Legalities of being the middle man

[timmyb]

Hi now im approaching 30 i realised my dream of starting a business after finishing uni before 30 is more than rapidly approaching, so this year is the year for me to start a business.


My concept is this:

I'd like to produce a site that connects 3rd party sellers to the public. So a member of the public would purchase an item from my site, the monies would go into my account, the seller would dispatch the item from their address by recorded delivery and then at the end of the month, i'd release the monies to the seller and take a small commision for myself.

My question is this:

Does this business model sound viable?

I'm worried about worse case scenerio if there was a dispute between a seller and a buyer, whether I as the middle man would be held responsible. I dont want to employ a ebay style points system for sellers as I expect my sellers to be of high calibre and i think it would only reduce the confidence in my site if i did so.

I'm also concerned how i'd go about working out what tax i'd pay, as in effect the money i would hold would not be mine..though i can go to an accountant for this type of advice

Any help would be great, and thanks shell! this site looks brilliant, with lots of useful advice :)

Tim

btw i know this sounds like an ebay type site, but its much more focused, and its also not an auction site

[nickthomas365]

Hi Tim,

Legalities aside, are you talking about a set-up similair to B2B protals?

Not sure if you would be interested, but an old colleague of mine was once toying with the idea of something like wantitfoundit.com

Buyers essentially linform you of what they want, you source it - buy it and take a cut.

Perhaps that would wit well with your model?

All The Best,

Nick

[jasper123]

Tim,

it may be worth looking at becoming an affiliate portal for certain products where you take a cut of profits instantly. The biggist issue would be a sellers cash flow which by waiting for a month before you give them their money greatly ristricts an SME cash flow.

[timmyb]

Hi Jasper,

Thanks for your reply

I've not heard of affilate portals so shall look this up,

I totally understand that for a small business that this restricts their cashflow, i guess the only reason i suggested keeping the monies til the end of the month was to help protect the buyer, should they be unhappy with the purchase or any disputes.

If being the middle man did not make me responsible for the goods then I would of course pass on the monies to the seller straight away.

As mentioned this is a worst case scenerio, which ofcourse i hope would never arise.

Nick - I'd be happy to discuss that idea at a later date, i tried sending you an email but you have a setting turned to stop people emailing you :(

[m8internet]

In effect you are the retailer, so the customers contract is with you
If the goods, product, and/or service is faulty then it will be returned to you
Returning this back to the supplier could be a serious issue for you, unless you are registered as a reseller with them
In many cases the resellers only receive a set rate for product returns, usually no more than 75%
For those reasons I would avoid this method

As above, start off with affiliate links and create a website that updates regularly and offers something unique

[nickthomas365]

Hi Tim,

Apologies - i have yet to get to grips with the full workings of Shell.

Feel free to give me an e-mail through;

nick.thomas@liquid-cube.co.uk

Would be more than happy to discuss

Many Thanks,

Nick

[timmyb]

Hi m8internet

I'm in effect providing a platform for them to sell on though, as they wont actually have a way of selling their products elsewhere. I want to give people a helping hand, but want to avoid having to keep their products in a warehouse.

I understand that being a retailer id take on the responsibilities of what i'd sell, but was hoping that i could perhaps draft up terms and conditions that would state i am an intermediary, maybe thats not possible if I take the monies from the buyer..

thanks for all the responses by the way :)

[m8internet]

Sadly that is not the way the law would look at it, as you would in effect be the retail contact for the customers and so their contract of sale would be with you

This is why some companies select their resellers and agents quite carefully, some with really bizarre requirements!

Think of it like a McDonalds restaurant
The are all branded the same
McDonalds own the property, fixtures, and fittings
The franchisee hires the staff and takes the money
If you have a complaint, then McDonalds send it to the franchisee who then respond directly to you