Yesterday I got an email from a reader who was getting a quote together for a new HP P2000 SAN, it sounded like he had all the part numbers he needed lined up and was only questioning whether he should work with a VAR (Value Add Reseller) or just go through an online merchant.
I guess when you look at the pure economics of the question you will see that most of the time an online merchant is much cheaper, but why shouldn’t they be? If you think about why VAR’s are called VARs its pretty much self-explanatory…
They provide a Value Add to an otherwise commodity product, they also bring people with expertise in the area of your project… be it VoIP, Virtualization, or Networking, or whatever.
An online merchant is very often going to look cheaper on the surface, but I think a co-worker put it best when he said this: “…on the surface, they may be cheaper – if the product is not solutioned correctly you may have returns and lost time that will end up costing more. Also, at times it is a simple misconception that an online store will be cheaper – as VAR’s we have realized we need to be price competitive.” I totally agree… gone are the days of only having local competition… with the internet being easily accessible everyone is competing with everyone.
So let’s take a look at how business is conducted by an online merchant versus a VAR.
- You research products and get part numbers
- login to the website and add items to your cart
- you check out and pay for items
- merchant orders product from the upstream vendor
- product drop ships to you
If you notice the only thing the merchant is doing is middleman type stuff… marking the product up and then ordering from someone else. Most of the time the online merchant isn’t even going to touch the product you order. Plus all responsibility for correctness is put on you.. the customer. The bottom line is that after the sale… it’s your problem if there is a mistake.
Value Added Reseller:
- Call your sales person and discuss pain point
- Sales team works with Design engineers and you to formulate the best solution for your environment
- VAR registers deals if possible to the best pricing
- Quote is delivered to you
- If needed VAR sales team helps justify costs and ROI to management
- Product is ordered once approved
- VAR makes sure all product is correct and stages equipment if needed
- Project completes without issue.
A VAR is more then a reseller, normally there is a partner type relationship between the customer and the VAR…normally when you work with a VAR they know you; they know your network, and more importantly your company goals. They also help design the solutions, so when it comes time to order the product you have a reassurance that at least a couple different people have looked at the design and approved it.
My response to the reader was this:
If you are comfortable with making all design decisions, and taking all responsibility for the product that your ordering… and want a cheap price, then an online merchant may be the best way to go. But if you want a little extra… basically someone standing beside of you to help with all phases of your project and assurance that everything is designed properly and reviewed by experts in their field (not to mention that a VAR has probably done many projects like yours and knows the little tricks to get the project done smoothly), then a VAR is who you want to work with…. that is the Value Add.
On a side note and as I listed in number 3 of the VAR section, vendors also provide programs that allow VAR’s to get discounts for the customer… online merchants may or may not be taking advantage of these programs, and if they are… they may still not pass that savings on to you. So the next project you plan I would recommend you give your local VAR a ring and let them see what they can do to help you.