What is a Value-Added Reseller (VAR)?
A value-added reseller is a firm that enhances the value of third-party products by adding customized products or services for resale to end-users. Value-added resellers play a prominent role in the information technology (IT) industry, providing additional hardware, installation services, consulting, troubleshooting, or other related products or services on top of core products.
Value-added resellers are significant and well-known in the information technology (IT) sector.
Understanding Value-Added Reseller
Value-added resellers exist because they serve as a significant distribution channel for manufacturers—especially those in the IT industry. A value-added reseller builds a customer’s bundle of extra system add-ons from scratch using base hardware, software, or systems. Although the reseller does not make the equipment, they must be well-versed in it so that the consumer can adequately configure, install, test, and maintain it.
Understanding the advantages of value-added resellers, an IT company would usually provide product discounts to them to boost sales via this channel. While some resellers may only carry products from a single manufacturer, most carry many brands to provide clients with more options.
A Value-Added Reseller Example
Cisco maintains a reseller program that includes member permission, certification, training, and auditing, much like other major IT product makers. This program is designed to guarantee quality control. To support the sales of the goods, a reseller must first be approved to carry Cisco products, proving that it has the staff and equipment necessary.
Cisco may certify it as “select,” “premier,” or “gold” based on the quality of service. Cisco also offers reseller training to help them focus on various topics, including data centers, corporate networks, cybersecurity, and the Internet of Things (IoT). Value-added resellers must submit to Cisco audits regularly to demonstrate their continued eligibility to join the reseller network.
Value-Added Resellers’ Benefits
A value-added reseller’s increased potential for recurring business stems from the value they bring. For clients of certain goods and solutions, a VAR may also serve as their one-stop shop for customer service-related matters. A VAR is often in a superior position to comprehend the clients’ difficulties and provide the knowledge that guarantees client happiness.
Value-added goods and services account for the bulk of a variable advertising rate (VAR) margin; the items are often only slightly marked up. Standardized VAR software does not exist. Every firm has its terms, conditions, and procedures, as well as its business environment.
Value-Added Resellers’ Drawbacks
Value-added resellers may experience opaque reselling procedures and need more control over the cost of the goods they offer. Manufacturers may address this issue by giving resellers a discount, giving them more discretion over the pricing they charge their clients.
Additionally, a reseller relies on their manufacturer to adapt to changing client needs since they have little to no influence over the features or quality of their product.
Conclusion
- Adding specialized goods or services to the main product for end-user resale, a value-added reseller raises the perceived worth of goods from other businesses.
- Value-added resellers may boost recurring revenue by offering value-added services.
- Value-added resellers have no meaningful influence over the price of the goods they sell.
