Information about Reseller

A reseller is a company or individual that purchases goods or services with the intention of onselling them rather than consuming or using them. This is usually done for profit (but could be onsold at a loss). One example can be found in telecommunications, where companies buy excess amounts of transmission capacity or call time from other carriers and resell it to smaller carriers.

Another example of this occurs on the Internet where individuals or companies act as agents for ICANN accredited registrars. They either sell on commission or for profit and in most cases, but not all, the purchase from the registrar and the sale to the ultimate buyer occurs in real time. These resellers are not to be confused with speculators, who purchase many domain names with the intention of holding them and selling them at some future time at a profit. Resellers, by the very nature of their business are retailers.

Another common example on the Internet is in the web hosting area, where a reseller will purchase bulk hosting from a supplier with the intention of onselling it to a number of consumers at a profit.

The Distinction between Resellers and Agents

When deciding how to sell their products, many manufacturers have the choice between setting up a reseller network and an agency network.

• Under a reseller agreement, the intermediary takes title to the product before selling it on to the end-user. The financial benefit to the intermediary comes from the difference between cost price and selling price, the latter of which is usually determined by the reseller.
• Under an agency agreement, the intermediary does not take title to the product. The price that the end-user pays is set by the manfacturer, not by the agent. The financial benefit to the agent is the sales commission that the manufacturer pays out, typically expressed as a percentage of the purchase price.

A critical difference for any manufacturer hoping to sell to an after-market is that, under the reseller agreement, the manufacturer has no innate right to know the location of the end-user. Under the agency agreement, the manufacturer will know where the end-user is based, quite possibly because the manufacturer shipped the product direct to the end-user's address.