What is Traditional Resale?

1. Introduction

Traditional Resale represents a fundamental and enduring model within partner ecosystems. In this arrangement, an independent business, known as a channel partner (often a reseller or value-added reseller, VAR), acts as an intermediary between a vendor and the end customer. The partner acquires products or services directly from the vendor, takes ownership of the inventory or licenses, and then resells them to their client base. The core of this model's profitability for the partner lies in the margin they add to the vendor's original price.

This model is prevalent across diverse industries, from the fast-paced world of information technology to the established sectors of manufacturing. For instance, an IT reseller might purchase software licenses from a major vendor like Microsoft or hardware from Cisco, then sell these to businesses, often integrating them with their own installation, support, or consulting services. Similarly, in manufacturing, a distributor might buy industrial components from a factory and then supply them to various other manufacturing plants, adding value through logistics, inventory management, and technical support.

2. Context/Background

The concept of resale is as old as commerce itself, but its formalization within structured vendor-partner relationships gained significant traction with the rise of complex products and expansive markets. In the mid-20th century, as technology products became more specialized and required local support, vendors realized they couldn't reach every customer directly. This led to the widespread adoption of channel sales models, with traditional resale being the cornerstone. It allowed vendors to scale their reach without significant capital investment in direct sales forces and infrastructure. For partners, it offered an opportunity to build businesses around established products, adding their own expertise and localized services. The evolution of partner relationship management (PRM) systems and dedicated partner program structures became essential to manage these distributed sales networks effectively.

3. Core Principles

• Inventory Ownership: The partner typically purchases and owns the product or service inventory before selling it to the end customer.
• Price Mark-up: The partner's primary revenue stream is derived from the difference between the price they pay the vendor and the price they charge the end customer.
• Customer Relationship: The partner owns the direct relationship with the end customer, including sales, billing, and often initial support.
• Value Addition: Partners frequently add their own services, support, or integration expertise, enhancing the vendor's offering.
• Brand Representation: Partners act as an extension of the vendor's sales force and brand in their respective markets.

4. Implementation

Implementing a successful traditional resale model requires a structured approach:

1. Define Partner Tiers: Establish clear criteria for different partner levels (e.g., authorized reseller, premier partner) based on sales volume, certifications, or market reach.
2. Develop Pricing & Margins: Create a competitive pricing structure that allows partners sufficient margin to be profitable while remaining attractive to end customers.
3. Establish a Partner Program: Outline program benefits, requirements, support, and incentives, including deal registration processes.
4. Onboard Partners: Provide comprehensive training on products, sales processes, and the partner portal functionalities.
5. Enable Sales & Marketing: Offer sales tools, marketing materials, and access to through-channel marketing platforms to help partners generate leads.
6. Provide Ongoing Support: Ensure partners have access to technical support, sales assistance, and regular communication channels.

5. Best Practices vs Pitfalls

Best Practices (Do's)

• Clear Communication: Maintain transparent communication regarding product updates, pricing changes, and program modifications.
• Robust Partner Enablement: Invest in continuous training, certifications, and resources to ensure partners are knowledgeable and effective.
• Fair Deal Registration: Implement an unambiguous deal registration process to protect partner investments and prevent channel conflict.
• Competitive Margins: Offer attractive margins that incentivize partners to prioritize your products.
• Mutual Business Planning: Collaborate with key partners on joint business plans and sales targets.

Pitfalls (Don'ts)

• Channel Conflict: Allowing direct sales teams to compete unfairly with partners for the same accounts.
• Inadequate Support: Failing to provide partners with the necessary technical, sales, or marketing assistance.
• Complex Processes: Overly complicated partner portal interfaces, deal registration, or rebate claim processes.
• Poor Communication: Lack of regular updates or feedback loops with partners.
• Undermining Partner Pricing: Selling directly to end customers at prices lower than what partners can offer, eroding partner profitability.

6. Advanced Applications

For mature organizations, traditional resale can evolve into more sophisticated models:

1. Solution Bundling: Partners combine vendor products with their own services and third-party offerings to create complete solutions.
2. Vertical Specialization: Partners focus on specific industries (e.g., healthcare, finance) where they have deep expertise and can add significant value.
3. Managed Services: Partners offer ongoing management, maintenance, and support for the vendor's products, often on a subscription basis.
4. Geographic Expansion: Vendors leverage partners to enter new international markets without establishing direct operations.
5. Co-Selling Initiatives: Vendors and partners collaborate closely on specific sales opportunities, sharing leads and sales efforts.
6. Advanced Partner Tiers: Implementing multi-tiered partner program structures with escalating benefits and requirements, driving higher commitment.

7. Ecosystem Integration

Traditional resale is foundational to several pillars of the Partner Ecosystem Operating Model (POEM) lifecycle:

• Strategize: Defining where traditional resale fits within the overall market strategy and target customer segments.
• Recruit: Identifying and attracting suitable resellers who align with vendor values and market reach.
• Onboard: Equipping new partners with the necessary tools, training, and access to the partner portal.
• Enable: Providing ongoing training, certifications, sales tools, and partner enablement resources.
• Market: Supporting partners with through-channel marketing materials and campaigns to generate demand.
• Sell: Facilitating deal registration, joint sales efforts (co-selling), and lead distribution.
• Incentivize: Structuring competitive margins, rebates, and performance-based incentives.
• Accelerate: Optimizing processes and fostering deeper relationships to drive increased sales velocity and partner growth.

8. Conclusion

Traditional Resale remains a vital component of successful partner ecosystems, providing vendors with scalable market reach and partners with profitable business opportunities. Its enduring appeal lies in its straightforward nature: partners buy, partners sell, and both benefit. Effective management of these relationships, supported by robust partner relationship management tools and a well-structured partner program, is paramount for long-term success.

By adhering to best practices, fostering clear communication, and continuously enabling their channel, vendors can maximize the potential of their traditional resale partners, ensuring mutual growth and deep market penetration. This foundational model continues to adapt and thrive, proving its resilience and strategic importance in a constantly evolving commercial landscape.