A channel partner is a third-party organization that distributes a manufacturer’s products and services to the end consumer. Co-branding is common, but the partner is not a subsidiary. Third-party resellers help customers set up wireless service and sell equipment, but do not provide wireless service. Compensation is tied to sales volume, but there are risks associated with channel partner relationships, such as competition from other manufacturers and varying levels of service expertise.
A channel partner is a third-party organization that helps distribute a manufacturer’s products and services to the end consumer. The partner gets the rights to sell and distribute the product and could add further value through its set of services. Co-branding between the two organizations is common, but the channel partner is not considered a subsidiary of the manufacturer.
The wireless telecommunications industry is a prime example of the use of value-added resellers, which is a type of channel partner. Wireless service providers license the sale of their telephone equipment and service plans to third-party electronics resellers. These dealers enter into consumer service contracts and sell the manufacturer’s equipment. They may offer additional warranty options or special promotions that the manufacturer does not offer to its direct customers.
Third-party resellers often help the customer set up wireless service, exchange faulty phone equipment, and can help the customer troubleshoot their service. However, the third-party reseller does not provide wireless service to the customer. A dealer does not work for the manufacturer, but often advertises the manufacturer’s brand logo next to their own. This co-branding strategy is designed to drive foot traffic to the retailer’s store locations based on the reputation of the manufacturer’s name.
In a channel partner relationship, the third-party reseller usually receives compensation that is directly tied to the volume of sales it gets on the manufacturer’s products and services. The manufacturer receives more market penetration as it is not always cost-effective to operate company-owned stores. One of the risks associated with a channel partner relationship is that the third-party vendor won’t handle customers with the same level of service expertise. This gap can be filled through supplier employee training, clear and concise performance expectations, and agreements that include certain performance metrics.
Another challenge with channel partner relationships is that third-party vendors often sell products for other manufacturers. These products are generally considered to be direct competitors. Resellers of third-party wireless phones and services typically carry several brand names. In an already fiercely competitive industry, the customer who walks into a third-party reseller to buy a service has more control over the company they choose. Additionally, third-party reseller employees will not necessarily advocate one wireless provider over the other or may not adequately inform the customer about the company that will provide them with service.
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