Marketplaces have reshaped how individuals and businesses connect. They have disrupted several industries and have touched every aspect of our lives from retail to travel to business. B2B Marketplaces powered by digital technologies specifically have improved efficiency, reduced risk, increased revenues, and offered several benefits to the business running the marketplace.
In this blog, we explore some reasons why Marketplaces are outpacing traditional e-commerce by 7X. We further dive into what innovations make Cloud Marketplaces a desirable choice for many buyers and sellers of SaaS, container products, professional services, and more.
What is the Marketplace Model?
The marketplace model is a strategic approach where B2B businesses enable third-party (3P) sellers to offer their products, software, and solutions directly on the business’s digital platform. In this arrangement, the 3P seller remains the merchant of record, while the B2B business takes a share of the sales value as commission.
Forward-thinking businesses are also becoming marketplaces themselves, automating relationships between customers and suppliers to enhance the buying experience. This trend is set to grow, becoming a key part of B2B digital strategies in the coming years.
What are Cloud Marketplaces?
Cloud Marketplaces such as AWS Marketplace, Microsoft Commercial Marketplace, Google Cloud Marketplace, and Salesforce AppExchange, are continuing to invest heavily in their marketplaces and work towards bringing their partner services and solutions listed on the marketplace.
Cloud Commerce has been on the rise since the launch of AWS Marketplace in 2012. Through continued innovation, building up of partner networks, and API integrations, they have changed the way businesses manage procurement of new software and grow on the Cloud.
Cloud Marketplaces also unlock new opportunities for partners such as resellers and System Integrators (SIs). Canalys reports that AWS partners can earn up to $6.4 on every dollar the buyer spends on the marketplace.
Cloud Marketplace Innovations
Top innovations pioneered by Cloud Marketplaces that have made it into successful GTM channels:
- Committed spend consumption: Buyers can apply their pre-committed spending towards marketplace purchases, helping them optimize cloud spend and justify new software acquisitions. This provides them with additional discounts on other products and services from the Cloud Provider. EDP on AWS and MACC on Microsoft are examples of such programs.
- Verifying the security posture of your product: As the adoption of cloud services increases, so does the focus on security. Cloud marketplaces provide a way for buyers to easily verify the security posture of the product they are purchasing. Increasing trust and making it easier to sell to larger enterprise clients and the government.
For example, Vendor Insights on AWS Marketplace continuously verifies security certifications such as GDPR, FedRAMP, HIPAA, ISO, SOC 2, and more. - Reducing licensing overhead: Most customers on Cloud Marketplaces choose to go with a standardized End User Licence Agreement (EULA). These contracts are developed in collaboration with the buyer and seller communities.
- Involve your Channel Partners: Marketplaces offer mechanisms that simplify creating resale authorizations and enable your Channel Partners to sell your products directly through the Marketplace.
- Ability to create Private Marketplaces: Companies can create private marketplaces within a public cloud environment to customize their software catalog for internal use or specific clients, and ensure compliance and tailored access to necessary software.
- Free trial models: Cloud marketplaces offer free trials, allowing customers to test software before making a purchase decision. This can increase adoption rates by reducing upfront risks.
- Support for multiple product types: Marketplaces cater to a diverse range of solutions, including Containers, Software as a Service (SaaS), and professional services, expanding vendor reach across different customer preferences of solutions from Containers to SaaS to professional services and more
- Simplified discounting through private offers: ISVs can negotiate custom pricing directly within the marketplace through private offers, simplifying the process of offering discounts and tailored pricing for larger deals.
- Jointly working with Co-sell: Marketplaces facilitate co-selling opportunities between ISVs and cloud marketplace providers like AWS, Microsoft, or Google, enhancing sales and visibility.
- Simplified procurement process: Setup and deployment of applications are made much more streamlined through Cloud Marketplaces. AWS Quicklaunch for example provides pre-configured templates, reducing the technical barriers to the deployment of new software and services.
These innovations have not only streamlined business purchases, increased deal sizes, shortened deal cycles, faster procurements, and deployment, but they have also created new opportunities for all of the stakeholders involved.
Benefitting from Cloud Marketplace
As a Seller, it is important to understand that several effects seen in traditional Marketplaces can also be seen in Cloud Marketplaces. These further benefit you and your listing on the Cloud Marketplace.
- Network effect
The more participants that use the Cloud Marketplace, the greater the value it provides to each user. As more vendors list their software, more buyers benefit from the choice in the marketplace. As more buyers procure through the marketplace, the more sense it makes for ISVs and sellers to list and sell through the Marketplace. This leads to the formation of a self-reinforcing cycle of growth that makes it a more valuable resource for finding and distributing software solutions. - Increased reach
Cloud marketplaces enable ISVs to reach a global audience without the need for physical distribution networks. This broadens the market for software vendors, greatly benefitting smaller vendors, who instantly gain access to customers across the globe. - Faster transaction
Cloud Marketplaces streamline the purchasing process by offering standardized contracts, automated provisioning, and immediate delivery of cloud-based services. This facilitates quicker transactions compared to traditional sales methods, reducing the time from discovery to deployment. - Larger deal size
By allowing users to run down their committed spending, Marketplaces make the deal cycle shorter and also allow for bigger deal sizes. - Increased trust
Well-established cloud marketplaces backed by major cloud providers (like AWS, Microsoft Azure, and Google Cloud) offer a level of trust due to their brand recognition and security standards. This trust is extended to the ISVs on their platforms, making customers more comfortable making purchases. - Ability to share reviews and get custom pricing
Customers can leave feedback about products and services, which helps other users make informed decisions. The negotiation of private offers within cloud marketplaces has enabled custom pricing agreements between ISVs and buyers, providing flexibility and potentially better deals tailored to specific customer needs. - Targeted audience
Listing your SaaS, containerized applications, and professional services on cloud marketplaces like AWS, Azure, and GCP provides exposure to a highly targeted audience already seeking solutions that integrate with their cloud infrastructure.These marketplaces are the primary destinations for cloud users to fulfill their needs, meaning a significant portion of visitors to your listings are serious buyers ready to transact, leading to higher conversion rates and meaningful customer engagements. - Scalability and Flexibility
Cloud marketplaces give businesses the ability to scale their operations up or down depending on their current needs without making long-term commitments. This flexibility is especially valuable for small businesses or startups that might need to quickly adapt to changes in demand or business growth without significant upfront investments.
Cloud marketplaces have revolutionized how businesses buy and manage software. With features like easy deployment, free trials, private offers, and strong security, they make the procurement process smoother and more efficient. These platforms help companies scale, reach global audiences, and gain valuable insights, making them essential tools in today’s digital economy. Cloud marketplaces are changing the game, creating new opportunities and driving business success.
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