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I don't understand why this scenario is profitable
Anyone who is wise can help me understand this scenario in business, I can never understand why this kind of business works:
For example like someone said here:
https://lowendtalk.com/discussion/196761/i-want-to-sell-white-label-vps-through-whmcs-matchmaking
In general:
-> Buy the public selling product VPS from famous ones like hetzner/linode..., put a price margin and resell it to others.
I don't understand:
Why don't the customers just go to original source to buy instead?
Why they should buy through reseller with higher price and unstabilities(the real VPS is not actually in end users' control, but through a reseller panel plugin) ?
What kinds of additional value does the reseller add to the VPS?
Are all the targeting buyers just fool?
Comments
Not many people know much about this low end hosting market, they just know AWS or Google Cloud and even with price margin the resold hetzner is still 10x cheaper than that
Many times, they are unable to create/open an account with the original source (Hetzner is a good example where they are quite picky in their KYC process and account opening). Going via a reseller allows some customers to get access to Hetzner infrastructure at the higher price (markup) via the reseller. There may also be other restrictions (like country of origin - for e.g. Russia, Iran or other sanctioned countries) that prevent the customer from directly dealing with the provider and so they are forced to go through a reseller.
There are many resellers who also add value in terms of backups, managed offerings and what not over the vanilla infrastructure offered by the provider. Resellers may also offer flexibility in terms of billing terms, discounts, invoicing procedures, payment options etc. which may make the markup acceptable for the convenience they offer.
Obviously there is also risk (which also commands premium pricing) since one bad customer can blacklist the reseller and result in a full shutdown of such business relationships with a particular provider.
yea most people use Azure/AWS/Google/Oracle/etc.
So finally one day when the customer know the whole thing, the reseller loses, right?
It sounds like a scam, by just exploiting the information imbalance,
I wonder if there are other reason why these kinds of reselling can get customer?
So the reseller should protect these kinds of customers and takes the risk of getting FBI come, right? Sounds fair.
If you resel just with bare few percentage it is not a business. But there is spmething called “value added services”. You resell servers + management + customized solutions etc. Than you utilize resold product as a base platform for quick start. Wirhout value added services it is not much business.
I can see why you say that but I dont think its a scam - most people in college only use services from big companies bc of free education credits and its what their professor/department uses. A massive portion - if not the the majority - of people studying CS hate the field and are only doing it for money. Therefore they aren't going to be building projects or doing hobby stuff with the field on their own time as they are not getting paid for it so they will just stick to using the big companies with what they were forced to learn in school or their internships. Its not like the information is being hidden from them they just dont wanna seek it out on their own. Also most people are not as price sensitive as the average customer on lowendtalk so dont care to pay more if it looks trustworthy and well managed lol.
Usually its some niche they are hosting, or the customer is local.
A niche could be anti-ddos hosting with some specialized support for applying rules better, or offering gaming panel access instead of pure SSH.
Local customers could be people from specific asian countries that do not speak english or are unable to buy from original seller due to fraud risk.
To be exact, DMCA ignored is not about "protecting" anyone from court or in court or from raids. It's about making it hard and time consuming for rightsowners to enforce their rights and getting the content shut down. Basically they might be in jurisdiction which allows them ignore generic USA format DMCA takedown requests/mails, but they would need to comply if the said letter came via physical mail to their address. It's just making things hard enough so the rightsowner focuses on the easy targets instead.
If the rightsholder is determined to go through local processes, they can just hire local lawyer in the country of your hosting and use the long and costly route to get your information from the hosting provider with judge's decision, and then continue to pursue you in your local area via another local lawyer or in the case where the provider has no data of you, they might pursue the hosting provider for damages to make an example of you. But usually this process is 10x more costly than anything they might get back through courts.
They could also ask for VM data, and any panel login logs, and then sue your ISP to get access into who owns this and this home IP address during this and this time to finally get into you. If the provider claims that there is no such thing, they could ask the judge to seize the servers anyway and pay a third party court approved party to investigate if such logs are indeed available or not.
Basically, you're fucked regardless where you host if the other party is determined enough to get into you and willing to spend tons of money and time in order to do it.
Definitely. They're successfully brain-washed by the big companies business strategy cooperating with schools.
