Your third party marketplace needs clear terms

//Your third party marketplace needs clear terms

Selling online has become so common lately that businesses need to put a lot of effort into their online store before customers will notice them. Some smaller retailers choose to bypass the fuss and effort of building their own online store entirely, and instead ask to piggyback on another company’s established marketplace. A third party marketplace like this is often good for both parties: the third party gets access to a much larger audience; while the marketplace owner gets a fee for supporting them. But there are many moving parts to a relationship like this, and anyone interesting in running a third party marketplace will need to consider the terms they have with their third party sellers very carefully.

Third party marketplace terms

We have spoken before about what to consider when drafting legal notices for an online store. Your third party marketplace will likely have similar concerns, but how you handle them will differ depending on whether your marketplace offers sales from:

  • third party sellers only (e.g. Gumtree); or
  • your own store, plus third party sellers (e.g. Amazon).

It is important to understand that in these examples, a third party seller is not a reseller of your goods. Instead, they sell their own goods on a website that you control.

Third party sellers only

If you cater to third party sellers only, your marketplace is essentially providing a service to two classes of customer: the buyers and the sellers. Your business is less of an online store, and more of a platform for others to buy and sell. We’ve written before about legal notices for an online marketplace, but at its core you would need to consider whether your marketplace:

  • is free to use for buyers, sellers or both;
  • is involved in the transaction between buyer and seller at all; and
  • offers any service to any party associated with the transaction between buyer and seller (e.g. delivery; payment; escrow).

Your own store, plus third party sellers

If you sell your own goods to customers, and allow third party sellers to sell to them too, your marketplace is essentially performing two functions: it provides goods to your customers, and a service to your third party sellers. Your business would cover all of the main elements of an online store, but would also have to handle how your third party sellers interact with your customers. Your third party marketplace terms would need to cover:

  • the agreement between yourself and the third party seller, describing your relationship and the fee you will charge sellers for selling on your marketplace;
  • the rules between yourself and the third party seller, describing how third party sellers must act on your marketplace (e.g. rules for trading; returns processes); and
  • the disclaimer between yourself and your customers, describing where you are not responsible for a third party seller’s actions.


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