Online Marketplaces: Threat or Opportunity for the Channel?
What does the channel really think of this increasingly popular way to buy technology?
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Chris Hill, RVP public cloud & alliances, Barracuda, says no one could have predicted the surge in online marketplaces.
“The online marketplace was always going to be a big opportunity for the channel. But, pre-pandemic, none of us could have predicted that opportunity would knock at our door quite so suddenly.”
If that wasn’t enough, the acceleration of online marketplaces has coincided with a behavioural shift among end users.
“[They] now want their organisation’s purchasing experience to mirror the online marketplaces they know and love in their consumer lives. Millennials want to do their own research and be active in exploring the marketplace. Vendors like Microsoft and Amazon have created an attractive location for them to do so.”
Hill says those who want to seize this opportunity must prioritise creating a great online experience for their customers.
“Distributors need to work on their own online marketplaces and how they interact with channel partners. [This is] to make sure they’re not cut out of the chain as this channel-wide change takes form. Partners must focus on ongoing training, development and value-add propositions to stay current. This also applies to independent software vendors. They need to ensure they are supporting both marketplace integration and supporting the channel with new routes to markets.”
Ultimately, Hill believes the growing appetite for online marketplaces is a huge opportunity for the channel. He says they should “create intuitive, attractive, user-friendly experiences for their customers who confidently self-service and source their Christmas shopping via Amazon and want to emulate that experience for business procurement. Whether they be SMBs, enterprise, or somewhere in between. Those that cater to this shift will keep customers coming back for more. [They] will carve themselves a space in what promises to be a fundamental pillar of the channel in the coming years.”
Kirk Horton, VP, channels & partners at security firm Netacea, agrees that marketplaces are a crucial addition to partner portfolios.
“They provide a one-stop shop for customers solution needs. They enable new technologies and use cases for a variety of builds across all models, from applications to security solutions. This is a new and exciting opportunity for service providers. It’s imperative that security providers partner with these marketplaces to easily enable the use of their technology across a widely distributed customer base around the world.”
Sam Soares, chief growth officer at another security firm, CyberSmart, thinks more businesses will want a low-touch relationship with their channel partners. The equates to less complexity and more efficiency.
“The accelerated digital transformation is not going to slow down. This means the channel will continue developing digital-first experiences to deliver their services and products. This will see the rise of more digital marketplaces, and more digital support/self-serve, from a trusted partner that can provide what a business needs in one place.
“Channel will focus on products that are proven to work within specific environments, easy to deploy and maintain. This will put pressure on vendors to standardise systems and think of their tools as more of a part of an ecosystem, rather than standalone solutions.”
The rise in online marketplace activity will see an increased value exchange between vendors and the channel. That’s according to Adam Wilson, strategic partner director at cloud communications vendor Vonage.
“While vendors may be getting closer to the customer and the consumer segments, they cannot be everywhere and satisfy a business’ every need,” he says. “As long as the channel adapts and the vendor remains willing to trade with the channel, the technology will get in the hands of joint customers on a far broader scale and will be adopted far sooner.”
Wilson also says the rise of online marketplaces has “hammered home the importance of consistency where brand and communications across all customer touchpoints are concerned. He adds that advancements in AI can help bridge this gap.
“To stay ahead of the curve in 2022 and beyond, channel partners will need to get to grips with helping customers effectively deploy ‘conversational commerce’. [This is] a term used to describe the growing convergence of shopping and conversations on social media platforms.”
Forrester’s Jay McBain has said that online marketplaces “might be the strongest headwind that distribution is facing.” He noted that upward of 17% of the $3.5 trillion that businesses and governments spend on technology may go through marketplaces as quickly as this year.
So what do the disties think – a threat or opportunity?
Rakesh Parbhoo, global CTO at Westcon-Comstor, says channel enablement is a crucial aspect of any distributor’s role. Therefore, facilitating the channel’s evolving needs is key.
“With the channel continuing to adopt a digital-first mindset, we’ve seen a shift in vendors moving toward as-a-service and subscription models. In the partner landscape, we’ve noticed a growing desire for easy, digital and accessible solutions, amplified by remote operations. Hosting an online marketplace has been a key way for distributors to cater towards these changes and better support the evolving, hybrid needs of vendors and partners.
He also notes that while it’s important to have digital self-serve channels, the value of a people-focused approach cannot be lost. Westcon-Comstor’s own online marketplace for its partner applications, PartnerCentral, taps into that, he says.
“It allows our partners easier ways to transact and gain insights into our joint business, but also reflects the strong domain knowledge of our people, who are invested in our partners’ success. The … digital tools have allowed us to provide more meaningful engagements with our partners and offer a truly hybrid approach.”
However, there is another view. Francis O’Haire is group technology director for UK and Irish distie DataSolutions. He believes marketplaces are suitable for selling commodity IT products but not for complex licensing or product configurations.
“For channel partners, a large part of the value a distributor adds is in helping them navigate the complexities and pitfalls of enterprise software licensing or hardware selection and configuration.
“End customers purchasing directly from the hyperscaler marketplaces such as Amazon or Microsoft Azure threaten channel partners that have largely focused on reselling products. These IT resellers need to show more value to their customers including developing their consulting and services skills and transitioning to offering tailored managed services.
“Customers still need guidance and assistance in selecting, implementing and managing complex solutions so the role of the technically competent partner does not go away,” he said.
Tarik Faouzi, SVP of Ingram Micro Cloud’s marketplace, CloudBlue, says adoption of online marketplaces is becoming second nature.
As such, “we’re seeing partners and customers reap the benefits of the new territory. However, as more enterprises make the shift to a subscription model, the importance of being able to automate certain functions has never been more important.
“Nobody wants to be overbilled, and nobody wants their service cancelled because they missed a payment. Being able to keep track of these sorts of things – especially as we move into a multicloud environment – has never been more pressing.”
Faouzi added that this is one of the reasons for Ingram Micro’s recent acquisition of Keenondots.
Tarik Faouzi, SVP of Ingram Micro Cloud’s marketplace, CloudBlue, says adoption of online marketplaces is becoming second nature.
As such, “we’re seeing partners and customers reap the benefits of the new territory. However, as more enterprises make the shift to a subscription model, the importance of being able to automate certain functions has never been more important.
“Nobody wants to be overbilled, and nobody wants their service cancelled because they missed a payment. Being able to keep track of these sorts of things – especially as we move into a multicloud environment – has never been more pressing.”
Faouzi added that this is one of the reasons for Ingram Micro’s recent acquisition of Keenondots.
The growth of B2B online marketplaces is evident. Driven by changing purchasing habits and expectations, the channel may consider them both a threat and an opportunity.
McKinsey notes that “COVID-19 has changed B2B sales forever”. Its 2020 research shows that more than 75% of B2B buyers say that they prefer buying online. Importantly for partners, they prefer remote interactions with sales representatives over traditional in-person interactions.
The use of online marketplaces is also not restricted to smaller-ticket items. Seventy percent of B2B decision makers say they are open to making new, fully self-serve or remote purchases of more than $50,000. Twenty-seven percent would spend more than $500,000.
So what does that mean for the channel? Here both vendors and distributors share their thoughts on online marketplaces. See our slideshow above to find out if they think they pose a threat or opportunity for their businesses.
Want to contact the author directly about this story? Have ideas for a follow-up article? Email Christine Horton or connect with her on LinkedIn. |
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