People get mind-controlled and blinded from useful information by a "trend" (which is man-made by the big companies and on purpose for business), like a modern black magic.
Or, most LET hosts simply suck.
There, I’ve said it.
I would absolutely use a reseller for Hetzner instead of buying it direct. You don't have to deal with them scanning your servers for open ports and giving you abuse alerts for stray packets. I used hostingby.design for Hetzner and I got none of the nonsense alerts that I used to get with Hetzner directly, until I realized their network is crap anyway and got rid of them.
Unless your provider has some special reseller agreement with Hetzner,
I don't think you can escape from the Hetzner official rules (like what you write: scanning your servers for open ports and giving you abuse alerts for stray packets).
Usually your provider "hostingby.design" is just registered as a normal user at Hetzner running your VM in their account and use some trick (API) to bridge the control panel to their whmcs.
So actually you are just using their account, nothing different from using your own account at Hetzner. Anything breaking the rules can also lead your provider's account get banned, it's the same as when you using your own account at hetzner.
I think the reason you don't get the alert is that your provider just ignored all of them. And this can finally result in banning their account if such thing happened a lot.
It not just information imbalance, while it's true that most people have a device that connect to the entire collective human knowledge, most are still choose to be ignorance. Will the local brick and motar shop owner spend time to learn IT and scout low-end market places? Heck as soon as my business do well enough, I'll get an admin to do all of this for me so I can work on other fields.
Moreover, the most expensive resource is time, if the reseller offer extra service already then why not ultilize your's and employees' time for something that get more money instead?
There are plenty of 3rd party countries that does not lean either way, if they are smart enough, there are plenty of ways to do this legally.
Also, not every business is willing to work with customers from every nations. While I would prefer to tryout Hetzner, I understand that my country does not have high reputation, internationally. Heck, I done it with my company as well, not only end-customers but plenty of resellers that I send to work with my distributors for one reason or another. I don't want to support every shipping/payment method, speak every accent, or work with every level of professionalism!
No need to learn that deep, I mean when they know the original provider, they will leave the reseller and turn to the original.
I don't think there is more difficult using the original provider's panel than resellers
As the price is lower and original usually more user-friendly and trustable (as I know most reseller just use a whmcs with a plugin).
Nice point
Nice point sharing
hostingby.design have existed for quite a while. I'm sure that would've happened already if it were the case because I've had the server for months.
As an IT-consultant, I can totally understand how this works.
I have customers that have turned to me for help for 20+ years. Some of them have zero IT knowledge, it's not their business and they have no interest in learning, they simply trust me to fix everything IT related for them. They call me and say "hey, we need to accomplish this and this" and I tell them what they need and how much it will cost. They can tell me in their own words and in their own language what they want, and I make sure they get it. If I charge them $10 for a vps that I buy for $4 from someone else, they really do not care. They get what they need without having to understand the technical details and they know who to call if they need help, and if that means they have to pay a little extra they are more then willing to do so. This is what is called added value.
And this is not the only way to add value. It could be things like different forms of payment, support in your native language, backup solutions or just a trustworthy brand. Or such a simple thing as not being just one of a million customers to a big corporation that does not give a fuck, but instead being an important customer with a provider that really cares.
This is not something Hetzner does on their discretion, it is government initiative. What Hetzner really does is forwards abuse notice (this is not really a complaint at which Hetzner requires customer to act).
So you have great reasons, Access, Payment, Support, Language, Branding.
))
It is better to buy more expensive from a reseller than to humiliate yourself at the original provider through reprimands and providing personal data to unknown to whom for security purposes.
Also, payment methods at the original vendor are not always satisfactory to the buyer, as they usually require a credit card to hold. To charge it when they need it. Resellers always have more secure methods.
The reseller may be adding value: hand-holding support, deploying their application, helping you setup and maintain something complicated, etc. Or acting as a financial middleman: other payment options, dealing with barter, accepting the risk from a sketchy customer who can't get approved otherwise, etc.
You're right that a well-informed consumer would never buy from a reseller when they could get the same thing cheaper from the reseller's source.
Sorry, I should not have answered.
No, you're wiser than me
I can not answer myself so actually I'm the most stupid