What is a Value-Added Reseller (VAR)?

Usually, when a procurement department prepares to invest in new software or hardware, they come across lucrative options from value-added resellers. 

But what do these businesses do in reality and what are the pros and cons of working with them?

In the following sections, we dive into the details of what is a value-added reseller. We explore some of the fundamentals, explain why it’s advantageous to work with VARs, what some of the obstacles are, and more. 

How VARs work

Let’s start with the basics.

For starters, what’s a value-added reseller (VAR)?

A value-added reseller is a business or organisation that buys goods from vendors and resells products or services with added value to end users. In essence, VARs improve third-party solutions by including extra features and more services before selling the end product to clients. 

Although industry-specific, some of the frequently provided value-added services and products include:

• Additional hardware;
• Troubleshooting;
• Installation services;
• Technical support;
• Training services;
• Professional design;
• Interior decorating;
• Extended warranties.

Value-added resellers manage business operations and take care of customer relations on behalf of the vendor. 

The VAR business model is popular in business-to-business technology service companies. In this case, VAR can provide an additional income stream to the final consumer and the vendor. 

VARs, in most cases, participate in a complexsales channel for an original equipment manufacturer or OEM. Here’s how this works.

First, a value-added reseller invests in goods from an OEM. The OEM then produces the solution according to instructions provided by the VAR. Next, the OEM sells the created goods to the VAR and delivers them. The VAR will then add value to the products, assemble them, and brand them according to the specifics of the company.

During the final stage, the value-added resellers move to product sales, managing implementation, training, providing marketing support and additional services. 

It’s essential to note that VARs are frequently confused with amanaged service provider or MSP. 

While value-added resellers work on a transactional basis and short-term contracts, managed services operate via long-term service contracts, providing goods and services at a steadier rate and ensuring repeat customers. 

The role of VARs in the supply chain

Value-added resellers are fundamental in the supply chain as they act as intermediaries between global distributors and end consumers, like healthcare organisations, government agencies, and businesses.

For instance, in data centres, value-added resellers can personalise a software product, install supplemental hardware, or offer space planning services, guaranteeing seamless integration of technology. 

In a similar way, furniture stores and furniture companies can rely on VARs for custom-made accessory parts or the shipment of bespoke solutions.

In that sense, VARs minimise manufacturers’ burdens. Moreover, value-added resellers can work under service contracts to provide support, maintenance, and updates. This ensures that the provided solutions adapt to the changing needs of clients and are up-to-date at all times.

Key functions and services

Value Added Resellers are not only essential in the supply chain. They play a critical role when it comes to enhancing the value of the goods and services they provide.

Below, we take a closer look at some of the core functions and services they are responsible for.

Customising products for end-users

Among other functions, value-added resellers provide customisation – one of their most important capabilities.

Instead of providing off-the-shelf items, VARs will enhance the original product and customise it to fit the particular needs of the end consumer, from an operations, technical, and business perspective. 

Delivering technical support and training

In addition, in most cases, VARs don’t just concentrate on offering products or services but also deliver post-sale support, like training and guidance. 

When it comes to complicated technological products, these services are key to guarantee customer satisfaction. 

Multi-vendor product integration

Last but not least, value-added resellers focus on product integration across multiple vendors. 

A lot of end-user businesses stand out with complex requirements that demand a mix of diverse products from multiple manufacturers. At the same time, they don’t possess the in-house expertise to integrate and use these solutions. 

The intermediary role of VAR largely enables them to optimise the end-user experience, whether that is by using external solutions to enhance business operations or by facilitating payments in the supply network through their own merchant account.

Benefits and challenges

Value-added resellers represent a valuable and substantial portion of the broader IT industry.

By being familiar with customers’ problems and optimising third-party solutions before they reach users, value-added resellers are guaranteeing customer satisfaction. 

However, this business structure also goes hand in hand with a few challenges that are important to consider. 

Advantages of using VARs for businesses

Let’s start with all that makes value-added resellers preferred. 

Single point of contact

One of the biggest challenges for small and medium-sized businesses is having to closely analyse and assess the IT solutions that offer value-added services for their teams. 

In most cases, in-house resources are limited when it comes to IT expertise. Value-added resellers (VARS) can, therefore, play the role of a single point of contact between multiple IT vendors, making troubleshooting and management much easier and more effective. 

