In the three years leading up to 2023, marketplace listings have grown by at least 250 percent according to research by the Boston Consulting Group. This is emblematic of how, from a simple discovery channel for products, cloud marketplaces have turned into a new ‘route to market’ for software businesses globally.
In 2024, however, cloud platforms are carrying this momentum ahead by incentivizing marketplace-led sales to – grow consumption, unlock new value for sellers through partnerships, and drive customer stickiness.
We dive into the tailwinds that support this momentum and peek into why launching your marketplace listing today offers compounding advantages for your sales engine.
1. Hyperscalers are incentivizing marketplace listing growth
A key factor underpinning listing inflation on cloud marketplaces is the growth of the platforms themselves.
According to Gartner, increasing digitization will see 70 percent of all technology workloads run in a cloud environment by 2027, up from 25 percent in 2023. A tremendous amount of net new cloud consumption is up for grabs for cloud providers. And this is where marketplaces are adding more value.
Platforms like AWS, Microsoft Azure, and GCP (also known as the hyperscalers) currently command 65 percent of the cloud market share, according to Statista. For them, cloud marketplaces act like a double-sided revenue tape:
By the end of 2025, hyperscalers are also projected to earn between $0.5 – $2 billion of incremental revenue, exclusively from transaction fees.
For sellers, not only is this a sign that marketplaces are a sustainable channel and not a ‘flash in the pan,’ but that they are also a driver of sales growth. In fact, Jay McBain revised Canalys’ forecast of marketplaces generating $45 billion in sales by 2025, stating that the mark could be hit as early as mid-2024!
Hyperscalers are also doing more to incentivize independent software vendors (ISVs, aka sellers). Early into 2024, AWS publicly announced a reduction in private offer listing fees to between 1.5 to three percent. Platforms also provide premium benefits when a seller surpasses a threshold in sales or consumption, with programs like Azure’s top-tier benefits.
2. Marketplace listings offer cost-effective revenue growth
Sustained growth compression is pressurizing SaaS businesses to focus more on profitability. As a result, median burn rates have fallen aggressively, according to OpenView’s latest benchmarks report.
Over the same period, hyperscalers have boosted customer commits by $73.4 billion, registering 2X year-on-year marketplace growth.
What that means is, as ISVs hunt for more cost-effective channels to grow sales, marketplace listings offer a growing pool of ready-to-transact buyers actively looking to burn through their cloud commits.
Over the past three years, hyperscalers streamlined partner onboarding, simplified buyer procurement, and established all enablements to set up the next wave of growth. From 2024, this preparedness will materialize into growth for both hyperscalers and ISVs selling with them, according to Zinnov’s research.
3. Marketplace listings enable partnerships for better conversions
According to Gartner, new decision-makers enter in the last five to ten percent of the sales process. This isn’t just a problem of ‘too many cooks’ delaying deal closures. It is a sign that today’s buyers are more evaluative when purchasing a tool.
Especially as competition intensifies, sellers need to do more than just drive product education; they need to drive conviction for buying decisions.
According to HubSpot, this is being increasingly solved by partner-led selling. According to their report, most revenue leaders believe that partner-attached deals are at least 26-50% more likely to be won than average.
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Cloud marketplaces are built on the spirit of collaboration. To that effect, they help ISVs launch partnerships at scale. This happens in two ways:
- Firstly, hyperscalers offer them access to a large buyer pool. But more importantly, partnering on Co-Sell helps ISVs piggyback on hyperscalers’ credibility to influence deals. Eventually, a more formidable partnership helps drive mutual sales benefits through co-marketing.
- Secondly, channel partnerships on the cloud help ISVs grow their reach through reselling. Channel partners, in turn, benefit by offering simpler buying experiences to a larger audience. Additionally, AWS does not charge transaction fees from channel partners to help them maximize the value derived.
As a result, North American resellers have already seen their deal sizes increase by four to five times, with a 19 percent increase in win rates, according to AWS.
4. Marketplace listings drive sales success through buyer-centrism
After Shopify’s recent GCP marketplace listing, 21 of the 25 EmCloud SaaS businesses with over $10 billion market cap are now listed with at least one hyperscaler.
“By joining Google Cloud Marketplace, our partnership expands to support the commercial needs of enterprise customers, allowing them to easily buy, build, and integrate with the right technology to power unique commerce experiences,” Shopify’s press release read.
In essence, beyond the obvious benefits of reach, Shopify also aims to leverage the many buyer-side advantages a marketplace listing offers:
- Shorter procurement cycles since marketplaces are a one-stop-shop to search for, evaluate, and buy solutions
- Sellers are pre-vetted by the marketplace; this helps reduce efforts in the validation stage for buyers
- Easier post-purchase vendor management and bookkeeping since the hyperscalers handle billing
- Usage-based pricing enables buyers to limit expenses by helping them pay only for the value derived
- Cloud procurement helps buyers burn through their cloud commit faster
As a result, buyers find compounding benefits driven by cost and time efficiencies. According to AWS, buyers see a 75% reduction in effort during procurement and can generate up to $4.38 million in benefits over three years.
At the same time, by managing billing, standardizing contracts, and pre-vetting solutions, hyperscalers allow ISVs to reduce sales cycles by 50%.
5. Marketplace listings fit your existing sales motion
The benefits of product-led growth (PLG) first came under the spotlight with Slack’s meteoric rise to fame. In 2016, the company got by without a sales team. Yet, by 2023, Slack had a team of 900+ sales representatives.
This exemplifies just how dynamic SaaS selling is. While PLG reduces the barriers to entry for new customers, sales-led growth (SLG) still offers more personalized expansion opportunities.
In such a transitory environment, asking where cloud GTMs, ergo, marketplace listings fit in, is natural. The answer is – “it does not matter.”
Marketplace listings combine the best of both worlds of PLG and SLG. While public offers allow users a simple click-to-buy experience without human touchpoints, sellers can still close more mature, high-ticket deals with private offers. This makes marketplace listings the right fit for any business, irrespective of their sales motion.
The evidence is clear – marketplace listings are not merely an additional sales avenue; they are becoming integral to how software is sold and consumed in the cloud era.
An excellent marketplace listing starts with an equipped partner
Notwithstanding the benefits, cloud marketplaces are still complex to get started with. Cloud providers are constantly changing their rules of engagement, and businesses are left to play catch-up.
Then, there’s also the perpetual technical and operational legwork in maintaining listing uptime and ensuring that everything works like a well-oiled machine between your buyers, cloud platforms, partners, and internal tech stack.
Having a partner who understands cloud marketplaces inside out and can help you start and scale your marketplace listing makes the process painless. With Clazar, you get the same tools and expertise that help some of the fastest-growing SaaS businesses list on marketplaces and find exponential revenue growth.
Ready to explore how Clazar can amplify your cloud marketplace journey? Write to us at hello@clazar.io or talk to one of our experts.
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