More evidence that businesses are seeing greater value in on-line retailing comes today with the news that ToysRUs has paid £3.6m ($5.1m) for the Toys.com domain name.

It’s thought to be the highest price paid for a domain this year although nowhere near to the record $14m paid for sex.com in 2007 or the $9.5m paid for porn.com

While the prices being paid for domain names have dropped by as much as half during the credit crunch, many domain name sellers are reporting an increase in the number of sales, especially to small and medium-sized businesses.

One UK domain name seller Sedo reports a trebling of domain name sales.
A spokesperson for Sedo is reported as adding: “In the case of ToysRUs it could be that they are thinking of rebranding or increasing their online presence. Toys.com is going to put them in the top search ranking and is likely to give them kudos in terms of brand recognition.”

Internet retail observers believe that as the recession bites more businesses are looking to go on-line in a bid to stay afloat. E-tailing is seen as a more cost effective and efficient way to operate than via high street retailing.

One analyst 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 £2.1m ($3m), only two were left: ToysRUs and National A-1 Advertising.

There was a glimmer of good news for some bosses last week after Labour unveiled a scheme to guarantee up to £20bn in loans to small and medium-sized firms. Labour’s Business Secretary, Lord Mandelson, said the proposals would target “genuine business needs” to help small firms survive the economic downturn.

Central to the Government’s loan plan is a £10bn Working Capital Scheme designed to help banks lend capital to businesses. In effect what this means is that Labour will, in return for a fee, insure banks against companies defaulting on loan repayments. The proposals amount to a 50% guarantee on of £20bn short-term loans to firms with a turnover of up to £500m.

Mandelson is reported as saying: “The £10bn injection to banks represents a guarantee to enable them to free up working capital to sustain existing loans and create new ones.”  But he added that “a condition of [banks] getting the money will be that they negotiate with the government on what capital will be freed up”.

Bank lending is to be targeted at “innovative, viable and growing” companies that are finding it difficult to access working capital, for example to pay employee wages.

Other parts of the package include a pledge by Labour to put aside £225m to cover any repayments that can’t be made by some small businesses that may default on loans. Plus there will be a new Enterprise Guarantee Scheme, which will secure up to £1.3bn in additional bank loans to companies with a turnover of up to £25m. These companies will be able to borrow a maximum of £1m, with 75% guaranteed by the Government.

In addition, Mandelson said that Labour was setting up a £75m Capital for Enterprise Fund specifically for businesses with high levels of debt that have “exhausted traditional forms of financing”. £50m will be provided by the government and £25m by the major banks.