question we asked David Clements.

"A premium domain name like cheesecake.com is the online equivalent of having a premium physical address on New York's Fifth Avenue," said David Clements, Co-Founder and CEO of Cheesecake.com. Clements continued, "Let me explain. In 2008, Forbes magazine said that Fifth Avenue was the most expensive street in the world – retail space goes for around $1,000 per square foot. Now, the question is ‘Why is the retail space on Fifth Avenue so expensive?’ The answer is multi-factorial, but it is largely affected by simple economics. There are more shoppers on Fifth Avenue in New York compared with say, Main Street in Sherrill, New York [population 3,147] so there is much more demand for Fifth Avenue retail space. Twain said it best, ‘buy land, they’re not making it anymore.’ One of the four basic laws of supply and demand states that in a competitive marketplace with a constant supply and an increasing demand the equilibrium price will increase. The values of Fifth Avenue real-estate and domain names like Cheesecake.com are based this same law of supply and demand. Additionally, domain names have increased exponentially compared with real-estate in the past decade because the PED [price elasticity of demand] for domain names has been much lower than the PED of real-estate. A Google search for the term ‘cheesecake’ reveals over 50 million results for the term ‘cheesecake’ on the internet, and cheesecake.com currently fluctuates between the number 4 and number 6 spots. It is on the first page, the top 10 results for the term cheesecake, out of over 50 million places that the term is found on the internet. It is also typed directly into browsers when people search for the term ‘cheesecake.’ These two factors have a direct effect on the number of shoppers, or potential customers, that come to the website. So, we bought the domain because there were already a lot of shoppers going by an existing virtual storefront at cheesecake.com. The way we’re looking at it - the money we spent on the domain name was a one-time advertising expense. There is a lot more to it, but that covers some basics."

As of this writing, Cheesecake.com currently has about 250 products available – all in the dessert and gift categories. Their products range from several sizes of cheesecakes (of course), cookies, cookie dough, pies, fruit baskets, fruit boxes, and more. They specialize in smaller portion products and have both a 5 ounce and a 2 ounce cheesecake. Before the end of October, 2010, the company plans on increasing their product mix to over 400 products.

About Cheesecake.com:

Founded in Alpharetta, Georgia, by David Clements and Harvey Kaplan, Cheesecake.com is a one stop shop for gifts and sweets online. They offer bakery-fresh, gourmet cheesecakes, pies, fruit, fruit baskets and more. All sweets and treats ship out packaged nicely for gifts which are perfect for any occasion - a birthday, a thank you gift, an anniversary, or for no reason at all to spoil that someone special. As foodies themselves, David and Harvey know the value of having a bakery quality product delivered right to your home or office. Additionally, there is a 100% satisfaction guarantee for every customer. “If for any reason you are not completely satisfied with a purchase, we will exchange the item for the same product, a different product, or we will refund your money. It’s that easy and straightforward.” Cheesecake.com is growing exponentially because of an ever increasing crowd of loyal foodies that continue to spread the good word. Cheesecake.com: Delicious Desserts Delivered.

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