Are VARs like Record Stores, Obsolete?

With all due respect to the great people at the 240,000 VARs in North America, what is the point of a VAR today?  Vendors are aggressively courting end users, i.e. Apple Stores, online stores.  Traditional direct marketing resellers (DMR) like CDW and Insight have always been "the boogie man" anyway to VARs and they are offering more value-add services while selling large volumes of goods at thin margins.

To quote my friends at VARBusiness:  a VAR or Solutions Provider is any third party company that deploys/integrates/resells and/or influences hardware/software/service to an end customer.  The most common value-add VARs traditionally provide is "Access and Advice".  When you think about it, the value proposition is pretty close to that of record stores, look what happened to them.  Do you even remember the name of a record store.  For the record I do....Tower Records.

10 years ago VARs kept inventory in order to be able to respond quickly to clients. It was a competitive advantage.   Presto! with the combination of FedEx, the internet and the huge economic buying power of the mega resellers it is no longer an advantage.  In fact tying up cash in inventory is a disadvantage.  And that was before SaaS eliminated inventory.  So access has gone by the wayside, what about advice?

Queue a discussion of social media....Much of the channel discussion that I have been involved in centers around communication between vendors and resellers.  It is about about becoming more interactive, relevant, and timely.  The goal being to better enable the channel to resell products and vendors to stay relevant to those resellers.  The same logic and technology can be used on end users with the same wondrous result.  However, another attribute of social media is a down side for VARs.

VARs filtered the "signal to noise" ratio for end customers by being knowledgeable about a set of products, i.e. reducing the noise.  These products are filtered, as they are preselected as a portfolio product by the VARs.  The good ones do it on the basis of product features, service, vendors stability, etc.  As VARs select the products before the end user uses the product, they are Pre-Filters.  The VAR can give advice about the 2 to 4 products that they carry in each product category.  The advice is valuable, in some cases invaluable.  But wait, there is a new source of information for buyers: fellow travelers. 

What is more compelling:  a power point from a sales person or a series of rhapsodic reviews from professionals in your position i.e. doctors, lawyers, coffee shop owners.  Unsure?  Well then try it for free for 30 days.  DIY (Do It Yourself)  in full bloom.  

There goes the "advice" portion of the VAR value proposition.  What happens when a company with a powerful market position, credibility, and aggressive prices like CDW or Insight offers user recommendations on their web site (which neither do today) or it is available on Amazon?  Is it game over for VARs?

The IT channel is at the cusp of a change.  My contention is that there is room for Value-Added Resellers but not for resellers masquerading as VARs.  In future posts I will develop the “whys and wherefores” a bit more.