The channel conflict noted in this article reveals one of the big challenges/opportunities for new SaaS vendors
Under an online model, there are often issues with your existing ‘real world’ channel.
- Does the old world channel add value in an online world? Does it get you sales?
- How do you pay a sales channel if there is no up front license fee? Often SaaS pricing is sharp because they have eliminated some of the channel and distribution costs.
- Ongoing commissions for sales is a very expensive sales cost for SaaS vendors. The real cost of SaaS is driving more innovation and outstanding customer care, so a recurring fee model just for a sale is to much cost.
Flipping it around, existing real world channel needs to think about how they share in this new online world as the inventories of products they earn margin on will erode.
In the business software space this creates a huge opportunity for buyer aggregation points. The retail browsing shop of the 21st century.
In the New Zealand small business SaaS market this is where MED and NZTE can really help out. Providing a location where NZ small business owners can discover great products that can make their businesses better.
This what small businesses have asked for. (Don’t worry, I’m onto it.)