With the advent of the Internet, business models are undergoing rapid change. Value addition has become the key survival factor in the IT industry. Despite all these changes, value added resellers remain an essential link in the channel. They provide various services with the products they sell. This gives them an edge over resellers.
The genesis of channel activities in the IT industry can be traced back to 1986 when industry professionals set the trend. Within three years, there was a big rush by entrepreneurs to join the bandwagon. Since most resellers were not from the industry, they offered huge employment opportunities to youngsters who could help them in sales and marketing.
While resellers tasted success, these youngsters too gained valuable IT industry experience. With this experience came the dreams of creating a niche of their own in this dynamic industry. Since most of them were qualified, hardworking and focused, they ventured to create a new link in this chain — the VARs or value added resellers.
This new genre of value added resellers were sharp enough to understand the nuances of the channel business. They realized that understanding the changing trends of technology, customer needs, key product features, costing structures and maintaining good relations with OEMs was the key to a healthy business.
Some of them, apart from being smart, were also technically qualified and that gave them the confidence to start their own enterprise. These guys looked at business in the same way as their first generation predecessors, except for the fact that they concentrated on a smaller area.
Essentials for a successful VAR
Connecting the customer to the OEM
The value added reseller, became the most important link between the customer and various tiers of the IT channel. These guys understood customer needs and were able to add some value to every product, making it more saleable to the customer. Most importantly they were able to identify the right market for each product, explore new user segments, identify the best product combinations for every application and thus give right value for money to the customer.
Since marketing was the key strength of these VARs, they became an important base for product manufacturers. They became key targets for product expositions and marketing programs. Even in these days of direct selling, most manufacturers continue to focus on wooing them to take their products to the customer. Though VARs buy the product from resellers or distributors, they get lot of direct support from the manufacturer in the form of certification, education, incentives and technical support.
Some VARs also create their own product solutions. Most of these solutions are an intelligent and creative combination of hardware and software. Thus they manage to set their own norms of profitability in this niche. In fact, the Internet is now offering a lot more similar opportunities to the VARs.
Makings of a VAR
What does it take to be a VAR? Not much. All you need is a competent knowledge of IT products and the ability to cope with the changes in technology. But what is it that makes a VAR successful? Well, it is sensitivity to the needs of your customer. You can dispense with a fancy office. What your customers will need instead is a place where they can call you anytime of the day. As long as you give good service to your customer, you can be assured of receiving your payments on time. This will reduce your financial hassles to a large extent. With the basic finances in good shape, your profitability will be better.
As business models change to move effectively with the demands of the Internet, VARs will become a more and more effective link in the distribution channel. Value addition will be the key survival factor for every channel member not only in the IT industry, but in every other industry. But in the IT industry specifically, every channel member have to start exploring areas where they can carve out their own niche to survive.
Gone are the days when a channel member could just trade a product. Today both manufacturers as well as customers want partners who can do more than mere box pushing. Better, higher and honest standards of value addition in IT will help ramp up the channel momentum in our industry and will augur good news for all concerned.
Ajay Aggarwal is the Managing Director of Seacom. He can be contacted at