Denying the relevance of ICANN Accreditation in 2023 might be tempting, but the truth is that it remains a valuable asset for registrars. Many forward-thinking registrars continue to see the immense value that ICANN Accreditation brings to their domain registration business. Embracing ICANN Accreditation complements their operations and acts as a catalyst for their success in the competitive domain industry.
Why Many ICANN Accredited Registrars are Losing Ground?
In recent times, a concerning trend has emerged in the domain industry, as many ICANN Accredited registrars find themselves losing market share. A fundamental shift in the market landscape, coupled with certain strategic decisions, has led to a challenging scenario for these registrars.
One of the primary reasons for this decline is the increased cost of operation and compliance burden that falls on the shoulders of web hosting companies who choose to become ICANN Accredited registrars. While ICANN Accreditation was once seen as a mark of reputation and provided access to cheap domain names, the benefits seem to have dwindled for many.
In the past, companies sought ICANN Accreditation to attract customers with low-cost domain names, hoping that they would eventually purchase higher-margin products like web hosting, SSL, and email services. However, in recent years, several registrars have either surrendered their ICANN Accreditation or faced deaccreditation due to the intricate compliance requirements imposed by ICANN.
The domain reseller route has become more appealing for many businesses. Registrars like Resellerclub, enom, or namecheap offer competitive pricing, charging only a nominal amount on top of the cost price, with no further commitments. For resellers, this option is less stressful, quick to start, and easier to scale.
The domain registration business, however, often comes with low or no margins, particularly when registrars or resellers sell domain names at cost price or with minimal profit. Many view domain names as a means to attract leads who will eventually become paying customers for higher-margin products.
A critical mistake made by some registrars in the past was compromising on prices, offering domain names to customers at cost prices in the hopes of attracting them to their other products. This model, however, is unsustainable in the long run, especially when the cost of running a registrar business is already high.
Assuming that customers who purchase domain names at cheap prices will become loyal follow-on customers and buy other products is a risky proposition. Customers seeking cheap domain prices will likely seek out competitive prices for web hosting, email, and other services, leading them to use multiple vendors. Competing with established giants like GoDaddy, NameCheap, and eNOM, who can afford such loss-making strategies, becomes a near-impossible task for smaller registrars.
To survive and thrive in this competitive market, new registrars must think innovatively and strategically. Merely selling domain name registrations without a solid use case is unlikely to lead to sustainable profits. A well-defined use case, coupled with innovative business strategies, is essential for registrars to differentiate themselves and attract customers.
The Cost of Running a Registrar and Market Trends: Embracing Value Over Price
Running an accredited registrar comes with a host of costs that demand careful consideration. Beyond ICANN’s application fee ($3500), annual membership fee ($4000), and the per-domain fee ($0.18), registrars must factor in registry cost prices, technology infrastructure, API development, customer support, compliance and abuse management, sales and marketing efforts, payroll, office rent, and various other fixed costs of operation. Phew! The overhead expenses are indeed substantial. On top of this registrar’s need to maintain a wallet with every single registry out there even though many of those TLDs never sell. Holding funds in a savings account would be more beneficial than maintaining wallet funds with registry’s.
With such high operational costs, selling domains with meagre margins becomes unsustainable. For the amount of resource, time and energy spent ICANN Accreditation brings very limited value to the table these days. Registrars must recognize that even in 2023, .COM remains the unrivalled king in the domain world, despite ICANN’s efforts to promote new gTLDs like .online, .xyz, and .club. Brands continue to crave a .COM after the dot in their domain names. The demand for .COM domains shows no signs of waning. Additionally, the supply of .com domains has diminished considerably, thanks to domainers who have stockpiled thousands, if not hundreds of thousands, of .COM domain names for trading in the future.
While new gTLDs may appear enticing, the average end-user who lacks in-depth knowledge of the internet often finds them perplexing. Explaining an email address like email@example.com over the phone becomes cumbersome. Users instinctively expect or presume a .com after the main domain name and hesitate to invest effort in capturing the rest of the address.
