Digital transformation revolutionized modern life in countless ways. However, before the technology reaches its end-user, the products usually undergo a direct sales or channels sales process. The sales funnel can include value-added distributors or resellers. To expand market reach, Vendors partners with a value-added distributor or channel sales arms.
Incube Solutions exists as a value-added distributor for digital transformation technologies in the Middle East. Our company helps vendors — like Zoom and 1Kosmos — to bring their products to a specific market. In addition, we also offer technical and business support services. In this blog, we define VAD’s overall role in the channel sales business model.
Using diversified sales channels enable vendors to extend the best possible experience and support to their end-customers.
Distributors operate in between the vendors and the rest of the market. Usually, they acquire products in volumes from vendors with the aim to sell the technology in bulk. Basically, distributors supply the technology to various sales channels and spread the sales across among reseller companies serving end-customers.
Actually, VADs are a new generation of distributors. They provide services and competencies to channel partners — also known as reseller networks — selling and marketing the vendor products. Compared to distributors, VADs provide additional service and support on top of the product supply.
VADs commonly offer resellers their product expertise, technical support, and competitive prices. On the other hand, distributors mainly handle the overall volume of all technology transactions with a goal to only provide the product to resellers.
For most major technology vendors, distribution is their principal route to market. In fact, according to GTDC, distributors represent as much as 80% of the vendor’s revenue. This means distributors play a major role in providing extensive market reach and coverage.
Also, VADs usually are in constant reach outs to vendors and partners. Partnering with a VAD would mutually benefit the vendors and resellers alike. In fact, VADs enable vendors to have trained and supervised sales arms. VADs are essential in go-to-market strategies.
Vendors rapidly expand their reach through VADs and reseller networks. VADs exist to support, train, and empower resellers. To summarize, we listed several benefits of partnering with VAD companies.
A value-added distributor’s sales team is fully-equipped to sell the product to its target market. They can make recommendations in marketing the product by highlighting the product’s strength and position in the market.
Moreover, Sales Channel Managers are accountable for a network of resellers. They serve as the point-of-contact for channel partners. Furthermore, the sales team segments its channels by territory, industry, or company size. Usually, VADs grow an established network within a given territory and a strong reseller network base.
The right value-added distributor understands the market very well. They can also make recommendations in marketing the product by highlighting the product’s strength and position in the market. The in-house specialists can give resellers advice, data, feedback, and overall insights into the market. This is relevant as B2C companies may not have access to such information.
VADs must know the product like the back of their hand: what it can do, how it works, who the product benefits. More importantly, they are professionally-trained by the vendor. VADs has a sales and technical team that understands the product more than the reseller.
With a specialized sales and technical team, VADs are expected to provide regular product training to empower channel partners. The success of the channel partners is deemed the success of the VAD company. Altogether, the target is to boost sales.
Also, training programs are necessary for new salespeople joining the channel partner team. Moreover, it is also important for new products at the go-to-market stage or existing products with new additional features.
VADs have in-house product technical experts who can support solution design, development and product demonstration, and system integration. Aside from distribution, VADs can also offer consultancy and customized solutions and also implementation if needed.
In this sense, VADs can act as a software house that can facilitate the development of various products. From software-as-a-service (SaaS), platform-as-a-service (PaaS), or an entirely new innovative infrastructure leveraging new technologies.
Lastly, a value-added distributor starts operations with a huge capital that enables them to secure a bulk number of products for distribution. Through credit lines and margin-based pricing, VADs lowers barriers of entry for resellers to enter and sell a specific product in the market.
For this reason, many small-to-medium reseller companies that want to sell the products engage in VAD partnerships. Aside from distribution, VADs might also offer multiple credit options; from credit lines to leasing options for the reseller or sometimes even to the end-consumer.
VADs are vital components to ensure success with any new technology. With the right VAD partner, coupled with proven sales and marketing strategies, innovative product vendors can reach their target consumers and profits.
It is the same with other technology products in the market. The era of single-channel or direct sales has long been gone; many sales funnels are slowly transitioning to multi-vendor business models. Moreover, multi-disciplinary environments do much more than maintain IT functions.
VADs like Incube Solutions have sprung deep and wide-roots of connections. By partnering with a capable VAD in your chosen industry. Your brand and product can ensure success in the long run.
Are you a technology product vendor or reseller? Let’s talk. Contact Us.