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GLOSSARY

Merchant

A company or individual who sells services or goods


Generally speaking, a merchant is a company or individual who sells services or goods. An ecommerce merchant is someone who sells only over the Internet.

Every merchant (wholesaler or retailer) has a duty of care to the customer. That is due to the knowledge of the products he has for sale. Moreover, they are responsible for the store’s inventory, but more so for controlling the whole financial process. An online merchant usually works with an acquiring bank to apply for and receive a merchant account. That’s because every payment made with a credit card will involve the transfer of funds to an account of this kind. Merchants have full responsibility for the transactions that occur within their account.

The Merchants you create in Commerce Layer is the structure of fiscal representation you decide to have. It is one of the key elements of a Market. It is defined by two simple pieces of data: a name (the internal identifier for this resource within your organization) a billing address (the one that will appear in this specific merchant invoices). Likewise, your merchant account information provides all the credentials needed to set up a Payment Gateway.

Examples

When you create a market on Commerce Layer you have to choose its merchant. Actually, this is a one-to-one correlation. That means you can associate with your market only one merchant. This is usually enough to start selling. But there are some cases when, according to your needs and business model, you have to set up more than one merchant. So, define more than one market.

Let’s look into some specific cases.

Distance selling

When you sell goods or services over the internet, it’s very likely that you’re going to sell (and deliver) across different countries. Consequently, you need to pay attention to your sales volume, to be sure you respect the fiscal rules of each country.

For example, each country sets national VAT registration thresholds to help reduce the administrative load on companies and to encourage them to start trading across Europe. If a foreign company is selling below these thresholds, it does not need to VAT register. But if you exceed one of these thresholds, you’re required to have a fiscal representative in the target country. That means you have to set up a new merchant.

You can download a list of EU annual VAT thresholds (updated to April 2017) here or check them on VatLive.

Different distributors

Even in the absence of such mandatory fiscal rules, you might need to partner with local distributors. You can benefit from their unique expertise and knowledge of their own markets. Let’s suppose your business model includes different sellers, companies or distributors. Hence you have to create a Merchant for each one of them.

Multi-vendor marketplace

In a multi-vendor setup, customers can choose from several vendors that are selling on your website. Good examples of this kind of marketplace are Amazon, Etsy, and eBay. They offer a multitude of tiny shops run by several individuals or companies. In this case, each one of these must have its own fiscal representative.

That’s why your organization needs to have a merchant for every vendor if you want to create a multi-vendor marketplace on Commerce Layer,

Dropshipping

A completely opposite approach to the multi-vendor marketplace is the so-called dropshipping. In a common dropshipping setup, your store sells products handled by third parties. In other words, this is a retail fulfillment method where a store doesn’t keep the products it sells in stock. This means you have to take care of a first step, handling the order-process on your website. But then forwarding the order to the third party that actually ships the goods to the customer.

In this case, you should be the only merchant. Then you can create only one market within Commerce Layer. You don’t stock or own inventory. You simply purchase it as needed, to fulfill your orders from a third party (usually a wholesaler or manufacturer).