Which Marketplace? Wrong Question.
Actually, everyone in the channel should think hard about which online marketplaces they use. But maybe not as hard as IT providers in particular think about something else.
If you’re reading this the day it landed in your inbox, you’re either too lethargic from last night’s feast to handle more than a little reading or taking a break from Black Friday shopping.
If you’re shopping, moreover, chances are good you’re doing at least some of it digitally. Adobe expects online spending by U.S. consumers to rise 8.4% this holiday season to $240.8 billion. B2C ecommerce revenue for the year as a whole, moreover, was already at about $880 billion by the end of Q3, according to the Census Bureau, and looks likely to come in north of $1.2 trillion by New Year’s. Which sounds impressive, until you learn that CapitalOne expects U.S. B2B ecommerce to total some $4.04 trillion this year.
Everyone, in other words, is buying all sorts of things online these days, very much including the highest of high tech. Sales just through hyperscaler marketplaces like AWS Marketplace and Azure Marketplace will top $45 billion next year, according to Canalys, which expects that figure to hit $85 billion in 2028. And hyperscaler marketplaces are but one of seven marketplace categories overall.
“The money is definitely flowing through marketplaces,” observes Ryan Walsh, Pax8’s chief strategy officer.
IT providers know it too. Over a third of them globally generate more than 20% of their revenue through marketplaces today and 87% expect to sell more through marketplaces in the next five years, according to recent Pax8 research.
Put differently, we’re long past the point of debating if marketplaces matter. They do. What everyone from vendors to their partners increasingly wants to know is which of the many marketplaces they can transact through should they transact through?
Allow me to make the seemingly contradictory but—trust me—perfectly rational case that the correct answer depending on your role in the channel is either all of them, some of them, or you’re asking the wrong question.
All of them
Literally speaking, of course, it’s hard to do business with every marketplace available. But something like that should be your objective if you’re a vendor, according to Canalys Chief Analyst Jay McBain.
“You want to be where your customer is,” he says.
Hyperscaler marketplaces? Absolutely. Businesses had more than $360 billion worth of commitments on deposit with them at midyear, according to Canalys, and you don’t want to miss out when that money gets spent.
Distributor marketplaces? Of course. A whole lot of SMBs buy there via a whole lot of SMB partners.
And don’t forget about ConnectWise if you care about MSPs. It’s the market share leader in RMM and PSA at present, per Canalys, and is building an Apple-esque app store for its many, many partners.
Some of them
You’ll want to place your bets more thoughtfully if you’re an MSP or reseller. Using all the many marketplaces out there is hard if you’re a vendor with lots of people and money at your disposal. It’s closer to impossible for the vast majority of IT providers.
“You don’t want to have your team going to 30 different marketplaces,” says Marty Bauerlein (pictured), chief commercial officer at distributor D&H. “You want three at the most.”
So which three? Given their scale and popularity (AWS Marketplace alone sells 20,000-plus products across more than 70 categories to over 300,000 active users), the hyperscalers are a seemingly obvious starting point. And yes, channel partners will directly produce more than half of all hyperscaler marketplace sales by 2027 and influence even more, according to Canalys.
Indeed, Bauerlein freely concedes that the hyperscalers have an “unbelievable value proposition.” But so do we, he continues, and in ways that matter to channel partners. For one thing, good luck getting the kind of personalized solution insights we offer our partners from a hyperscaler.
“When something’s new or you’re in a new environment or you’re speaking to a new end user, you’re probably not going to be able to call your hyperscaler for support,” Bauerlein notes.
How well do the hyperscalers really understand your business model too, asks Nate Herz, senior vice president of business operations at TD SYNNEX, given the massive variety of companies they partner with?
“The features and functionality that we have are much deeper, richer, and nuanced for the needs of the reseller, MSP, and MSSP market,” he says, pointing in particular to integration between TD SYNNEX’s StreamOne marketplace and PSA solutions from ConnectWise and Kaseya.
Walsh makes a similar point about Pax8, noting that everything the company does is built specifically around MSPs serving SMBs. “They’re the hero in this ecosystem for us,” he says.
Plus, Walsh notes, Pax8 integrates with the hyperscalers, so closely in fact that partners can include vendors who sell through AWS or Microsoft but aren’t on Pax8’s line card in orders if they wish. Same goes, for D&H, Bauerlein says.
“We collaborate versus compete” with hyperscalers, he says.
Wrong question
Of the many ways MSPs serve clients, I’d argue, working the mouse for them is arguably the least valuable. Yet 30% of marketplace orders today, according to McBain, are basically just partners clicking on behalf of a customer.
Even when partners play a more active role in shaping and executing marketplace deals, he adds, they’re lucky to pocket 10 or 20 percent of the total. The companies coming in after the deal to integrate all that software, by contrast, are making more like 200 to 300 percent of the order value on services.
Take Insight, for example, which could care less about resale, in the cloud or elsewhere. “They’re not cash registers,” McBain says. “They do the consulting, design, implementation, the full cycle, hundreds of services.” And Wall Street has rewarded them for it.
“Insight as a reseller has outgrown Microsoft in the last three years in stock price,” McBain notes.
Which is why it’s probably fair to characterize McBain’s wise take on which marketplaces IT providers should buy from as “wrong question.” Everyone in the channel must do business with marketplaces, because their customers do and because they’re the most efficient way to research and procure cloud software. But which marketplace MSPs in particular choose will ultimately have less impact on their top and bottom line than their skill at turning cloud software into solutions that deliver outcomes that help customers either make more money or spend less.
“How do we get better at that,” therefore, seems like the question they really should be asking.
I have a lot to be thankful for
Including you and your support, faithful readers. My co-host and I discussed some other things we’re thankful for on this week’s episode of our podcast.
Also worth noting
David Raissipour, formerly chief technology officer and chief product officer of Mimecast (a security vendor, I’ll note), is now chief product and technology officer of ConnectWise instead.
Timely development given that we’re talking marketplaces this week: Keeper Security is the latest addition to the catalog at Sherweb.
Arrow now sells VMware solutions in North America.
Clumio Backtrack, from Commvault, is designed to help anyone with data in Amazon S3 recover and revert anything from an object to a huge dataset all but instantly.