Channel partners distribute a manufacturer’s products and services to end consumers, adding value through their own services. Wireless service providers use value-added resellers to sell their equipment and service plans. Third-party resellers help customers with wireless service but do not provide it. Compensation is linked to sales volume, and training and performance agreements can fill service gaps. Third-party vendors may sell products to competitors, and customers have more control over which company they choose.
A channel partner is a third-party organization that helps distribute a manufacturer’s products and services to the end consumer. The partner obtains the rights to sell and distribute the product and can add additional value through its own 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 an excellent example of the use of value-added resellers, which are a type of channel partner. Wireless service providers license the sale of their telephone equipment and service plans to third-party electronics specialist resellers. These dealers initiate service contracts for consumers and sell the manufacturer’s equipment. They may offer additional warranty options or special promotions that the manufacturer does not offer its direct customers.
Third-party resellers typically help the customer configure wireless service, replace faulty telephone equipment, and may 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 usually advertises the manufacturer’s brand logo along with your own. This co-branding strategy was designed to drive foot traffic to dealer store locations based on the reputation of the manufacturer name.
In a channel partner relationship, the third-party reseller usually receives compensation directly linked to the sales volume achieved on the manufacturer’s products and services. The manufacturer receives greater market penetration, as it is not always profitable to operate own stores. One of the risks associated with a channel partner relationship is that the third-party provider does not deal with customers with the same level of service experience. This gap can be filled through training of supplier personnel, clear and concise performance expectations, and agreements that stipulate certain performance measures.
Another challenge with channel partner relationships is that third-party vendors often sell products to other manufacturers. These products are generally considered to be direct competitors. Third-party phone and wireless service resellers often carry several different brand names. In an already highly competitive industry, the customer who goes to a third-party reseller to purchase service has more control over which company they choose. In addition, third-party reseller employees will not necessarily advocate one wireless provider over another or may not adequately inform the customer about the company that will provide them.
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