eCommerce Normally a startup comes along, backed by venture capital funding,
with a shiny, disruptive new offering that end users eventually buy into aſter lots of promotion from the channel and elsewhere. Te marketplace trend is different. It has been very much led by
end-users, creating an unusual dynamic whereby partners are having to respond to changes in their customers’ behaviour.
Delayed reaction So why was the channel slow to respond to the marketplace trend, when it’s normally at the forefront of tech innovation? It’s fair to say that, in the early days of cloud at least, some channel
players viewed hyperscaler marketplaces with a degree of suspicion, or at least uncertainty. Te fundamental concern was that AWS Marketplace and the rest would make it so easy for end-users to procure soſtware that resellers, distributors and others would see their business impacted. Tankfully, such concerns have proven to be unfounded and we’re
now as a sector rapidly waking up to the fact that the marketplace economy is a huge opportunity for the channel, rather than a threat. Similarly, AWS itself is placing greater emphasis on the channel
than ever before, with a raſt of channel-focused announcements at the recent AWS re:Invent in Las Vegas.
Wake-up call Several analyst findings and forecasts may well have been instrumental in the channel waking up to the marketplace opportunity, including: • Canalys’ prediction that global sales of third-party vendor soſtware and services through cloud marketplaces will hit US $45 billion this year, up 84% CAGR over five years; and
• A Forrester finding that partners selling in AWS Marketplace can close deals up to 50% faster than traditional purchase channels, with an average 234% return on investment.
Perhaps most crucial of all is the Canalys forecast that enterprise soſtware sales through hyperscalers will soon reach $85 billion, with more than 50% expected to flow through channel partners by 2027.
Fact and fiction Tat’s an enormous prize, worth at least $43 billion, but there is definitely still some reticence out there in the channel. I believe this is largely down to misconceptions and a lack of awareness of the precise role played by AWS Marketplace in channel transactions. With this in mind, there are three AWS Marketplace myths that I’d like to tackle head on. 1) AWS Marketplace is neither a reseller nor a distributor In October 2024, Canalys characterised AWS Marketplace as “one of the biggest distributors in EMEA and globally.” For me, it’s more accurate to think of AWS Marketplace as a transaction and payment collection vehicle. AWS Marketplace does not distribute or resell soſtware solutions, nor does AWS train, enable or provide channel partners with professional and presale services on vendor solutions like a distributor does. Trough AWS Marketplace, AWS provides the means by which soſtware solutions can be sold and procured.
2) AWS does not quote the end-user Contrary to what seems to be popular opinion based on
www.pcr-online.biz
conversations across the channel, in AWS Marketplace transactions AWS does not go to the customer with a quote. It does not provide direct solution pricing and, once again, should be seen as a route to market like any other marketplace. In Channel Partner Private Offer (CPPO) transactions, the offer is from the partner to the end-user. AWS may offer incentives but it is not involved in commercials.
3) AWS Marketplace transactions only become channel deals when the channel is involved Tis is the subject of much confusion. To be clear, if a vendor sells directly to an end-user on AWS Marketplace, this can be classed as a direct sale because AWS Marketplace is not a reseller or a distributor (see point 1). AWS Marketplace transactions only become channel deals when a reseller or other channel partner is involved. AWS itself addressed this and other misconceptions in an excellent recent blog post, Whose contract is it anyway? How AWS Marketplace works.
Farmers’ market In the blog post, AWS urges AWS Marketplace users to think of a farmers’ market when considering the contractual relationship between different players. In the analogy, AWS Marketplace is the entity that organises and hosts the market, vendors are the stall holders and end-users are the consumers. As the article states: “Buyers might even haggle over prices if they’re buying a large amount of an item, but the organiser of the market never gets involved in this negotiation.” It goes on to say that: • AWS is the marketplace provider, responsible for the marketplace’s functionality for both the seller and the buyer, but “not involved with the pricing or terms you agree to with the soſtware or service provider”
• “As is the case in a farmers’ market, the soſtware vendor pays the marketplace provider a small fee and is typically happy to do so for the benefit of reaching so many customers in one place”
• “Te buyer is a customer of the reseller or soſtware vendor for the SaaS product, as well as of AWS for use of our marketplace. AWS Marketplace is a free service for AWS customers to use”
Mindset shift Addressing these misconceptions and creating an improved level of understanding is vital, because the rise of AWS Marketplace marks a major shiſt in the IT landscape, representing a huge – and in some cases untapped – opportunity for channel partners. By embracing AWS Marketplace and adapting their go-to-market
strategies, partners can unlock new opportunities by tapping into their customers’ dedicated cloud budgets for security and networking soſtware solutions. As hyperscaler marketplaces continue to grow in both size and
strategic significance, channel partners who are agile and forward- thinking will be well-positioned to seize the opportunities on offer and accelerate their own growth in the process. As we oſten say to partners, it’s about selling where your customers want to buy. By viewing AWS Marketplace as a vehicle for driving incremental
growth with both new and existing customers, partners can take a slice of the ever-growing marketplace pie and, in so doing, secure the role of the channel in the cloud economy.
January/February 2025 | 39
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