Value added resellers (VARs) usually deal in the IT and technology industry. This is a type of business which resells products and services with added value as a complete package.
The added value is achieved by combining a variety of products from multiple suppliers or adding up various services like consultation, advice, customization, training, product support, etc.
The following example will help to understand the value added system of business. Suppose a customer wants to purchase a desktop computer, the VAR will advise him about different brands and their specifications. Once the customer makes his choice, VAR will offer more products like software’s, printers, scanners, extended warranties, etc; adding value with each additional product. Service and product support is also provided by the VAR which is not usually provided by the vendor. These features of VAR increase the likelihood of repeated business in future.
The VARs are in contact with multiple suppliers of products and provide a wide range of product information, advice, and solutions for the customer. VARs can usually understand what the customer requires and deliver solutions accordingly.
Purchases are made by the VARs from various product suppliers at wholesale rates and it resells them by adding a marginal profit. The bulk of the profit earned by VARs comes through value added products and different services it provides for the customers.
The VAR system of business is not regularized and each company has its own set of terms and conditions or the methods of payment. The terms and conditions differ and are negotiated with each supplier or merchant on a case to case basis.
Advantages of VARs
Value added resellers (VARs) have many advantages which are listed below:
· VARs have business contacts with a multitude of renowned and reputable suppliers with access to their technical support and technology.
· VARs provide a long list of new and existing products from leading brand suppliers for their potential customers without spending anything on research and development.
· The suppliers provide sales and marketing support for the VARs, usually at no extra cost as the suppliers have allocations for such support in their budgets. This support is in the form of advertisement, sales and marketing brochures and literature, reviews, surveys, etc.
· Suppliers also provide free training and other support to the VARs, which may sometimes lead to certifications. A certified VAR is more credible in the market and is able to resell his products with more success.
· The VARs can easily cater to the changing needs and trends of the market as well as the technology advancements, and can adjust their line of products and suppliers to stay competitive and successful in their business.