Value added distributors extend their services beyond simple product distribution by providing an array of supplementary offerings to resellers and channel partners. Their added value comes in the form of marketing assistance, technical support, educational resources, and customized products that are designed to fit the specific needs of each customer.
What a Value-Added Distributor Actually Does
A value-added distributor sits in the middle tier of two-tier distribution. The vendor sells to the distributor, the distributor sells to resellers, VARs, and MSPs, and those partners sell to the end customer. The VAD never owns the end-customer relationship. It equips the partners who do.
On top of logistics, a VAD adds a service layer: marketing assistance, pre-sales technical support, partner training, solution bundling and configuration, and credit or financing that lets smaller resellers carry larger deals. That service layer is the whole point. It is what separates a value-added distributor from a broadline distributor that only moves boxes.
This tier matters more than its low profile suggests. Canalys, now part of Omdia, reports that over 70% of all IT revenue flows through the channel, with distribution as the channel's second tier. The largest of these distributors are not small: members of the Global Technology Distribution Council, the trade body for major IT distributors, drive over $180 billion in annual worldwide sales. A VAD is qualified like any other channel partner, for example with the 4C method, and the same deal registration discipline applies to deals that flow through it. For when a distributor tier is worth adding at all, see deciding when to work with distributors.
VAD vs VAR: The Difference
The two terms get swapped, but they sit at different points in the supply chain.
| Value-added distributor (VAD) | Value-added reseller (VAR) | |
|---|---|---|
| Sells to | Resellers, VARs, and MSPs | The end customer |
| Value added | Enablement, bundling, credit, and logistics for the partner network | Implementation, integration, customization, and support at the point of use |
| Owns the customer | No, the reseller does | Yes |
In short, a VAD adds value one tier up, for the partners who sell. A value-added reseller (VAR) adds value at the point of use, for the customer who buys. A VAR often buys from a VAD rather than direct from the vendor.
Frequently Asked Questions
What does VAD stand for?
In channel sales, VAD stands for value-added distributor, a distributor that adds services on top of plain logistics. The acronym means other things in other fields, which is why search results mix. In partnerships it always refers to the distribution-tier partner.
What is VAD in sales?
In a sales channel, a VAD is the tier between the vendor and the resellers. It does not sell to end customers. It equips resellers to sell, through training, pre-sales technical support, product bundling, and financing.
What is an example of a value-added distributor?
Broadline global distributors such as TD SYNNEX, Ingram Micro, and Arrow operate the distribution layer, and security-focused VADs such as Exclusive Networks, Infinigate, and Westcon-Comstor specialize further. All are members of the Global Technology Distribution Council.