Reseller Model: Definition and How It Works
A reseller purchases products or services and resells them in their own name to end customers, usually without altering them. In the reseller model, the selling platform itself becomes the contractual partner of the customers and is responsible for billing, taxes, and liability. Profit is generated from the difference between the selling price and the purchase price.
At a Glance
- A reseller purchases third-party products and resells them under their own name. This makes them the legal seller and holds them liable.
- Unlike affiliate marketing, a reseller earns money from reselling, not from a referral commission.
- This model works well with digital products because it eliminates the need for inventory.
- On platforms for digital products, the reseller often handles sales tax, invoicing, and fulfillment—in other words, acts as the merchant of record.
How does a Merchant of Record work?
With a Merchant of Record, customers legally make their purchases from the MoR, not directly from the creators. The MoR collects the payment, reports the sales tax, issues the invoice, and pays out the net proceeds. Chargebacks, refunds, and tax filings are also handled by the MoR.
In the process, the MoR is responsible for:
- payment processing (credit card, SEPA, PayPal, Klarna, and other methods),
- the reporting and payment of the correct sales tax of the buyer's country,
- the legally compliant invoice,
- the payment of the net proceeds to the creators,
- Chargebacks, refunds, and tax filings.
How does the reseller model work?
In the reseller model, a platform takes on your product and sells it to your customers under its own name. The customers enter into a contract with the platform, not with you. The platform issues the invoice, collects the payment, and pays you the proceeds. You deliver the product and handle the content and customer support.
What other sales models are there besides the reseller model?
In addition to the reseller model, there are direct sales, marketplaces, and the affiliate model. They differ in terms of who sells to customers and who handles the transaction.
Model
Salespeople vs. Customers
Role of the Creator
reseller model
the platform (reseller)
delivers the product, receives the proceeds
Direct Sales
the Creator
sells and handles billing on its own
Marketplace
the Creator
sold through the intermediary platform
Affiliate Model
the Creator
Third parties promote the product in exchange for a commission
Practical Example of a Reseller Model
Mia sells an online course through a platform that operates on a reseller model. Legally, her customers purchase the course from the platform, not from Mia. The platform issues the invoices, remits the sales tax, and pays the proceeds to Mia. Mia provides the course content and supports her participants.
ablefy classification
At ablefy, the reseller model is one of two sales options. Legally, ablefy sells through its subsidiary namotto and handles sales tax, invoicing, and fulfillment. Those who sell under their own name remain the sellers themselves.
Common Misconceptions
- "A reseller modifies the product." Usually not. Resellers typically resell the products as-is.
- "With the reseller model, I lose ownership of my product." No. You retain ownership of the product; the platform only receives the right to resell it.
- “The reseller model and the merchant of record are two different things.” On platforms for digital products, they are one and the same: The reseller is legally the seller and thus the Merchant of Record.
Frequently Asked Questions About Sales Platforms
What is the difference between a reseller and a wholesaler?
A wholesaler sells to other retailers (B2B). A reseller sells to end customers, often in the B2C sector.
How does a reseller make money?
The difference between the purchase price and the selling price—the margin. With platforms, a fee per transaction may be charged instead.
Is the reseller model suitable for digital products?
Yes. With digital products in particular, there's no need for inventory management, and the platform can handle sales tax and order fulfillment.
Is a reseller liable to customers?
Yes. As a seller, the reseller is liable to customers, for example, under the warranty.
