As I walked from the Paris Las Vegas, which hosted RetailNOW 2017 Aug. 6-9, to the nearby Cromwell Hotel to attend the RSPA’s Next Gen Community gathering, I noticed extremes just steps away from each other. Some folks on South Las Vegas Boulevard wore shoes that cost more than my entire closet while others had scuffed up sneakers and tattered T-shirts. We’re on the same sidewalk, but we’re worlds apart.
I can draw a parallel from that scene to what I saw inside the conference center during RetailNOW. The attendees are all resellers, but their reaction to the disruption facing our industry today is as extreme as Prada vs. pajamas.
A few years ago it became widely accepted in the POS channel that hardware margins had eroded and weren’t ever coming back. Most resellers adjusted, integrating payment processing with the software they resold and living off that combination. Today, with the advent of cloud POS and added pressure in the payments space, margins for traditional POS resellers are continuing to tighten. Nobody’s exactly thrilled with the situation, but some VARs are adapting while others are scrambling.
Let’s talk about the high-initiative, growth-oriented resellers first because they comprised the vast majority of the conversations I had at RetailNOW. During a Saturday night reception, I listened in as a group of resellers discussed the opportunity to sell managed cellular failover routers. “The upside on it is huge,” one reseller said. “It’s actually easy once you get the concept down. You buy ‘X’ GB of data and share it across your customers. You can become an agent for the carriers and make some really good margins.”
The next morning I talked with two reseller executives from the rural northwest who, according to the stereotypes, should have been lamenting the demise of the cash register. Instead they were talking about how bundling an array of managed services with their POS/payments offering was protecting merchants and increasing their own margins. When one of the executives mentioned firewalls being a key part of their linecard, a reseller from Florida chimed in. “That’s the main reason I came to the show – to find out who are good firewall vendors,” he said. “Who do you use?”
I saw that same Floridian reseller on the show floor two days later, and he was even higher on managed services. He asked me if I could connect him with POS resellers who have experience with the MSP (managed services provider) model so he could learn even more from them.
The first reseller I’m going to connect him with is a friend of mine who told me over dinner Monday that he’s partnering with an MSP to possibly exhibit at next year’s CompTIA conference, hoping to steer more managed services providers into the retail and hospitality verticals. He spoke optimistically about the many deals he’s primed to win because of his bundles that marry POS with managed services.
Also, I talked with resellers who have broken away from their traditional model by adding programmers to customize software for their merchants. They’re excited to create one-of-a-kind solutions which are leading to strong sales growth and greater margins.
Contrast that with this reseller who told me in a Paris hallway that his business wasn’t growing at all. “I’m a POS guy,” he said. “I don’t want to do networks.” I talked with a couple other resellers who used the phrases “holding our own” and “we’re doing okay.”
Similar to what I saw outside on The Strip, we’re on the same trade show floor but worlds apart. I think it’s safe to say that every one of the 2,000+ RetailNOW attendees is concerned about the disruption our channel is facing – and unsure what tomorrow will bring – but the leading resellers are using this as an opportunity to retool their business for the better.
The concluding slide of my Wednesday morning RetailNOW presentation “18 Ways Leading POS Resellers Provide Superior Value to Their Merchants” implores resellers to learn, adjust, adapt, make mistakes, and get better. You have to continually try, test, and measure new products and services to determine what works best for you and your merchants.
Just like the streets of Vegas, you’d better move forward or you’re going to get run over.