The VAR Channel is Missing the Boat on Ecommerce

How large is the ecommerce opportunity for retail-focused VARs? The simple answer is HUGE! The cost to launch a new ecommerce website can be multiple times the cost of a new point of sale system deployment. Plus, the ongoing investment in ecommerce dwarfs recurring spend on POS systems. For example, the cost of a new ecommerce site for an online retailer with $5.0M to $25.0M of sales can be $125,000 to $750,000 upfront with ongoing support costs of $15,000 to $75,000 annually (3).

Given this opportunity, you would think that retail-focused VARs would be rushing to build out services for multi-channel retailers. Unfortunately, that does not appear to be the case. If you attended the 2013 RSPA Retail Now conference, you would have found all sorts of booths displaying cash drawers, printer supplies and all-in-one computer systems – but no vendors focused on the online retail market. While ‘omni-channel retailing’ was brought up at several seminars (including VSR editor George Koroneos’ panel discussion) – there was no chatter in the hallways about how to get in front of this opportunity. Instead, the discussions evolved around the good old days of selling high margin hardware – with digital signage and offline managed storage offerings still considered ‘emerging services’.

Here are a few suggestions on how VARs can better capture ecommerce revenue:

1) Educate Employees – Multi-channel retailers tend to be early adopters of emerging retail technologies. VARs should educate their employees on emerging retail technologies such as multi-channel system design, wireless networks, cloud application integration and mobile payments.

2) Expand Product Offerings – To take advantage of the continued growth of ecommerce, VARs need to expand from offering POS hardware/software and merchant services into growing markets such as website design and implementation services, and ecommerce integration services.

3) Integrate With Popular Ecommerce Technologies – Don’t get caught on an island by vendors that do not easily integrate with third party technologies. Be sure to work with modern technologies that easily integrate with ecommerce platforms and other applications used by multi-channel retailers.

4) Partner with Complimentary Businesses – Even if a VAR chooses not to build out ecommerce offerings, they can still partner with other ecommerce service providers for joint marketing programs or exchanges of leads.

5) Become a Referral or Reseller Partner – Just like credit card processors offer recurring residuals to recommend merchant services, many ecommerce software vendors offer similar referral or partner programs offering a commission or a share of ongoing recurring revenues for referrals.

While many VARs feel that ecommerce is just too hard to understand – the younger generation of retailers do not feel that way. These next generation retailers are embracing the multi-channel systems to expand their market, leverage online advertising and social media, and capture more data on their customers. Traditional retail VARs need to be positioned to seize this opportunity – or be left in the dust.

(1) 2013 POS Benchmarking Survey – Boston Retail Partners
(2) Forrester Research, June 2013
(3) MicroBiz LLC research