With the advent of the internet and internet retailers in the early 2000’s, the phrase VAR (Value-Added Reseller) almost became obsolete in the data collection industry. Anyone with a data collection need could turn to the internet for hardware and software, creating a gold rush of web-based companies competing to sell these products online at the lowest price. Being a VAR suddenly meant selling products over the internet without really adding any value.
But this seemingly great deal for the customer soon soured. Hardware and software would show up on their dock, followed by the realization that they needed help integrating these products into their operations. At a minimum, they required some technical support and service. They couldn’t call the guy that sold it to them. He sold them products at rock bottom prices and certainly could not afford the staff to support them. In some cases, the internet retailers who sold the hardware had no idea what they had sold; they just fulfilled a part number for 4% or 5% margin, sometimes less.
Backlash followed shortly. Manufacturers in our industry suddenly had disgruntled customers on their hands demanding technical support. The manufacturers’ field engineers, who were already spread thin, found themselves with an onslaught of support work. Factory phone support desks were swamped with calls from customers who purchased hardware and software on the internet because their internet retailers didn’t offer product support.
The worst part was the internet retailers soon became the biggest customers of the manufacturers. Even though the end-users were suffering from bad service, none of the manufacturers were standing up to fix the problem.
MAP to the Rescue
At this point, Apple, intent on protecting the pricing of its products, implemented MAP (Minimum Advertised Pricing) providing a model and precedent for the data collection industry. Contractually force your resellers not to advertise your products below an agreed-upon price. In a one-two punch, they restructured their discounts to the resellers based on the level of technical support provided to customers. The message was clear: if you want to sell our products on the internet to customers all over the world that you cannot possibly support, fine. But your discounts will be less than the reseller who supports their customers.
There is another upside to all of this. The manufacturers in our industry, in a further effort to support the true VAR, began implementing a deal registration process. This allows the VAR, who is working hand-in-hand with a customer on a project using the manufacturer’s hardware, to get even more margin for those opportunities. This creates a win-win-win. The customer gets the best price from the best source, which is the reseller who is working closely with them to craft a solution.
VAR and Proud
This evolution in the sales channel leaves EMP Tech Group in a stronger position than ever. We have heavily invested in our technical services staff over the years. Even during the dark days of low internet pricing, we continued to support our customers with onsite service, programming, and hardware integration. Now that the manufacturers have pitched in, we are able to provide not only the best service but also the best price. The value-added reseller who is a one-stop shop, offering the best products and services at the best value, is a winner for the customer.