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Making the Business Case for Cloud Marketplace

You recognize the potential of Cloud Marketplaces for reaching more buyers and driving revenue as part of your go-to-market strategy. Now you need to convince your C-suite to make their move.

Getting executive buy-in on a novel approach isn’t always easy, which is why we created this post. Here, you’ll find compelling facts and contextual information to help you make your case: the history and growth of Cloud Marketplaces, how Cloud Marketplaces can drive value in your organization, and what the future holds. Use this trove of knowledge to present an air-tight pitch to your company’s decision-makers and come out looking like a hero. 

First Things First: What Is the Cloud Marketplace? 

Start by making sure everyone understands what you mean when you talk about Cloud Marketplaces. In the simplest terms, Marketplaces represent B2B app stores where cloud customers can buy third-party software to run alongside their cloud infrastructure and have the purchase go directly to their cloud bill. Cloud Marketplaces bring SaaS sellers and buyers together to accelerate deals and simplify the procurement process.

By selling through one or more Marketplaces, SaaS companies gain access to a broad pool of enterprise buyers—along with their billions of dollars’ worth of committed spend.

Who operates Cloud Marketplaces? The three hyperscale players today are Amazon Web Services (AWS), Microsoft Azure, and the Google Cloud Platform (GCP). But the field is steadily expanding, with hundreds of Marketplaces targeting niche verticals such as analytics, productivity and collaboration, education, and health. 

Overcoming Misperceptions and Resistance to Marketplace

Fair warning: Your C-suite may have outdated notions about how Cloud Marketplaces work and the level of effort they require.

It’s true that the earliest iterations of Marketplaces lacked sophistication. They functioned more like digital bulletin boards built for self-service procurement, with buyers primarily purchasing cloud storage and infrastructure solutions on limited terms like by the hour or temporary usage. 

If your product offering wasn’t instantly deployable and didn’t fit such a metered environment, you’d need to spend considerable time reengineering it before you could sell it on a Marketplace.

Lucky for all of us, things have radically changed for the better. 

Today’s Go-To-Market Platform 

Cloud Marketplaces today bear little resemblance to their predecessors. They have evolved into friction-free, go-to-market channels empowering more seamless B2B transactions. 

Marketplaces do still offer the simplicity of one-click direct purchasing, but they also have the flexibility to operate more like a fulfillment vehicle with the ability to broker Private Offers with customized solutions, pricing, discounts, and terms. Private Offers through Marketplace allow buyers and sellers to mimic direct purchasing with the added advantage of moving more quickly through procurement thanks to standard contract terms and no need for new vendor onboarding.  

Marketplaces accommodate sales for all kinds of software, from complex to click-to-deploy and development to enterprise. And they work for sellers of all sizes. According to survey data on the State of Cloud Marketplaces, the largest groups of sellers in terms of ARR included $100M-500M+ unicorns (30%) and those attempting to scale their GTM with ARR of $0-20M (39%).

As for their popularity and effectiveness in accelerating revenue, the numbers speak for themselves. 

In August 2020, Tackle surveyed software buyers and sellers representing multiple industries to learn about Marketplace usage and perceptions. Based on the data we collected, we predict that 25% of B2B SaaS sales will happen through Cloud Marketplaces in the coming years. Here are the most notable findings that back up our prediction:

  • 43% of buyers had purchased software through Marketplaces in the last 12 months.
  • 74% of buyers are “extremely likely” or “likely” to make future software purchases through Marketplaces.
  • Buyers cite four top reasons for why they want to purchase through Marketplaces: simplifying the procurement process, gaining fast access to tools, consolidating their IT spend, and burning down cloud budgets.
  • 65% of sellers use Cloud Marketplaces alongside direct sales and channel partners for a comprehensive go-to-market strategy.

Marketplaces will also grow significantly this year among sellers. 70% of sellers said they will continue or increase their focus on and investment in Marketplaces in 2021. Over the coming years, we expect Cloud Marketplaces to become a fundamental revenue channel for enterprise software, capturing a substantial share of this $550B+ industry.

Here are some third-party findings you can cite in your case as well: 

  • Over 25% of global 1000 companies are already using online Marketplaces in some capacity to purchase all types of technology, and over 75% have tried Marketplaces, according to Gartner. 
  • More than 35% of Cloud 100 companies are active Marketplace sellers, according to data we calculated from Forbes
  • 73% of B2B buyers say that buying through eCommerce, web direct, or Marketplaces is very convenient, according to Forrester

Finally, examples from leading software companies illustrate the tangible benefits of Cloud Marketplaces for sellers:  

At this point, your stakeholders might be wondering if your company is large enough to justify using Marketplaces. The answer is Absolutely. Marketplaces work for sellers of all sizes. According to our survey, the largest groups of sellers in terms of ARR included $100M-500M+ unicorns (30%) and those attempting to scale their GTM with ARR of $0-20M (39%).

Check out this recording of our 2020 SaaStr Scale talk where our CEO, John Jahnke, shares how companies at different levels of growth can leverage Marketplace.

Another consideration for you: Does your solution help drive cloud service consumption? Marketplaces offer an extra bonus through their respective partner and co-sell programs. Read up on this and other reasons B2B sellers choose Cloud Marketplaces

The Buying and Selling Platform of the Future  

According to the industry’s top analysts, Cloud Marketplaces are just getting started. To sweeten your pitch, reference these predictions:  

  • 17% of the $13 trillion in B2B spend will flow to Marketplaces by 2023, according to Forrester
  • By 2024, Marketplaces will be a dominant channel for the procurement of infrastructure operations software, according to Gartner.
  • 80% of B2B sales interactions between suppliers and buyers will occur in digital channels by 2025, according to Gartner.

Even more encouraging, ecommerce is growing exponentially. In the first three months of 2020, ecommerce realized the equivalent of 10 years’ of growth, according to McKinsey. There are no signs of slowing down, as buyers continue seeking more convenient digital means of buying.  

Simplicity Seals the Deal  

You’re sure to pique interest when you lay out the case for “why” you should list on Cloud Marketplaces. But your decision-makers will inevitably want to know more about the “how.” We have an alluring answer for you there, too. 

Rather than take on the time and expense of listing and establishing a Marketplace presence on your own, you could leave all the heavy lifting to Tackle. 

We live and breathe Cloud Marketplaces. Our first-to-market platform provides a zero-engineering approach with unique features allowing you to list, market, and sell with unmatched speed and simplicity. With Tackle, you cut your Marketplace launch time from months to just weeks and free up your teams to focus on what you do best: serving your customers. 

What else do you need to make your case for Cloud Marketplaces? Reach out and let us know. We’ll be happy to give you even more information to help your C-suite see the value of this game-changing channel. 

 

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