Reselling Connectivity: What Makes a Great Reseller?
Hardware manufacturers resellers are no longer limited to one-off device sales where the margins may be slim. Advancements in IoT connectivity means that many of them can now easily move from selling products to selling services and convert their one-off sales into monthly recurring revenue.
However, not all manufacturers and resellers are well positioned to benefit from reselling connectivity. For one, there are scenarios where the connected devices don’t require bespoke connectivity solutions or they don’t consume enough data to generate significant revenue. Likewise, if you’re a reseller who doesn’t sell products in bulk or the products are used locally, then a standard connectivity from a local provider might work just as well.
That said, in today’s highly connected world the need for deploying large-scale IoT solutions across different regions is becoming more commonplace. Here, we look at what makes a great connectivity reseller and how you can grow your profit margins by becoming an indispensable service provider for your customers.
When Does Reselling Connectivity Make Sense?
We mentioned a few scenarios earlier where hardware resellers may not benefit from reselling connectivity. Low sales volumes as well as low data consumption are usually good indicators that reselling connectivity might not pay off. In turn, resellers who sell items in bulk or sell equipment that consumes a lot of data have a good chance of increasing their profit margins by two or three-digit numbers.
Here are the three main profiles of hardware resellers who stand to win the most from reselling connectivity:
- Hardware/Gateway Resellers
Gateway resellers can capitalize on reselling connectivity in two major ways:
Leverage Gateway Applications
First, gateways usually imply large data consumption. You can sell the same gateway for two different applications and see a significant jump in your returns. For instance, you can sell a gateway for installing heating, ventilation and air conditioning (HVAC) systems in a hotel which may consume about 500MB of data per month. However, you can sell the same gateway to enable data streaming from street cameras and this can easily jump to 10GB of data consumption per month. Considering that the price of hardware items can go up only by so much, large data consumption means you have much more wiggle-room to make bigger margins.
Offer Bespoke Plans and Improved Troubleshooting
Second, the variety of gateway applications means that your clients will require bespoke plans. Since the product is built based on its application, it will require bespoke connectivity as well—something that a local connectivity provider may not be able to provide. Here, not only will reselling connectivity be a unique value-add for your customers, but you’d be able to fully test the solution before deployment and provide support throughout the entire lifecycle. You’ll also maintain full visibility over the product performance so that you can troubleshoot issues faster.
Let’s imagine a client of yours has purchased 1,000 dash cameras from you and then loaded them with SIM cards from a local connectivity provider. When some of these devices malfunction, they go to their connectivity provider only to be told the issue is with the device itself. They come to you, but you need access to their network (which they can’t provide) in order to see the full picture and identify where the problem lies.
As you can imagine, your client is getting increasingly more frustrated as the whole troubleshooting experience takes much longer. In contrast, imagine if you sold the client both their devices and connectivity alongside a centralised connectivity management platform (CMP) which you can easily access. This will not only significantly increase the speed at which you troubleshoot and fix issues, but it will also give your brand far more credibility.
- High Data Consuming Devices
If you know you’re reselling products that consume massive amounts of data each month, then you know you stand to win big from reselling connectivity.
Some of these devices include:
Telematics has evolved drastically in the past few years. Whereas five years ago a telematic device may have consumed 1-2.5MB of data per month, today they consume double the amount. Not to mention the increased focus on leveraging big data and real-time data streaming. Any reseller of trucking devices, dash cameras or any other telematics sensors stand to benefit from reselling connectivity services.
Electronic Logging Device (ELDs) Manufacturers
The use of ELDs has grown significantly in recent years both across the U.S. and the EU as governments seek to improve road safety and reduce accidents. For instance, the U.S. Department of Transportation has legally mandated the use of ELDs in an effort to protect drivers as part of MAP-21. This means that commercial drivers are now required to log their activities and vehicle performance twice a day as part of their job.
Considering that ELDs, in general, consume anywhere between 250MB-500MB per month, ELD resellers can reap great benefits if they add connectivity to their offering as well.
Dashcams are also becoming more commonplace with transportation companies. While truckers used to be held responsible for road accidents they got involved in, dashcams today are used to record both the driver and their external field of view in order to provide factual information on what happened.
As you can imagine, video streams consume a lot of data. Dashcams are estimated to stream about 500MB to 2GB of data each month. Imagine how this data translates in revenue if all it goes through your connectivity solution.
- Devices Sold in Bulk
We mentioned that devices that don’t consume much data aren’t going to give you much incentive to resell connectivity. However, if you resell any devices in bulk then connectivity can turn out quite lucrative simply because of the economies of scale.
Imagine the following scenario. You’re reselling water meters which consume no more than 1MB of data per month. This translates into about 10-20 cents in revenue. If you sell only 10 of these per month, you’re looking at making about one or two dollars from your connectivity solution. Not quite the earnings that you were hoping for.
But, what if you were selling 10,000 or 20,000 water meters per month? Even if you only make several cents per device, you still stand to earn good money from your solution simply because of the sheer volume of devices you sell.
Set Yourself Up for Success
You may be happy with the margins you currently make from selling hardware, but if you aren’t going above and beyond to make your customers’ lives easier, you better believe that your competitors are. Not only adding connectivity services to your offers will make you stand out as a supplier, but you can also scale your business much more easily.
So, let’s recap the qualities of an ideal reseller. You’d make a great connectivity reseller if you sell gateways or hardware that consume large amounts of data. You’d also win from reselling connectivity if you sell devices in bulk or if your clients require custom connectivity plans. If any of these things apply to you, then you can use connectivity as a differentiation point between yourself and your competition.
At floLIVE, we offer everything you need as a hardware reseller to start reselling connectivity at the best rates possible and with an existing connectivity management platform at hand.