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Resellers

Much of the activity in the hosting and domain-registration business occurs through the reselling of services. This has its pros and cons. In the domain-registration business it's almost a necessity for the smaller companies, as the fees and resources required to become an ICANN-accredited registrar can be onerous until you're in a position to meet both. Several of the larger domain registrars offer reseller programmes so that smaller hosts can buy domains at a wholesale price, mark them up and sell them at a retail price. This works well for all concerned, otherwise (experience has shown) it can be difficult to get things done in a timely manner when the host needs to make DNS changes.

On the other hand, if you're dealing with a reseller in the hosting business, it can make things more difficult simply because you have another middleman between you and the resolution of potential problems. A reseller likely doesn't have access to the nuts and bolts of the hosting system (called "root" or "administrator" access), and so when you go to them with a problem, they sometimes have to go to someone else, who will hopefully fix the problem, get back to the reseller, who then gets back to you. You can see that this would cause problems if time is of the essence, or if -- more likely when -- there is miscommunication in some step. Additionally, if a reseller has chosen to be a reseller rather than run their own (or leased) servers, it's most likely because they lack the depth of technical knowledge necessary to have a good overview of their own business. Again, this is not a situation in which you want to find yourself.

And on the third hand, a trend that we have noticed is for large telecommunications companies to outsource their web hosting business -- which is exactly the same as the scenario above, just for different motivations -- making their own hosting business reseller-based. I mean, if your real target market is the huge enterprises buying six figures worth of IT services a year, does it really pay for you to bother with the little guy wanting the cheap, $4.95-a-month hosting account? Nah. Pretend you offer the service, then farm it out to someone else. Everyone wins, right? Little guy gets to feel like he's important enough to have his website hosted with Mega Telco, Mega Telco gets to put another notch in their ... wherever they put them ... and Outsourcing Co. gets another notch in theirs. Until, of course, little guy actually feels he needs to deal with someone really running the system; then he's dealing with some tenth-level "customer experience guru" using a checklist and a script rather than an actual tech who knows the server like the back of his hand. Good luck.

Relevant links:

In Defense of Not-Invented-Here Syndrome

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