You May Already Be a Reseller

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You May Already Be a Reseller
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By Max Smetannikov
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This story appeared in the July/August 2004 issue of Web Host Industry Review magazine. Click here to subscribe for free.
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August 25, 2004 — (WEB HOST INDUSTRY
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REVIEW) — By day, George Roberts is a systems analyst for a Fortune
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500 company. By night, he is the chief executive, chief geek and head
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janitor at Interjuncture (interjuncture.com), a one-man Web hosting firm serving 40 customers and 150 Web sites.
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In the offline world, Roberts is what
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you’d call a regular guy. He likes computers, has a wife and two kids
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and a swarm of pets — a dog and two cats. In the hosting arena, he is a
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part of a growing group of individuals that are joining Web designers
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in one of the hottest trends in Web hosting.
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Roberts occupies a range of expertise,
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investment and time that many hosting customers already occupy. Many of
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them Web designers and hobbyists, these users may be involved in
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managing several hosting accounts and, more importantly, may already be
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doing the work of a Web hosting provider.
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This growing segment of advanced Web
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hosting customers is a potential goldmine for larger hosting firms,
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which already have the relationships, already provide all the back-end
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services and need only to help these customers make the potentially
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lucrative transition into becoming Web hosting resellers.
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The unique selling proposition of this micro-hosting reseller set—lots
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of hand-holding.
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“Because I am a one-man show I am hands on and talk to customers a lot,” said Roberts. “With me, you go straight to the top.”
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Roberts doesn’t advertise his services.
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All he does by way of marketing is list Aurora, Illinois-based
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Interjuncture on Web hosting directories and rely on word of mouth. His
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expenses amount to an account with a hosting company and some outlays
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for software. His pricing strategy is mid-range — Roberts doesn’t go
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for volume but figures his premium makes the difference for customers
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who need personalized services. This means that his shared hosting plan
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— Interjuncture’s least expensive offering — costs $4 a month as
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opposed to $1 a month.
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Interjuncture wouldn’t be operational if
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it weren’t for three tools. First, a control panel allows Roberts to
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set up accounts, add services, maintain customer profiles and initiate
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billing via a single Web interface. Roberts uses Ensim (ensim.com),
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though other control panels are available. Second is his billing
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software. Roberts doesn’t track usage by end users, doesn’t estimate
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billing and doesn’t lick envelopes when mailing out bills — instead, he
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runs his business on ModernBill (modernbill.com),
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a system designed with Web hosts in mind by Modern Gigabyte. Finally,
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Roberts outsources his technical support and customer service. Yes, he
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is available for his customers, but the flood of inevitable mundane
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questions is handled by a system called eSupport, from Kayako (kayako.com).
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Together, these three tools allow Roberts to run his Web hosting business in as little as 10 to 15 hours a week.
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“This is not a hobby, since there is time
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and money involved,” he says. “However it is nice to take something you
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get lots of satisfaction from and make it into a business.”
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Web hosts and vendors that enable
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businesses like Interjuncture have taken notice of this new trend.
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Ensim, the control panel maker that supports Interjuncture, has
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launched an entire program addressing the needs of the ultra-small Web
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hosting resellers. Called Ignite and launched this spring, the program
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aims to popularize Ensim tools not just with a handful of large hosts,
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but with a wider universe of Web hosting providers.
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Ensim’s research indicates there are 44
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million domain names in the US alone, a stunning number when you
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consider how operators like Roberts are making hosting probably one of
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the most competitive industries under the sun.
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Accidental Web hosts have been part of
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this industry as long as there was Web hosting. Some of the very first
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Web hosts were Web designers who sought to streamline their client
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relationships by giving access to their Web servers so that customers
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could view their sites as an end user would see them. Another group
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that has long been finding its way into Web hosting is network and
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systems consultants who help clients develop sites as part of larger
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contract engagements.
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It wasn’t until relatively recently that
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Web hosting became automated and sophisticated enough for individuals
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like Roberts to be able to provide quality service on a truly part-time
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basis — in off-hours from his job, and without requiring him to spend
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too much time away from his family.
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Ignite has been specifically structured
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to address the needs of this new wave of Web hosts. The big idea was
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that the very small hosts neither have the time nor the money to
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negotiate good supplier deals from third parties. Through Ignite, Ensim
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does that for them, setting them up with a payment merchant system, an
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SSL certificate for transactions, an email marketing campaign engine
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and a search engine optimization tool. Interjuncture is an example that
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these tools can be optional, and if all a host wants is a control
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panel, a control panel it gets. The magic of this program is that there
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is no money up front. Ensim gets a portion of each sale instead, or a
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referral if a third party’s product is sold.
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“We just launched this program a couple
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of months ago and already have 700 sign-ups,” says TJ Dupont, Ensim’s
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director of product marketing.
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Web hosts view this phenomenon as another
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entryway into the 5 million-strong SMB market in the US. Several
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companies have staked out their claims for the very-small business
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market, including Interland (interland.com), Hostopia (hostopia.com) and Alabanza (alabanza.com).
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Franc Nemanic, founder and president of Hostopia, defines this market
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of part-time hosts as companies run by one or two individuals,
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supporting between 150 and 200 sites.
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Hostopia’s offering for this kind of user
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provides, not surprisingly, outsourced billing services and tech
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support. But the future of this business is not with more automation,
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says Nemanic, but with helping these resellers better define and
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address their niches as well as develop more sophisticated offerings.
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Applications are the next frontier for
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the likes of Interjuncture, with hosted Outlook and spam filters
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leading the way. Helping resellers better define their market is a more
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complex problem, in Nemanic’s view.
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“This is a segment of the market looking for a franchise concept,” he
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says.
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Indeed, if entrepreneurs like Roberts are
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all buying essentially the same automation and penetrate their
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communities by making them franchisees? Nemanic is still pondering the
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idea of charging for the brand, however it’s easy to see where he is
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getting the idea — his local office supplies store.
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Staples is now offering Web hosting along
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with copying and ink jet paper. And if that seems like a bit of a
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stretch, consider that Costco is doing the same — continuing with the
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bulk-shopping motif in cyberspace. Two industries where the franchising
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of Web hosting services would be especially effective, Nemanic says,
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are real estate firms catering to their own agents; and dentists.
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Brand building works the other way around
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too. Web hosts have an uncanny ability to come out from nowhere and
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establish themselves as a go-to brand in a niche industry. Consider
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Ink21, a customer of Hostopia. The name probably doesn’t ring any bells
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with anyone who doesn’t speak Cantonese, but the firm is one of the
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most popular Chinese-American Web hosts.
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“Ink21 caters to Chinese entrepreneurs on
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the West coast, and is good in catering to this ethnic market and
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lifestyle,” says Nemanic.
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Advances in software and services have
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blurred the line between the sizable hosting customer and the small
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hosting provider and all-but-eliminated the barriers to starting a
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small reseller hosting business.
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The challenge, now, is for the hosting providers and software vendors
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that are already dealing with these customers to make it known how
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close they already are to operating reseller hosting businesses of
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their own.
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