Thursday, April 28, 2011

Business Model - Value Added Reseller

In the earlier blog on Business model, we had a brief discussion on the premium business model, where the company providing could charge more given their ability to create an image that stands out. Today we talk about value added reseller as a business model.

If we have closer look at most of the industries around us, we begin realizing that major portions of the companies work at creating a certain single component of the final product that consumer's purchase. There is another company that puts together all the individual single components from various vendors to help solve an issue that bothers the end consumer.

As most of the consumers of products, limit their interest to the usage of the product in discussion and the construction of the product is of interest only to a few people, these companies try to extract a premium using the components that are of greater worth. Given this situation, there are companies which outsource the component manufacturing to other companies while these companies focus on enhancing the usage of the product to the consumers through the product features.

Even after this, the overall experience of the product remains with the `end reseller of the product. They deliver the product, but also its service, its experience as a whole; and cater to the specific audience. This gives them the name value added reseller. Their value addition varies with what they provide, sometimes just the storage, and in some cases the experience. They make their money through value addition!

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