Finally — Solution Bundles that work in the Channel!
The evolution of technology has created new demands on vendors and channel partners to deliver end-to-end solution bundles for consumers. Offering individual products and expecting end users to do the rest is no longer acceptable. Yet developing solution bundles creates challenges in ensuring correct pricing, dealing with market variations and ensuring technical compliance.
Let’s look at how the three cogs in the channel engine – vendors, distributors, and Value Added Resellers (VARs) – deal with bundles.
Vendors: Many times, vendors will determine that a part of their market is looking for a combination of products that logically should be sold together. For example, a business unit may decide that sales can be boosted by adding on a logical product or service to the base product. Unfortunately, what looks good on a whiteboard is not always readily converted to a consumable bundle—i.e, it may not work in distribution or for Value Added Resellers (VARs).
Distributors: Distributors don’t normally stock ‘bundles’ – they stock individual SKUs (Stock Keeping Units). To package “vendor-prescribed bundles”, a distributor will require some type of incentive to be in place so as to compensate for the additional work required by staff.
VARs: Frequently, customers may need a solution that goes beyond the set of products and services that any one vendor can provide. Consequently, VARs will typically source products from different vendors to put together the ‘bundle’ their customers want. Unfortunately, this is a time-consuming exercise for the VAR and usually doesn’t deliver the best pricing to their customers.
How to resolve the issues surrounding Solution Bundles?
In a development that’s changing the way vendors go-to-market through their channel, Channel Mechanics has deployed SaaS that enables the first-ever channel-friendly means of structuring and delivering product bundles. How does this work for vendors, distributors and VARs?
Vendors: Vendors using this unique capability are able to structure a set of products they want to be in a bundle, and to offer discounts tied to that overall product bundle. Multiple vendors can participate in the bundle, bringing their own SKUs and pricing into the mix. The Channel Mechanics software manages all discounting rules, in addition to providing for different fulfillment routes, i.e, from the vendor directly, through a distributor, or any combination.
Distributors: Distributors receive vouchers from VARs that contain all the SKU’s to be fulfilled as part of a bundle order. Those individual SKUs are shipped to the VAR for combining with other parts of the order (some of which may have gone to other distributors). Pricing of the SKUs to the distributors is reflective of the bundled pricing.
VARs: VARs are provided with a simple, voucher-based method for ordering a specific quantity of a particular bundle. The bundle may contain products from multiple vendors, and all discounting will be reflected in the VAR buy price. With the simple submittal of the voucher in a shopping cart environment, the order is routed to the appropriate distributor(s) for fulfillment. VARs are now able to procure bundled solutions in a very short time frame, and to provide better pricing to their customers as a result of the overall bundle discounts.
Author Phil Wright, General Manager North America, Channel Mechanics
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