This is the latest in Localogy’s Website Windup series. It examines the ongoing evolution and advancement of SMB-focused website builders, including acquisitions and feature expansion to enhance product bundles.
Those who’ve observed or worked in local media know that a common framework for customer acquisition is channel partnerships. Tech companies bring products to the table while media companies — sometimes lacking that innovation internally — offer scaled distribution and a revenue share.
The latest such union happened last week when Wix announced that it’s partnering with Vodafone to sell its website products to SMBs in the U.K.. Specifically, Wix’s website creation, hosting and management software will now be available in Vodafone’s Business Marketplace platform.
Congruent with the expanding bundle of website-adjacent products, Wix brings to the table not only websites but eCommerce and appointment booking. Given SMBs’ often-low levels of tech-savvy, the offer comes with support to set up websites including domain names, design and maintenance.
Tip of the Spear
The deal appears to be mutually beneficial as Vodafone gets a more robust bundle of SMB digital services while Wix gets scaled distribution. Taking those one at a time, a greater bundle for Vodafone means broader appeal to acquire new SMB advertisers and retain existing customers.
Customer acquisition is a key factor, as websites are often the “tip of the spear” for marketing bundles, as we’ve examined. Vodafone can then upsell other marketing and presence products in its bundle. Websites are also sticky, due to high switching costs, hence the retention benefits noted.
As for what Wix gains, it now has greater reach into Vodafone’s customer base where the telco giant has an established a position as a trusted provider. As a bonus, this happens in a geographic market where Wix has relatively low penetration and thus headroom. It recently made a similar move in Turkey.
These are all reasons behind Wix’s new Channels initiative. The Vodafone deal represents the latest fruits of that program, and follows Wix’s acquisition of Websplanet. As we wrote at the time, the deal brought Wix closer into the world of SMBs and, like the Vodafone deal, strengthened its sales-channel reach.
Speaking of Wix’s Websplanet acquisition, it also served to validate one of our 2020 analyst predictions. At the time we projected more M&A activity in the website builder world (see below). We’d now like to make the additional prediction that more channel relationships like Wix/Vodafone will follow.
As we wrote in December.
Website Builders Continue to Broaden Functionality: As the website sector in general matures, there’s less growth so competition intensifies for market share. The result is a spate of moves in the past six months to beef up their bundle of services with more functionality to attract customers and reduce churn. This has ratcheted up as website builders like GoDaddy, Automattic and others are rapidly expanding (though building and buying) to offer marketing and promotion, in addition to the core “presence” functionality of websites. That will continue into 2020, with feature expansion that most prominently includes email marketing, SEO and CRM.
We’ll be watching closely for more M&A as well as channel relationships that help website builders gain reach and distribution scale. Meanwhile, Vodafone’s business customers in the UK can now sign up to Wix via the Vodafone Business Marketplace.