On the surface, wholesale SMS aggregators may seem like a logical vendor solution for enterprise brands in need of mass messaging services. These wholesalers contract with third parties to deliver SMS messages on your company’s behalf, including in global markets where that wholesaler isn’t present.

But while this business tactic results in lower per-message expenses for your business, it also introduces a laundry list of new costs and concerns to worry about, including:

• The added cost of paying a middleman. When aggregators contract out your messages to other vendors, they always take a cut. And if you are not paying that cost, it might just be that they are dropping messages to create margin.
  
  

• Your aggregators’ aggregator might be doing the same thing. This could take place six times, seven—and all the while, your business is footing the bill for vendor processing fees.
  
  

• One bad link in the chain can lead to disaster. As messages are passed between aggregators, for example, things can go wrong. If even one vendor changes a sender ID, your messages could suddenly be classified as spam and ultimately not delivered.
  
  

• Poor visibility leads to poor transparency. In the hands of unknown aggregators, your business is at greater risk of bad deliverability rates, impacting not only your campaign performance but your ability to evaluate your campaign’s results.
  
  

• Increasing message latency lowers your ROI. Exchanges between aggregators can increase the time it takes to send these messages out. One-time passwords and flash sales, for example, have a short life expectancy and need to be delivered immediately.
  
  

• Compliance. Messaging regulations vary by country, and not every SMS aggregator is going to follow the rules. A disregard for local regulations can expose your business to fines or other consequences.
  
  

• Quality of service: Delivery rates, timing, and other variables affecting performance can be hard to track. In the worst-case scenario, certain aggregators may submit fake delivery receipts.

The troubling math behind low-cost SMS delivery

So the question is, if wholesale aggregators keep taking a commission, dropping messages, and passing along the work to someone else, how much are you actually paying for message delivery?

It’s tough to answer this because it requires you to know exactly how many messages are getting delivered. 

Unfortunately, delivery can’t be assumed with SMS wholesale aggregation. Since there’s a baseline cost for sending an SMS message, aggregators at the bottom of the food chain might decide to drop a percentage of those planned messages, deliver the rest, and pocket the difference. 

Let’s say messages are sold for one cent each, but the cost to route those messages is 1.1 cents. The only way for aggregators to make money is by dropping enough messages that they create a profit margin. It might be 20%—or it might be more.

Getting concrete numbers around deliverability is often difficult, and sometimes impossible. Some aggregators will submit fake receipts. Others may not report on deliverability at all. 

These local aggregators also don’t typically share accurate deliverability data, so businesses are just left guessing how many of their messages are actually being received. Even if you raise the issue with the aggregator, there’s often nothing to do but accept the poor results.