What is a value-added distributor?
A VAD offers high-quality select, pack and ship services around a product, along with solutions that add value to the distributed product.
From the outside, distributors are all about moving volume. They receive consumer devices, business infrastructure and other products in bulk, then spread those across multiple resellers working with end-customers.
Yet this definition is not complete. Distributors handle the overall volume of all technology transactions. According to the Global Technology Distribution Council, distributors represent as much as 80% of vendor revenue.
Distributors are often the conduit between vendors and the rest of the market, providing services and competencies to the reseller base using those vendor products.
It has been easier to overlook this extra value because it was often still secondary to pushing tin. But as demand has grown for more productive, agile and interconnected technology services, distributors have had to raise their game and become much greater value providers to the channel.
This has given rise to the value-added distributor, says Elmien Du Toit, COO of Westcon-Comstor Sub-Saharan Africa: “A true value-added distributor not only offers simple, high-quality select, pack and ship services around a product; it also offers solutions and services that add value to the distributed products, with the intention of increasing their overall value or worth. This value addition can be segmented into three areas: pre-sale, support of the sale and post-sale.”
The new breed of distributor
Value-added distributors (VADs) are crucial to ensure success with current technology. The age of monolithic systems is over and is being replaced by multi-vendor, multi-disciplinary environments that do much more than maintain IT functions. Everyone in business now has skin in the technology game.
But vendors are too narrowly focused to support such broad scopes fully. Implementers and resellers are often rooted in the trenches and can’t always look up to see the bigger picture. This has opened the door for distributors to expand on their services and support offering.
“The benefits of partnering with a VAD include having access to a driven sales team, market and product specialists, training programmes to enable channel partners, technical expertise as required and, in some cases, credit lines,” says Du Toit.
“In our case, we also offer all the value associated with digital logistics, supply chain management, enablement, support and services.”
On both sides, the channel has been appreciative of the role. Vendors are keen to collaborate with the right VADs and companies further downstream, particularly SMEs that see the value that large distributors bring supporting their business.
Value to the customer
Both also benefit from the consistent customer service that a VAD offers, says Du Toit: “A box is a box, software is software, but customer service is where the partners in this value chain stand to benefit. When partnered with a VAD, the route to the customer is so much easier, and the investment they make into getting the competencies needed is less. They need to invest less, being able to ‘lean’ on the experience and skills of their distributor.”
Above all, one thing every distribution partner should expect is mutual respect. The days of vendors dictating and distributors strong-arming the channel are over. Now it’s about the collaboration and agility that create long-term value for customers. Genuine VADs pursue a collaborative culture.
The leading VADs support a variety of top vendors, so there shouldn’t have to be brand monopolies. Resellers and implementers should evaluate their potential distribution partners carefully, asking about product variety, skills, financial support and the distributor’s role in pre- and post-sales. Selecting the right distributor is no longer about access to a product, but rather, about finding a strategic partner.
As Du Toit explains: “Distributors are sometimes known to be order takers, and generally lack real product knowledge. On the other hand, VADs provide a broad range of products, stock inventory, operate their own warehouses, supply credit to resellers, and have dedicated sales teams trained in offering value on each vendor’s products. If you are searching for a long-term relationship with a distributor that will truly be an advocate for your company and product line, VADs will prove invaluable to you.”