Notably, many brands that previously embraced new gTLDs have returned to the comfort of .com domains. Even brands that invested substantial sums in obtaining their dotBRAND TLDs have reverted to using .com addresses. The familiarity and universal recognition of .com domains outweigh the allure of newer options.
In contrast, ccTLDs are witnessing a surge in popularity. Tech startups, in particular, are gravitating towards .ai and .io domains for their ease of use. Despite having higher registration and renewal costs (often 3 times that of .com prices), brands prefer ccTLDs due to the value they provide. Customers today seek more than just cheap domains; they look for domain extensions that align with their brand identity and resonate with their target audience.
How to Run a Profitable Domain Registrar Business in 2023
While doomsday scenarios may cast a shadow on the domain registrar business, it’s essential to seek the pivotal moment that can turn the tides. Innovation and unique product offerings hold the key to success for ICANN Accredited Domain Registrars. It’s time for registrars to deeply contemplate their business models and find their niche.
A growing trend we’ve observed is applicants seeking ICANN Accreditation Consulting with specific use cases and a competitive edge. One such applicant aims to become an ICANN accredited registrar for their SEO business. By purchasing thousands of domains annually, ICANN accreditation reduces their costs and provides greater control over their domains. With their in-house registrar status, they no longer need to worry about customer support or compliance expenses. They’ve carved out a unique path to success.
Similarly, another aspiring registrar envisions an AI-driven domain name registration business. They intend to leverage the power of AI to simplify domain name, web hosting, SSL, and email hosting processes through an AI chatbot. By tapping into cutting-edge technology, they aim to revolutionise the domain industry with ease and efficiency.
Brand protection remains an untapped territory for many registrars. While industry leaders like MarkMonitor excel in brand protection, their high costs may deter smaller brands from accessing these critical services. Here lies an opportunity for new ICANN Accredited Registrar applicants to step in and cater to smaller brands seeking cost-effective brand protection solutions. By identifying such specific customer segments and building products around their unique needs, registrars can gain a competitive advantage and thrive
Why Domain Reseller & Web Hosting Companies Should Consider ICANN Accreditation in 2023?
The value of ICANN Accreditation for your domain reseller and web hosting business lies in the tremendous cost reductions it offers. When managing over 10,000 domains, ICANN Accreditation makes perfect sense as it significantly lowers your domain purchase expenses. Moreover, registries frequently introduce rebate programs and enticing promotional offers for domain registrations, which can greatly benefit your registrar business. You might have noticed top registrars like GoDaddy or NameCheap offering .COM domains for just $4 or $5, thanks to promotional offers from the .COM registry Verisign. By becoming an ICANN accredited registrar, you can capitalise on these exciting opportunities and pass on unbeatable deals to your customers. Embracing ICANN Accreditation in 2023 presents a strategic move that not only reduces costs but also enhances your competitive edge in the market.
How to Reduce the Operational Cost of ICANN Registrar Business?
Reducing operational costs is another vital aspect of running a profitable registrar business. Instead of reinventing the wheel, registrars can opt for ready-to-use EPP software platforms, saving time and resources. Additionally, partnering with services like Dotup for compliance and abuse management can substantially cut expenses compared to hiring in-house expertise. Embracing AI-powered customer support through chatbots can further optimise human resources and streamline support operations.
Digital marketing, SEO, and content marketing play a significant role in cost reduction as well. By effectively leveraging these strategies, registrars can minimise their sales expenses while maximising their outreach to potential customers.
In conclusion, the domain registrar business in 2023 offers ample opportunities for success through innovation, focused strategies, and cost optimization. Identifying unique use cases, building around competitive moats, and embracing modern technologies are key to unlocking profitability and thriving in the competitive domain industry. The path to success lies ahead; it’s time for registrars to seize the moment and embark on a journey of growth and prosperity.
Are you wondering How to Become an ICANN Registrar now? Read our blog on How to Become an ICANN Accredited Domain Registrar in 2023 for more information. Dotup Technology Consulting is an End-to-End ICANN Accreditation Consultancy which helps in ICANN Accreditation to become a domain registrar.
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