Value-Added Resellers (VAR) refers to a business model where companies purchase products, such as hardware and software, from manufacturers or distributors, then enhance or modify them by adding unique features or services. These companies then resell the improved products to end-users, often targeting specific industries or markets. The value addition typically provides a competitive edge and offers customers a tailored solution, while also generating higher profit margins for the reseller.
Value-Added Resellers (VAR) in phonetics is:ˈvalyo͞o ˈadəd riˈsɛlərz
- Value-Added Resellers (VAR) are partners or intermediaries that buy products from manufacturers, enhance or customize them with additional features or services, and then resell them to end-users or clients.
- VARs can offer significant value to customers by bundling products or services, providing technical expertise, and offering tailored solutions to specific customer requirements, often at a lower cost than purchasing individual components.
- In order to be successful, VARs need to maintain strong relationships with their suppliers and customers, stay up-to-date with technology advancements and market trends, and constantly improve their offering to meet the evolving needs of their clientele.
The business/finance term Value-Added Resellers (VAR) is important because it represents a crucial component within the supply chain management and distribution process. The role of a VAR is to enhance the functionality of an original product or service by adding features or supplementary services to it, which in turn provides added value to the end consumer. This can range from customizing software packages, offering training services, or integrating multiple products and services to form a complete solution. The ability of a VAR to align their services with the needs and requirements of the customers ultimately fosters a more effective and efficient delivery of solutions. Furthermore, the collaboration between the original manufacturer, VAR, and end consumer helps strengthen partnerships and promotes the development of competitive advantage for all parties involved.
Value-Added Resellers (VAR) play an integral role in enhancing the overall utility and functionality of products within the finance and business realms. The primary purpose of VARs is to foster a symbiotic relationship between manufacturers and end-users by bundling or integrating diverse components and services, thereby creating tailored solutions aligning with the unique needs and requirements of their clientele. By extending their offerings beyond the original product specifications, VARs can effectively differentiate themselves in a competitive marketplace and build stronger connections with their customers.
The benefits of collaborating with VARs are manifold for both manufacturers and customers. For manufacturers, partnering with a VAR allows them to focus on their core competencies, such as product development, while the VAR tackles the customization, implementation, and support aspects. This enables a more seamless integration of the product into a client’s existing infrastructure and assurance that the implemented solution achieves its intended objectives. Meanwhile, customers benefit from the specialized expertise and resources VARs provide, which would be otherwise inaccessible or too pricey to develop in-house.
Consequently, collaboration with Value-Added Resellers (VAR) contributes significantly to increasing the product’s appeal and value proposition to the target audience, ultimately fostering long-term customer relationships, and ensuring marketplace success.
1. Cisco Systems Inc. (Technology): Cisco Systems is a US-based multinational technology company that designs, manufactures, and sells networking equipment. Cisco partners with Value-Added Resellers (VARs) like CDW, Insight, and SHI International Corp., who purchase Cisco products, add their expertise and services, and then resell them to the end customers. These VARs can customize Cisco’s networking equipment to better fit the specific needs of businesses and organizations.
2. Microsoft Dynamics (Software): Microsoft Dynamics is a line of enterprise resource planning (ERP) and customer relationship management (CRM) software products developed by Microsoft. Microsoft works with VARs like Velosio, JourneyTEAM, and Blue Horseshoe, who buy Microsoft Dynamics software licenses, customize the software, and provide additional support and services to customers. VARs in this space focus on tailoring the software for a specific industry or use case, such as retail, manufacturing, or financial services.
3. Hewlett Packard Enterprise (HPE) (Computer Hardware): Hewlett Packard Enterprise is a multinational enterprise IT company that provides servers, storage, networking, and other technology solutions. HPE collaborates with VAR partners like PCM-G, Softchoice, and Zones, who purchase HPE hardware products, add value through additional services, and resell the complete solution to customers. These VARs may offer services such as installation, integration, and technical support, in addition to tailoring HPE hardware to meet the unique needs of their customers.
Frequently Asked Questions(FAQ)
What are Value-Added Resellers (VARs)?
Value-Added Resellers (VARs) are companies or individuals that purchase a product, enhance its features, bundle it with other services, and then resell the combined offering to end-users. This process adds value to the original product, providing a complete solution for the end-users, and differentiating it from the original product.
What industries do VARs typically operate in?
VARs can be found in a wide range of industries, including technology, software, telecommunications, automotive, and more. Some common examples are IT service providers, software developers, and telecom system integrators who bundle their services along with hardware or software products to improve their offerings and provide a comprehensive solution to their customers.
What are the benefits of working with a VAR?
Working with a Value-Added Reseller can provide several benefits, including:1. Expertise: VARs often possess specialized knowledge of the products they resell and their accompanying services, ensuring a custom solution for clients.2. Convenience: By packaging and offering multiple products and services together, VARs save customers time and effort in sourcing, implementing, and managing their solutions.3. Support: VARs may provide enhanced customer support and training, making it easier for end-users to utilize and maintain their products.4. Cost savings: As VARs usually have strong relationships with manufacturers, they may be able to negotiate better pricing and provide cost-effective solutions to customers.
How do VARs make money?
Value-Added Resellers make money through several revenue streams, including:1. Reselling products and services: They make a profit equal to the difference between the purchase price of the product and the price they sell it for, after adding value.2. Consulting and implementation services: VARs may charge for their professional services in providing tailored solutions to businesses.3. Support and maintenance contracts: Customers often pay for ongoing support and maintenance, which can provide a steady revenue stream for VARs.
How do I become a Value-Added Reseller?
To become a Value-Added Reseller, follow these steps:1. Identify your target industry and customers.2. Develop specialized knowledge and expertise in your chosen field.3. Build relationships with manufacturers and suppliers.4. Create a unique value proposition by bundling products and services to address your customers’ needs.5. Develop a marketing strategy to reach potential customers.6. Set up an efficient support and service system for your clients.7. Establish legal and financial aspects such as contracts, reseller agreements, and pricing structures.
How do I find a reputable VAR for my business needs?
Consider the following factors when looking for a reputable Value-Added Reseller:1. Expertise: Look for VARs with expertise in providing the products and services relevant to your niche or industry.2. Track record: Research the VAR’s past performance, customer testimonials, and case studies.3. Partner relationships: Determine which manufacturers and suppliers the VAR is affiliated with, as this indicates the quality of products and services offered.4. Support and services: Evaluate the level of customer support, training, and after-sales services provided.5. Pricing: Compare pricing across various VARs to ensure you are getting a competitive and cost-effective offering.6. Customization: Make sure the VAR can tailor the solution according to your specific business needs.
Related Finance Terms
- Channel Partners
- Original Equipment Manufacturers (OEM)
- Distribution Channels
- Systems Integrators
- Reseller Agreements