The Rise of Resellers: Online Distribution Partners Are Essential For Business Success

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It makes sense that someone interested in acquiring goods and services should look to the source for the best products and prices. However, in the B2B world, that is not always the case. Major corporations, such as Cisco Systems, Inc. (NASDAQ:CSCO) and Microsoft Corporation (NASDAQ:MSFT), work strategically with certain distributors to ensure that all businesses can afford the highest quality equipment and services. Meanwhile, small businesses looking to expand their own business-oriented products can also make good use of working with resellers. Both B2C and B2B companies stand to profit from partnering with resellers ― here’s how.

Partnering With Resellers to Sell More

Using average salaries, benefits, and other expenses, it is easy to estimate that an average company spends $3.3 million annually to retain a meager force of 16 employees (including a vice president and a couple mid-level managers) in its sales department. Meanwhile, a single marketing campaign costs upwards of $100,000 per year, and that is on top of the expenses for a fully trained marketing team.

Companies that can outsource even a small portion of their sales and marketing efforts to resellers will benefit immensely from dramatically lower budgets. Some significant corporations have already recognized this benefit; for example, Cisco does not employ a single sales employee, choosing instead to cultivate an ecosystem of regional distributors and authorized Cisco resellers with whom businesses can develop lasting relationships.

Resellers exist internationally, nationally, regionally, and locally, and most already boast a healthy customer base eager for new products and services. Partnering with a reseller is one of the most effective ways to access new markets, especially in new geographic locations. According to Harvard Business Review, businesses looking to expand without significant financial risk would do well to partner with local resellers, though they may need to work closely with those resellers in the future to ensure continued growth.

Purchasing From Resellers for Extra Value

Many companies hear the term “reseller” and think price mark-ups, but resellers that add no value to the products they offer are few and far between. In fact, value-added resellers (VARs) intelligently bundle products and services to enhance worth beyond the capacities of manufacturers.

Though VARs’ prices might be higher than the specific hardware or software a business needs the supplementary features, which may include extended warranties, employee training, customer service, and customized applications, provide a value above and beyond the resellers’ prices. VARs continue to evolve, and today some VAR firms, like Trace3, are working with venture capitalists in Silicon Valley to offer businesses the latest and greatest tech in development.

For small and medium-sized businesses, resellers provide even more outstanding value: expertise. Partnerships with similar businesses provide VARs with in-depth knowledge about industry needs, granting their customers access to technology that is known to be effective. VARs personalize their recommendations ― a service major manufacturers cannot do ― and continue to provide individual attention with various valuable services, such as tech support.

Of Course, There’s a Catch

There are detriments to using distributors and resellers. For one, companies that fully transfer sales and marketing to third parties could find it more difficult to connect with clients and consumers. Such a detachment could impact a company’s ability to address consumer needs with new products and services. However, businesses must balance this lost opportunity with the extra earning potential provided by the superior customer service of VARs, which could increase sales by as much as 140 percent per client.

There are alternative resellers besides VARs, but most are glorified middlemen that only decrease efficiency and increase price. For example, retailers qualify as resellers, but VARs offer their products for marginally more than wholesale prices while retail prices can double or triple that, so few businesses gain by buying from stores. Additionally, there is a type of reseller, commonly called a value-subtracted reseller, that merely acts as a middleman ― providing no services while increasing prices. In truth, resellers can dramatically improve the way businesses function ― as long as businesses partner with trustworthy resellers.

Resellers are certainly not a new phenomenon, but as the economy recovers and businesses grow, they are becoming more important to business success. A partnership with a reseller, either to purchase products and services or to sell one’s own, has the potential to make any business more effective in its market, increasing its profits in the long-term.


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