by Dimitar Avramov, Daw Web Hosting Blog
"Reseller Hosting" is a fictional concept. It's always been a marketing term not a technical specification.
Unlike other broad used web hosting terms like "Shared Hosting", "VPS Hosting", "Dedicated Hosting", "Managed Hosting" or even "Budget" and "E-Commerce" hosting, the term "Reseller" lacks technical specification or specific set up that would distinguish it as a hosting type. But at the same time "Reseller Hosting" is a multi-million dollar industry.
Why? The reason is simple. A relatively small change in any web hosting automation software allows individuals who cannot afford to invest in their own web hosting infrastructure or do not have skills in managing web servers to establish their own web hosting brand. Shared, VPS, Dedicated or any kind of web hosting service can be resold. All the Reseller newbie needs is the ambition and skills to market itself on the web.
How a Reseller account gave birth to two web hosting companies?
I've been managing a web hosting company for seven years now. I entered the web hosting market as a small web design studio, founded by two guys in Bulgaria. There was no venture capital or other significant investment behind our beginnings. We needed to find a Shared Hosting service for our web address (fouthcolor.com) and initially signed up with a company called Addr. However it wasn't acceptable for us to wait 48 hours to get response on our technical support tickets. It sounds ridiculous today but my first web host used to respond our tickets within 24 - 48 hours.
There weren't that many web hosts at the time so we didn't have many options. One day we were emailed by someone who said he could provide a decent service and promised to respond promptly on our tickets. It didn't take us a long to decide to make a move. The guy who emailed us started his business as Alabanza reseller. Today he owns a reputable Shared hosting provider called ICDSoft. His company still answers promptly to support tickets, sticking to his promise from many years ago. However, we decided to leave because our client portfolio had grown very fast. We needed a dedicated server and RackShack (today it's named ThePlanet) was the company that attracted our attention because of their aggressive pricing model. The dedicated server we got from them gave a birth to Host Color, a popular name in today's hosting industry.
This is my story. You can see how an email sent to someone eight years ago made it possible for a web hosting provider to be created. The email was sent by someone with a Reseller account. When he began searching for clients he didn't operate his own equipment and didn't know much about server administration. But this didn't stop him from creating a web hosting company.
The above story isn't unique in the web hosting industry. If we decide to interview 100 owners of Shared hosting companies we will find out that a lot of them have entered the web hosting market as resellers. Even if it is not unique, the story is a good example that anyone who has a spirit of entrepreneurship inside and a certain skills in selling and doing web marketing can easily create an online company, a web hosting provider in particular.
Is Overselling Killing Reseller Hosting?
The Reseller Hosting inherently tied to Shared Hosting. Most of those who operate reseller hosting brands sell low cost shared hosting services. Their business is on the verge of vanishing into a niche as part of the evolution of the web hosting industry.
Since 2006 the hosting market has grown substantially and thousands of new web hosting providers have emerged. The prices of Dedicated and Managed hosting have gone down. Today anyone can get a low-end rack-mountable server for less than $70/month and to run their own boutique web hosting company.
Virtualization and the rapid development of various VPS Hosting technologies made the reseller hosting accounts look outdated. However the thing that's killing "Reseller Hosting" is the overselling trend in Shared Hosting market. When web hosts began offering "Unlimited disk space" and "Unlimited data transfer" for $7 per month or even for less it has become unnecessary to buy a reseller plan.
It is impossible to compete with Shared Hosting providers who sell "Unlimited web hosting" when you have a limited amount of resources in your pocket. If anyone buys a Reseller Hosting plan which features 50 GB disk space on the server and 250 GB data transfer per month, they can create 10 shared hosting accounts, each of them featuring 5 GB disk space and 25 GB data transfer per month. So the reseller might try to sell these 10 accounts but it will be very hard for them to compete with their own web hosting provider because they can't make the same "Unlimited" offer.
Reseller hosting is born again.
A small, but very significant change in the concept of producing and delivering computer resources saved the reseller hosting niche. It's name is Cloud computing. The new networking model of producing and delivering computer services form a highly available and scalable computing infrastructure brings Reseller Hosting to another level. Resellers are born again!
The "Cloud" is an excellent chance for anyone involved in Reseller Hosting to abandon the traditional way of selling web hosting services and to become part of the new Cloud hosting industry. And those who decide to move forward can stay in the Reseller market and even grow as a business. Those who decide to keep going in the same direction by selling services the old way might see that their business will be gone.
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Dimitar Avramov has 10 years experience in the web hosting industry. He is a founder and former CEO of Host Color (hostcolor.com). Since 2006 he's worked as a journalist and business consultant to dot-com businesses. He is an owner of the popular web hosting blog DawHb.com. Since August 2008 he is a CEO of Single OS, a company that produces Fuscan Linux cloud hosting platform.
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