The Role of the Reseller

A Web host reseller is a business that buys server space at a discounted price from a higher-tier Web host and then resells it to its own clients.

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Usually a reseller is an independent contractor who buys Web space from a hosting service provider in order to sell that same space, sometimes in smaller increments, to businesses and individuals for a substantial profit. The reseller often enhances the value of Web hosting services by offering special expertise on top of raw Internet presence provision.

Typically, the reseller adds continuity to the Web host industry's supply chain by servicing end-users, who are usually small business consumers. Resellers therefore fulfil the role of "middle men" by extending the revenues and reach of higher-tier Web hosts.

Higher-tier Web hosts benefit from resellers because they essentially mass and niche market their products and services. The reseller can then mark-up the cost of these products and service to make considerable profit.

Most resellers are second-tier hosting companies, Internet service providers, Web designers, publishers, domain registrars, or individuals who wish to capitalize on the expanding market for enterprise-class Internet services.

Resellers such as these prove that physically maintaining a rack of Internet servers is not required to be successful at providing Web hosting services. Indeed, the fact that they do not maintain infrastructure means that resellers can provide additional value-added services to their clients due to cost-efficiencies. For this reason, the majority of Web host resellers are either Web developers or system integrators who provide e-business solutions to their customers. Typically, their customers want "integrated solutions," which include Internet connectivity as a central component. Since their customers contract them for their expertise, Web developers and system integrators are usually granted the responsibility to provide hosting to ensure compatibility with the solutions that are deploying.

Consumers also select resellers because most specialize in customer relationship management. Indeed, the emergence of many second-tier Web hosts in the late 1990s can be attributed to the growing need amongst consumers to locate a hosting provider that can provide them with enhanced customer care. While many higher-tier hosts do provide technical support, the volume of their client base prohibits them from offering extremely personalized care, especially if the consumer is new to the purchase of Web hosting services. It is here where Web hosting resellers add value, by offering their customers a higher level of technical support.

Resellers are able to enhance customer care through offering more personable service and by leveraging their human resources to create more in-depth, customized documentation for their clientele. By so doing, resellers have endeared themselves to a large number of small to mid-sized enterprises (SMEs) who purchase Web hosting services.

Many industry participants estimate that approximately 65 per cent of the client base of a typical higher-tier SME Web host is provided through resellers. Resellers therefore are a tightly integrated component of the overall SME segment of the Web host industry. And with the Web hosting industry still projecting rapid growth within the next three years, it is widely expected that the reseller Web hosting segment will continue to grow with enormous magnitude. For this reason, many in the industry perceive reselling as a continuing opportunity to build solid business partnerships that can provide substantial levels of incoming revenue.