A value added reseller sells technology it did not build, wrapped in the skills that make it work. In South Africa that wrapper is the whole business: the licence costs the same from anyone, so the margin sits in design, deployment and the support call at 02:00. This guide explains where a VAR sits between the vendor and the customer, how the money actually moves through a two-tier channel, and what separates a reseller that survives vendor consolidation from one that gets rationalised out of a partner programme.
What is a value added reseller?
A value added reseller is a company that buys technology products from a vendor or distributor, adds its own services to them, and sells the combination to an end customer. The added value is the point. Reselling a firewall at list price is broking. Scoping the network, sizing the appliance, configuring the rules, migrating the old policy set and answering the phone when something breaks is what makes the reseller worth a margin.
The abbreviation is VAR. You will hear it used loosely in the South African market to mean any partner that touches a vendor product, but the definition matters commercially. A pure reseller competes on price and loses. A value added reseller competes on capability and keeps the customer.
Here is the practical test. Strip out every service the business provides and ask what is left. If the answer is a purchase order, it is not a VAR.
Where a VAR sits in the technology channel
A VAR sits in the third tier of a four-part chain that runs vendor, distributor, reseller, end customer. Each link exists because the one above it cannot economically do that job at scale.
The vendor builds the product. SonicWall writes firewall firmware and manufactures appliances. It has no interest in invoicing four hundred South African businesses individually or in stocking units in Johannesburg.
The distributor holds stock, carries credit, provides local technical enablement and trains the reseller base. This is where LOOPHOLD operates. A distributor that only warehouses boxes is a logistics company. One that trains and equips partners is doing the job properly.
The reseller or VAR owns the customer relationship. It designs the solution, quotes it, installs it and supports it.
The end customer buys an outcome, not a component.
This structure is called a two-tier channel, because two intermediaries stand between the vendor and the buyer. Understanding where you sit determines who you buy from, what margin you can expect and who to escalate to when a deployment goes sideways. If you are weighing up which vendors to build a practice around, you can apply to become an accredited partner and get the enablement side sorted before you commit to a stack.
What is an example of a value added reseller?
A Cape Town IT firm that sells a client a complete email security deployment is a textbook value added reseller. Walk through what actually happens on that deal.
The client is a 60-seat logistics business losing hours to invoice fraud attempts. The reseller audits the existing mail flow, recommends Barracuda Email Protection, sizes the licence count, configures the policies, runs a phishing simulation against staff, and takes a standing support contract.
The licence itself might be 30 per cent of the deal value. The other 70 per cent is work only the reseller can do, and it is work no distributor and no vendor wants to do for a 60-seat account. That split is the entire economic argument for the channel.
Compare that to the alternative. The client buys the same licence online, misconfigures the quarantine settings, disables the parts that generate false positives, and gets compromised anyway. The product was never the problem.
VAR vs distributor vs system integrator
A VAR resells and services products, a distributor supplies and enables resellers, and a system integrator joins multiple vendors’ systems into one working environment. The three overlap constantly, which is why the terms get used interchangeably and why partner agreements get argued over.
| Role | Sells to | Core value | Typical revenue mix |
|---|---|---|---|
| Distributor | Resellers and MSPs | Stock, credit, training, vendor enablement | Volume, thin margin |
| Value added reseller | End customers | Design, deployment, first-line support | Product plus services |
| System integrator | Large end customers | Multi-vendor architecture and project delivery | Mostly services |
| MSP | End customers | Ongoing managed operations | Recurring monthly |
Most South African partners are hybrids. A firm can resell SonicWall, integrate it with a client’s existing Microsoft estate, and manage the whole thing monthly. The labels describe activities, not companies.
How value added resellers make money
VAR revenue comes from four streams, and the healthy ones do not depend on the first. Product margin on hardware and licences is the most visible and the most fragile, because it erodes every time a vendor adjusts its pricing or a competitor discounts to win a logo.
Services revenue covers installation, configuration, migration and consulting. This is where expertise converts directly to rand.
Recurring revenue comes from support contracts, managed services and subscription renewals. It is the stream that makes a reseller worth acquiring, because it is predictable.
Vendor incentives include rebates, deal registration protection and marketing development funds. Deal registration matters more than most new partners realise: it stops another reseller undercutting you on an opportunity you sourced and qualified.
The direction of travel is away from product margin and towards recurring services. A reseller whose revenue is 80 per cent hardware resale is exposed to every pricing decision a vendor makes.
Why vendors are cutting partner numbers
Vendors across the security market are rationalising partner networks and concentrating enablement on fewer, more capable partners. ITWeb has reported on this consolidation in the South African channel, describing distributors being asked to move beyond holding stock and processing orders into training resellers, running go-to-market programmes and helping partners build practices around specific technologies.
For a reseller this cuts both ways. Accreditation is harder to obtain and easier to lose. A partner that cannot demonstrate certified engineers on staff risks dropping a tier, and with it the margin and the deal registration protection.
It also means the partners that do invest in certification face less competition inside the programme. The barrier that keeps you out keeps your competitors out once you are through it.
Certification is the mechanism. Vendor accreditation for products like SonicWall requires engineers to pass technical exams and maintain currency, which is why SonicWall certification training is a commercial decision rather than a professional development nicety.
BUILDING A SECURITY PRACTICE?
LOOPHOLD equips South African partners with vendor accreditation, technical enablement and deal support across six security vendors.
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What to look for in a distributor
Choose a distributor on enablement depth, not on price, because the price difference between distributors on the same licence is negligible and the capability difference is not. Five questions separate them.
Does it run accredited training locally, or does it expect you to fly engineers offshore? Local delivery changes the economics of certifying a team.
Does it employ engineers who have deployed the product, or only salespeople who have read the datasheet? Ask to speak to the technical team before you sign.
Will it support you on a live deployment at 22:00, and is that commitment written down anywhere?
Does it protect registered deals, or will it let a second reseller quote the same account?
How many vendors does it carry in your category, and do they overlap? A distributor carrying four competing firewall brands cannot be equally expert in all of them.
Is being a VAR still viable in South Africa?
Yes, but the viable model has narrowed to partners that sell expertise rather than access to products. The old VAR advantage was procurement: the customer could not easily buy enterprise kit directly, so the reseller controlled the transaction. Vendor e-commerce and cloud marketplaces removed that moat entirely.
What replaced it is a scarcity problem. Cybersecurity skills shortages are the most acute talent constraint reported across sub-Saharan Africa, and South Africa’s MICT SETA lists cybersecurity among its critical scarce skills, with SOC analysts, penetration testers and security engineers flagged as scarce nationally. Customers cannot hire the people they need. A reseller with certified engineers on staff is selling something genuinely unavailable elsewhere.
The threat environment reinforces it. Interpol’s 2025 Africa Cyberthreat Assessment recorded 17,849 ransomware detections in South Africa in a single year, the highest of any African country. Businesses are not buying firewalls because they enjoy procurement. They are buying because the alternative has become expensive and public.
Margin on the box will keep falling. Demand for people who can make the box work will not.
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