Smaller VARs show ambition

Large resellers find it hard to compete with smaller, lean VARs

Large, established resellers have been warned to watch their backs after research has suggested they are being trounced on sales growth and profitability by smaller, leaner rivals.

Research firm Plimsoll has identified a group of dynamic VARs outside the top 100 that are increasing profits at three times the rate of larger rivals. Examples include Hemini, NE Computing, ITRS Group and Centerprise.

David Pattison, senior analyst at Plimsoll, told CRN: “This band of small, dynamic resellers can operate on lower overheads and can work more productively than larger VARs.”

In contrast, Plimsoll said 18 of the UK’s top 100 IT resellers are losing money and claimed another 52 are making less profit than last year.

Barry Dodhia, marketing manager at IBM and Lenovo VAR Hemini, which Plimsoll said grew turnover by 68 per cent in 2005, said: “The problem for the bigger resellers is that they can’t change things overnight.

“We offer a range of services such as one-stop remote access, hosting, web services and development and design work, as opposed to the bigger resellers, which just shift boxes.”

Pattison added that larger resellers have been “hit where it hurts” by a 20 per cent drop in IT equipment prices since 2000. VARs in the top 100, all of which make sales of more than £15m per year, eat up an average of 10 per cent of sales on salaries alone, he said.