What is a VAR (Value Added Reseller’s)
A VAR (value added reseller) is a business which resells products, commonly in the IT and technology sectors, and adds products or services to resell as a complete package with added value.
The added value comes from either combining a number of independently sourced products from different suppliers or adding services such as consulting, customising, support or training.
For example, VARs in general provide added value by offering advice and support for a wide variety of products. If a customer wants to buy a laptop, the VAR will offer and advise on several brands and specs. Once the laptop is chosen the VAR will offer additional products such as software or peripherals and also extended warranties each adding value for the customer. The VAR may also provide ongoing service and support beyond the point of sale which often is not available when purchasing directly from a vendor.
As a value added reseller you can increase the potential for repeat business because of the added value through the extra products or services provided.
A VAR is also a single point of contact between various suppliers of products and solutions advising on and offering a broad range of expertise to see the purchase through to completion. A VAR is often well positioned to understand the customers’ challenges and to deliver a solution that exactly meets their needs.
A VAR usually purchases products from suppliers at wholesale prices adding only a small percentage as margin, so the majority of a VARs margin comes from the value added products and services.
There is no standard VAR program and each company will have its own terms, conditions and method of remuneration. Some companies will offer bespoke terms on a case by case basis, so it is advised that a VAR contact a merchant to negotiate terms.
What a VAR can do for your business
A VAR (value added reseller) can place your products in front of customers that require integrated solutions at the point of delivery. Using a VAR’s experience and skills they can incorporate your products or solutions into the packages they offer to their customers, growing your business.
A VAR can grow your business and increase your sales. VAR’s can add value by combining your products with other products or adding value by offering additional support or service for your product. This can take your product beyond an off-the-shelf purchase and expand your sales channel.
A VAR is ideally placed for renewing business as they often have very good relationships with their customers. When you introduce updates or new products, VARs are well positioned to promote and sell to them as upgrades to their existing customers.
A VAR is ideally placed to solve problems by offering your products and services as solution where suitable.
VARs can enhance your products by adding other products, services or support to what may otherwise be a standalone sale.
VARs often have a strong customer bases and geographic regions, making it easier to target new markets within areas or countries not yet targeted in your existing sales channels.
VARs also often have recurring revenues and competitive margins as trusted providers of solutions with a track record of customer satisfaction.
Benefits of becoming a VAR
There are many benefits of becoming a VAR (value added reseller). VARs can benefit from partnering with reputable suppliers providing access to technical support and technology advancements. By becoming a VAR you could benefit from offering new products from reputable suppliers to new and existing customers, without the expense of research and development.
VARs also benefit from sales and marketing support from suppliers. This can include sales and marketing literature, advertising, leads and data. Suppliers often have an allocated budget for such support and therefore may offer it at no cost to VARs.
VARs typically receive complimentary training and support from the suppliers. In some circumstances a VAR will need to be certified before being able to sell a product or service benefiting the VAR with added credibility in the market place.
VARs are independent enough to react swiftly to technology advancements, economic changes or changes in the market place. The benefit of being a VAR is you can adjust your products and suppliers accordingly to remain competitive.
How to increase your revenue as a VAR
There a several simple ways to increase revenue as a VAR. As VAR it is important to capitalise on new revenues available by offering product upgrades to your existing customers.
In many cases for every product that is sold a VAR has the opportunity to offer additional services, support or warranties, thus providing an opportunity to increase the revenue of each sale.
To be a successful VAR you will need to be skilled at identifying opportunities to offer additional products or services at the point of sale to increase you revenue.
New products and services are constantly being developed by new and existing suppliers. Each of these new innovations could be a new product or replace a redundant product in your portfolio. Each product presents VARs with the potential to increase revenue from new and existing customers.
As with any business to increase your revenue it is vital to grow your customer base by expanding geographically, entering new verticals, establishing new markets or winning your competitors market share. One of the best ways to grow your business is of course through strategic collaboration with other suppliers and even other VARs who do not directly compete.
VARs can also expand their sales channels to increase revenue by establishing their own channel of VARs.