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Business Management Review | Tuesday, March 28, 2023
The value-added reseller adds value to a product by assembling it, providing consumer support, or putting their name on it. Its advantages include personalization, enhanced security, expertise, and experience.
FREMONT, CA: Value-added resellers enhance the value of third-party products by offering customized products or services for resale to end users. On top of core products, value-added resellers provide additional hardware, installation services, consulting, troubleshooting, or other related products and services.
Especially in the IT sector, value-added resellers are an important distribution channel for manufacturers. Typically, a value-added reseller customizes a package of additional hardware or software add-ons for a customer based on a core product or an entire system. Despite the fact that the reseller is not the manufacturer, it is expected to have a thorough understanding of the equipment in order to customize, install, test, and maintain it.
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In order to increase sales through value-added resellers, IT corporations typically offer product discounts to them. Most resellers carry a few or several brands to offer customers more options, although some are exclusive to one company.
Value-Added Resellers (VARs) offer the following advantages:
Providing objective advice: VARs can provide objective advice about whether a given software platform is a good fit for the organization's needs. VARs don't have any ties to one software publisher, so they can help the organizations in evaluating the options and, in this way, can get to know the organization.
Software solutions aimed at broad markets can benefit from these company-specific insights. Publishers often focus on adding functionality to their products, but it may be difficult to understand whether a wide range of features may benefit the organization.
A VAR can also tell the company owners objectively whether a particular application is a good fit for their needs.
Support for implementation: A VAR can help the organization implement the software, train staff members, and continuously review the system's performance to identify improvement opportunities.
Value-added resellers also understand the differences between each software solution and can apply real-world experience to help their clients avoid common mistakes.
Alternatively, many software publishers outsource implementation and training to outside providers who also view their role as a one-time engagement.
Experience in a wide range of industries: Value-added resellers also have experience dealing with client companies within the industry, often of similar size or development stage. As a result of this experience, they are better able to understand the business needs and how a software solution can be used to meet them.
The VAR will understand what optional modules organizations will need, as well as how the solution will integrate with the other tools to improve efficiency across all departments.
Advantages in pricing: A VAR may be able to offer more favorable pricing than a single-implementation customer depending on the specific solution. They may be able to offer lower prices on related services, such as implementation, training, and support.
Value-added resellers can also increase their repeat business potential by providing added value. Customers of certain products and solutions can also contact a VAR for customer support. It is often easier for a VAR to understand customers' challenges and deliver the kind of expertise that ensures customer satisfaction.
VARs earn most of their margin on value-added products and services, not on the products themselves, which are usually marked up modestly. VAR programs cannot be standardized. Each company has its own business climate, terms, conditions, and methods.
The disadvantages of Value-Added Resellers include the following: There is no way for value-added resellers to control the cost of the products they sell, and the whole reselling process is not always transparent. The manufacturer sometimes tries to alleviate this problem by offering a discount to resellers, allowing the reseller to charge their customers a lower price.
Furthermore, resellers have little control over the quality or feature of their products and must rely on their manufacturers to adjust to changing customer demands.
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