Direct Marketers Weigh In On Partnering With VARs

Top channel executives say the increased services push comes with direct marketers moving beyond point product sales and delivery to end-to-end solutions for small and medium businesses. That means selling more high-margin services either with or without VARs. That evolution makes the old direct marketer moniker an anachronism.

Retail giants are also looking to provide more services to small- and medium-business customers. CompUSA, for one, has been actively recruiting VARs to team with the company on a wide range of solutions from data storage management to security to wireless solutions. Best Buy and Best Buy For Business are building up their own services business without formal VAR partnerships.

One thing that unites retailers and direct marketers is an all-out drive to improve their profitability with a higher mix of IT services. Peter Cannone, senior vice president of sales operations at PC Connection, says partnering with VARs is key to driving future growth. “Specialty VARs out there are very important to us,” he said. “It is very difficult to be all things to all people. Having a good network of VAR partners gives us an opportunity to provide more services to our customers."

Here is a breakout of the direct marketers’ strategies.

PC Connection
Actively recruiting VARs to partner with the company’s ServiceConnection for small business and MD Professional Services organization aimed at larger businesses. No program or strategy aimed at acting as distributor to smaller VARs. “Our strategy is an end-user, go-to-market strategy with IT solutions,” said Cannone. “VARs complement that by providing specialty solutions.” Cannone believes more VARs will get out of the hardware sales side of the business to focus exclusively on higher-margin services. At the same time, PC Connection will drive more services business, he said. “We have to evolve with the marketplace. We feel we are doing that by partnering with VARs.”

PC Mall
Provides professional services to corporate clients through its Wareforce subsidiary, which it acquired four years ago. Also has what it calls “teaming agreements” with some VARs to provide full solutions to customers. “We have no strategic push to go after VARs as customers,” said Kris Rogers, executive vice president at PC Mall. “We go after small- and medium-business customers.”

Zones
In the midst of developing a formal program to team with VARs on the services front to provide more solution-based sales to small and medium businesses. “We see the market evolving and this is our response to continue to grow as the market evolves,” said Zones CFO Ronald McFadden. Zones does not view itself as a product distributor to smaller VARs. “That is not a market we are attacking,” said McFadden, noting there are a small number of VARs that source product from Zones. “Our customer base is the end user. We are not a middleman.”

Insight
Last year, launched a widely publicized effort to shed its product-focused reseller image by adding a suite of SMB services and pledging to work with a select group of local solution providers. That effort includes a services infrastructure in five areas—security, storage, printing, mobility and IT management—to target end users with 100 to 2,500 employees. Insight said it continues to work with VARs through its PC Wholesale distribution subsidiary.