IT and Business Insights for SMB Solution Providers

Mastering Marketplaces

Online IT buying sites are increasingly popular with end users. What does that portend for the channel? By Rich Freeman
Reader ROI: 
ONLINE MARKETPLACES that aggregate cloud software and other products are increasingly where end users want to buy IT.
CHANNEL PROS can both use them on behalf of clients and offer them as self-serve tools for more sophisticated customers.
WHITE-LABEL MARKETPLACES build equity for your brand. Third-party marketplaces help you reach more buyers.
FOCUS ON A FEW marketplaces to start, rather than spread yourself too thin.

WAY BACK IN 2014, an MSP in Dallas named Juan Fernandez came upon a then-radical recipe for making himself utterly indispensable to his SMB clients.

“I can sell them the product, the services, the hardware, the whole thing,” he says, recalling the moment of inspiration. Better yet, he realized, he could sell it all on one monthly invoice at one recurring rate.

The term didn’t really exist at the time, but Fernandez, who is today CEO of consultancy the MSP Growth Coalition, had stumbled upon what’s now popularly called “everything as a service.” And all he needed to bring his vision to life was an online tool for provisioning, billing, and managing the new offering.

Juan Fernandez

“We knew what we wanted to do. We knew how we wanted to deliver it. We just needed to get the programming set up,” Fernandez says.

Back then, that was a heavy lift. These days, everyone from hyperscale cloud providers like Microsoft and Amazon Web Services to distributors like Ingram Micro and D&H to vendors like ConnectWise and Tackle offer ready-made online marketplaces stocked with all the resources you need to bring XaaS to your clients seamlessly.

They are, without question, powerful and convenient tools, but many experts think they’re more than that. They’re the key to success and survival in IT.

Point-and-Click Easy

Properly understood, a marketplace is more than just an ecommerce site., most famously, lets you buy Dell hardware plus maybe some accessories and services. Marketplaces, by contrast, are tools for aggregating, deploying, and supporting solutions that include customized blends of cloud software and other products from multiple suppliers.

“You can literally buy 10,000 pieces of software on the Salesforce AppExchange,” observes Jay McBain, chief analyst at Canalys. “The average sale has seven layers to it from six other ISVs that have no relation to Salesforce other than being API-integrated and on their marketplace.”

Good luck researching, quoting, and buying all those items on seven different websites, and then calculating one, accurate total each month for products with seat-based pricing in some cases and usage-based pricing in others that may or may not be billed in arrears.

“MSPs are trying, and they’re having trouble every single month,” says Sam Demulling, vice president of the ConnectWise Sell quoting solution at managed services software maker ConnectWise. “It’s a very tedious process.”

Jay McBain

Marketplaces, by contrast, are often easy enough for end users to operate on their own, and they sell technology exactly the way businesses increasingly want to buy it.

“Whether you’re buying a toothbrush, a razor, you’re buying a car, you’re buying a computer, it doesn’t matter anymore. The future is going more to this monthly subscription model,” McBain says.

Like everything else cloud-related, COVID-19’s arrival in 2020 poured rocket fuel on that trend. “There was more growth in marketplaces in the first three months [of the pandemic] than there was in the last 10 years combined,” says McBain, citing data from McKinsey. “It got to the point where one-third of U.S. GDP was running through marketplaces.”

And there’s nothing transitory about that phenomenon. “We’re predicting $25 billion going through these marketplaces by 2025,” says McBain, who forecasts “hockey stick” growth through the end of the decade.

The bottom line, observes Tackle CEO John Jahnke, is that your customers are spending more and more time on marketplaces, so you should too. “We want to meet buyers where they want to buy, and increasingly buyers are saying they want to buy through these cloud provider marketplaces,” he notes.

About the Author

Rich Freeman's picture

Rich Freeman is ChannelPro's Executive Editor

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