The ultimate guide to cloud marketplaces

What are cloud marketplaces?

Cloud marketplaces are online platforms that facilitate the discovery, procurement, and management of software products. These platforms enable transactions between ISVs and businesses, offering a centralized hub where organizations can browse, compare, and purchase various software solutions. The three biggest cloud marketplaces are Amazon’s AWS Marketplace, Microsoft’s Azure Marketplace, and Google Cloud Marketplace.

According to Jay McBain, Chief Analyst at Canalys, Cloud Marketplaces are expected to grow to over US$45 billion by 2025, marking a massive 84% CAGR.

Gartner predicts that by 2026, all major cloud platforms and enterprise application providers will offer business component marketplaces to enable customers’ composable strategies, enriching overall quality, convenience and security. With these developments, it’s no longer a surprise that cloud marketplaces are evolving at an unprecedented pace.

But why is there so much excitement about cloud marketplaces as a GTM channel? Well, let’s take a deep dive into understanding why.

Benefits of cloud marketplaces for buyers

1. Cloud commits for third-party software purchases

One of the significant benefits cloud marketplaces provide buyers is to draw their cloud commits, earmarked earlier for cloud infrastructure spend for third-party software purchases. As per the data shared by Roman Kirsanov, Founder & CEO of PartnerInsights, the commits on the AWS marketplace have increased by $10 Bn this quarter, adding up to $132 Bn. This is a powerful shift as it optimizes their cash usage on channels that can impact their bottom line and drive Return On Investment (ROI).

2. Discovery of applications and services

Cloud marketplaces provide businesses with a plethora of cloud-based services and software from different providers.

1. Amazon Web Services (AWS) offers over nine categories and 40+ sub-categories, ranging from Infrastructure, Data, and Professional services to modern IoT and Machine Learning.
2. On Microsoft Azure, there are 21 marketplace app categories with a broad spectrum covering all things Data, Security, Artificial Intelligence, Integration, and many more that one can access and leverage.
3. Google Cloud Platform (GCP) offers over 24 diverse marketplace categories, such as Networking, Storage, Monitoring, and Generative AI, to name a few.

These umpteen choices allow organizations to explore and evaluate the marketplace apps that can solve real business challenges.

The ease of discovering software is succinctly proven in the ‘The Total Economic Impact™ of using AWS Marketplace, a commissioned study by Forrester’ study. It states that the time spent searching for and selecting vendors was reduced by 66% when done via the AWS marketplace.

3. Easy procurement & billing

Cloud Marketplaces completely take the end-to-end charge of managing procurement and billing. It streamlines the need for individual contract and billing management for sellers and provides a one-stop solution to:

1. Mitigate companies' most significant pain points by standardizing End User License Agreements (EULA) across countries. This reduces the tedious effort and precious time spent drafting and managing contracts.
2. Create one single consolidated bill for all buyers, including their infrastructure and third-party purchases. This eliminates the need to raise a dedicated bill for each buyer and provides a single view for billing, payments, and invoices on the cloud marketplace.

Benefits of cloud marketplaces for sellers

There is no denying that businesses are rapidly shifting to marketplaces for their software procurement. Cloud marketplace will be one of the most prominent channels for software sales in the future. Some of the notable advantages of listing your products on cloud marketplaces are:

1. Global reach & market penetration

Cloud marketplaces have a more extensive and global base of potential customers across all segments. Listing your product and services there helps you reach a wider international audience. For a business in a newer geography or market segment, being associated with brands such as Google, Microsoft, and Amazon can help increase brand awareness and build a positive reputation.

2. A new GTM channel

With access to buyers and their budgets, Cloud Marketplaces allows you to instantly open a new GTM channel with little infrastructure or tooling investment. Here are more benefits:

• The drawdown on pre-committed spends enables you to increase deal sizes and win more deals.
• With streamlined billing, procurement, and contracts, you can close deals much faster

3. Scalability

Cloud Marketplaces help scale faster by:

• Opting for any pricing model - pay-as-you-go, subscription-based, one-time purchase, or even custom pricing.
• Launching a new product all together for a new market or buyer segment.
• Augmenting your customer experience with the support provided by the cloud service providers.

4. Billing, contract management, and payments

Cloud Marketplaces simplify contract management with standardized EULA, custom agreements, and public and private listing. They take care of automated billing, invoicing, and collections and disburse your revenue in your account on the scheduled date. What differentiates cloud marketplaces from the other GTM channels is their ability to:

• Append custom terms & conditions for a selected set of buyers, thus facilitating the profitable practice in the B2B SaaS ecosystem.
• Deliver custom discounts for some buyers, providing flexibility to scale and grow at a stronger velocity.

Hence, Cloud marketplaces free up a lot of time for your internal teams - RevOps, Finance - and keep everything centralized for everyone.

5. Buying experience

Cloud marketplaces make it easy for customers to discover and purchase your products and services with streamlined Legal, Procurement, Finance, and other operations. It also simplifies provisioning these services to their accounts and manages the billing and contracts in just a one-click experience.

Consider these while listing on cloud marketplaces

1. Fees

Cloud marketplaces charge a commission on each transaction, depending on your tier and relationship with the cloud provider. Make sure that you understand the fees before listing.

2. Hosting your infrastructure

To list on a cloud marketplace, your entire product or a portion of your infrastructure must be hosted on that cloud service, depending on the marketplace. There are some other requirements that you must follow for each marketplace.

3. Standardizing your pricing model

The hyperscalers allow you to model your product pricing for a global user base. Hence, sellers must diligently set their pricing strategies to match pricing on public properties outside of Cloud Marketplaces to build trust and execute fair pricing for all clients.

4. The long-term game

Cloud marketplaces drive the best results in the long term. List-and-forget does not work out. The channel needs you to invest time and work closely with the cloud marketplace team, route your existing deals to the cloud marketplace, deepen your relationships - and eventually expand into Co-selling programs.

Choosing the right cloud marketplace

1. User base and target audience

Assess the size and composition of your customer base. Conduct deep research to ascertain that the marketplace attracts your target audience, ensuring potential customers are genuinely looking for the category of apps you cater to.

2. Existing relationship

If you have a partnership with a Cloud Service Provider (CSP), it could help you expedite your marketplace GTM.

3. Your customers’ pre-committed spend

While your customers can and most likely will be present on multiple cloud marketplaces, take some time to understand their pre-committed spends on different marketplaces. One of the biggest reasons behind the success of cloud marketplaces is the commit drawdown—a list where your customers are present and have huge commits.

Wrapping up

Companies today are more aware and agile than ever. The market is getting more competitive, and to thrive, they must be on top of their game. Hence, it's become imperative for companies to forge forward to adopt promising and efficient modes of driving revenue. Cloud marketplace is a great channel that helps businesses see sustainable growth. Platforms like Clazar help companies get aboard cloud marketplaces seamlessly. The platform enables you to manage your listings, offers, contracts, and much more across all cloud marketplaces in one place. The user-friendly interface allows businesses to seamlessly go live and manage their cloud marketplace listings without needing a dedicated sales or engineering team.

Book a demo of the Clazar platform today to learn more about the modern way to sell SaaS software.