Technical expertise

From the point of contact and consultation to the actual execution and ongoing maintenance, VARs play the role of trusted advisors, navigating consumers on the road to the adoption of technology solutions. 

Customised solutions

Many VARs prioritise customisation when delivering a finished product, making them a go-to for a number of professional services.

By providing custom solutions with additional value, VARs not only enhance the overall quality of products or services but also meet customers’ needs and requirements at a superior level. 

Regardless of whether it’s creating unique software solutions or merging advanced technology with legacy systems, value-added resellers play a fundamental role in offering customisation in the IT industry and other markets. 

Flexibility 

Naturally, selling products under the value-added reseller model means achieving a greater level of flexibility and scalability. 

Compared to standard product vendors, VARs are much more flexible as they have the ability to reactto specific consumer requirements and personalise and customise where possible.

This, in turn, allows businesses to evolve and adapt, despite their changing needs. 

The advantages of VARs position them as the best distribution channel for manufacturers and technology vendors. They play a significant role in competitive or highly specialised industries. 

Common challenges of working with VARs

At the same time, relying on value-added products and services from VARs is also associated with a few challenges worth addressing.

Unaffordable solutions

Naturally, creating highly customised and bespoke goods and services comes at a higher cost. 

As opposed to standard solution providers, value-added resellers are often pricier, making this type of partnership less affordable when compared to off-the-shelf alternatives. 

However, before you make any decisions,make sure you compare the benefits against the costs.

Dependency risks

Companies who prefer VARs for technology solutions are highly likely to form adependency on their knowledge and guidance.

The fact that value-added resellers provide ongoing support often means that businesses don’t feel the need toinvest in internal resources until it’s too late. 

Such dependencies can be risky, especially in cases where the value-added resellers go through financial storms and other disruptions.

Insufficient resources

Although this won’t be a problem for larger value-added resellers, smaller VARs can sometimes experience resource constraints. 

This naturally limits their scaling abilities and prevents them from delivering and providing timely support. 

When assessing VARs, make sure you research the potential of your potential reseller partners in-depth and make sure they can deliver on their promises and meet your expectations. 

Limited scope

Multiple VARs face issues when it comes to scope as they are limited in terms of products or services they can offer. 

While customisation and personalisation are vital strengths, you may be forced to partner with several value-added resellers to receive all of the tech solutions you need. 

Success Stories of Value-Added Resellers

Today, a vast array of global and popular companies continue relying on the VAR business model. 

Here are a few examples of successful companies that offer customised technology solutions to users:

• Synnex Corporation: an international tech distributor and solutions aggregator, offering a rich diversity of IT products, services, and solutions to resellers, system integrators, and resellers. Key operational areas include financing, tech support, and logistics.
• World Wide Technology: A digital transformation specialist providing a rich catalogue of IT solutions and services, such as consulting, systems integration, and managed services, to businesses in different countries.
• Avnet: An international technology distributor and solutions partner, delivering a wide array of IT products, services, and solutions to businesses, government entities, and educational institutions, with specialised expertise in design, integration, and lifecycle management.

These are just a few of the names worth researching in more depth. There are many others, like CDW, Ingram Micro, Insight Enterprises, and others that also deserve your attention as successful VARs. 

Key takeaways

Overall, value-added resellers are an essential part of the business world and have central roles in a range of different industries.

By improving and customising base products in the tech world and other segments, VARs provide consumers with more options to choose from, drive innovation, and take a large portion of weight off the shoulders of traditional manufacturers.

We hope that this article will help you gain a better understanding of the way VARs work and what the pros and cons of partnering with these organisations are. 

Frequently Asked Questions

How are VARs different from traditional retailers?

Traditional retailers simply sell products as-is. On the other hand, VARs provide added services like customization, integration of multi-vendor products, technical support, and ongoing maintenance. This added value helps meet specific client requirements that go beyond the basic product.

Where are VARs commonly used?

VARs are frequently used in industries like IT, telecommunications, healthcare, education, and government sectors. These industries often require specialised solutions that involve combining products from multiple vendors and customising them to meet unique operational requirements.

What services do VARs usually offer?

VARs offer services such as system integration, product customization, technical support, training, consulting, and managed services. They may also offer ongoing maintenance and service contracts to ensure the solution continues to meet customer requirements and expectations over time.