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.