How new top-level domains will impact retail

 
May 9, 2014

By Jan Corstens

Partner, Deloitte

Over the next few years, the Internet will be facing its biggest makeover yet when branded and generic domain names like .nyc, .shop, and .tiffany enter the existing field of Top Level Domains (TLDs) such as .com and .org. The decision by the Internet Corporation for Assigned Names and Numbers (ICANN) to introduce thousands of new TLDs to the web was intended to increase innovation on the Internet and open up opportunities for users to make their mark online. Brands and retailers, specifically, should see this as an incredible opportunity to better appeal to customers in a way that allows them to creatively target customers based on geography and cultural context. However, it is important to note that the failure of brands to secure relevant TLDs does open them up to the risk of malicious third parties that may wish to pass themselves off as the brand and mislead potential consumers.

As new domain names continue to become available, retailers will be able to speak to customers more locally than ever before. While the most common country-specific domains currently in use include .uk and .au, the introduction of new international domains will allow brands to get even more specific. For instance, a brand like American Apparel may wish secure a top level domain like .tokyo if they are planning to expand business in Japan — customers could then find their goods online at www.americanapparrel.tokyo.

Recently, the domain extension .uno became available in an effort to connect the Hispanic and Latino communities online. It was designed for companies and marketers to take advantage of when providing information, products and services to the Spanish-speaking marketplace. In the United States in particular, the Hispanic community is among the nation's fastest growing demographic with a rising degree of purchasing power as well. This means capturing their attention online is crucial for brands looking to appeal to an influential customer base and a domain like .uno can be a vital part of the process.

While hundreds of new domain names present a great opportunity for brands to advance their local appeal, there is reasonable concern over fraud, which cost e-retailers $3.5 billion in 2012. The Trademark Clearinghouse, the only authorized and universal means of protecting brands against infringement during the launch of the new web domains, can help retailers secure domains that are exact matches for their trademarks before anyone else during a "Sunrise period" — an initial period of at least 30 days before domain names are offered to the general public — and be alerted when attempts at purchasing domains using the brand name are made. Registering with the Clearinghouse allows a company to take the first steps in investigating possible fraudulent activity associated with the brand name. High-end luxury brands such as Ferragamo and Gucci have already taken steps to fight this kind of fraudulent activity, each recently winning million dollar lawsuits against third parties passing themselves off as the brand or its competitor.

Despite the aforementioned Ferragamo and Gucci examples coming out as winning cases, filing for court cases is an undoubtedly time consuming and costly process. Moreover, new cybersquatting cases are likely to carry on as new web domains continue to appear throughout the year. Most recently, clothing retail brand Aeropostale filed a Uniform Rapid Suspension (URS) case against the domain name aeropostale.clothing, which was registered by an infringing third party. The URS system was designed exclusively to provide trademark owners with a quick and a low-cost process to take down websites infringing on their intellectual property rights, however these types of cases by the complainant results in only the suspension of the domain name rather than a transfer of the domain name to the rightful trademark owner. To avoid running into this sort of situation in the first place, it is imperative that brands take appropriate defense mechanisms far in advance of more new web domains appearing.

The transformation facing the Internet is still in its early stages and it is likely that over the next few years more and more retailers will begin taking advantage of the creativity these new domains offer. The bottom line is that in the Internet will soon look and function like a very different place, and retailers are among the key businesses that need to start preparing for the change now if they want to remain top of mind in the online space.

(Photo by Dennis Skyley.)


Topics: Marketing , Online Retailing


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