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A Process To Participate in Marketplaces in the United States

Tags :
#what is dropshipping
#most popular markt places
#how to participate in a marktplace
#who charges sales tax in a marketplace

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Nashib UmerWriter : Nashib Umer Kel RaeVoice : Kel Rae United States 25713 Listens


About a Marketplace:

A marketplace is an online bazaar a community selling place which gives access to the seller and buyer to participate buying and selling goods online.


We will discuss this later in the program with our guest about the features and how can a US and Non-US Resident can participate as a vendor or a buyer.


Let me say a bit about DueClixVoiceFM before we start our program. DueClixVoiceFM is a cloud radio and you can provide your programs that must contain unique knowledge and message for our users and listeners.


Because, sharing an experience and knowledge is one of the best ways to give back to the society.


We welcome to our guest Nashib Umer who is the CEO of InfoTaxSquare.com in our studio and we will ask him about the Marketplace and its essence in the digital world to increase sale and minimize marketing expenses.

What is the idea behind a marketplace and which are the mostly used marketplaces online today?

I thank you Kel Rae, for having me on DueClixVoiceFM to share my knowledge about a marketplace which is one of the most dynamic concepts and a complete business solution for a person who is willing to do business online to capture the attention of the maximum interested buyers across the country. And, I will try to share every important area for your listeners about a marketplace.

What is the concept of drop shipping and how does a vendor and seller get a benefit from a drop-shipping concept?

Concept of Drop-Shipping:

Again, the concept is old but the trend is changed and let me share a little history of drop shipping which was basically introduced before the internet was introduced in the sixties and seventies.

Mail order companies used to send a catalog or a small booklet to users to order a selected item from the catalog through phone calls. When the competition between large companies arose, they started opening fulfillment centers to speed up the delivery to attract more clients.


Later it turned to FBA Fulfillment Amazon warehouses. It is same as a search engine, the original idea was not coming from Google and Yahoo rather it was an old tail, but google and yahoo presented and promoted in a better way than the person who actually came with the original idea of a search engine. The most prominent names in a mail order companies were Sears and J.C. Penny.


History and Idea Behind a Marketplace:

The idea is old and existing like a bazaar where various products used to offer at one place to a large crowd with attractive deals.

The trend has changed, but the ideology is still same, and now a particular crowd has moved on the internet and the market and choices are vast compared to an old fashioned bazaar.


Let me explain a marketplace in a sentence, a marketplace is an online portal where various sellers offer various types of retail and wholesale items at a fixed price. And, both a seller and a buyer follow the guidelines of a portal's provider to stay in good standing.


Most Popular Market-Places:

The most popular marketplaces are Amazon, eBay, Shopify and Etsy.


How do a Seller and a buyer get benefits from dropshipping process?

Generally, a seller or a vendor gets benefited by saving:

  1. Advertising expense
  2. Business development expense
  3. Avoid opening a bricks-and-mortar store
  4. Transportation expense
  5. Avoid filing sales tax complications and chasing filing different deadlines.
  6. Avoid learning each state taxation rules.


Whereas, generally a buyer gets benefited by:

  1. Fast delivery by a nearest dropshipper which is arranged by a seller.
  2. Attractive deals from different sellers.
  3. There is no threat of non-delivery by a vendor because a market place assumes the assurance for a delivery.
  4. There is no return and refund issues with a vendor wheather, goods were either delivered on time of did not meet the standards.
  5. A buyer is not responsible to report use tax in income tax return, end of the year because the sales tax has already been collected by a marketplace on behalf of the taxing state.


How does a seller get registered with a marketplace to offer products in a marketplace?

Globally, there are many marketplaces and each marketplace has its own unique process to register and a few common information which are generally collected from a vendor, I am going to mention.


  1. Sign up with each marketplace and submit documents that are requested by a marketplace management.
  2. Provide contact person information for a future correspondence.
  3. Sales tax registration is generally required to sign up with a marketplace. It is used to buy taxable items and selling items to an end user.
  4. Provide proof of identification such as copies of a driver's license, passport or any other valid document.
  5. Bank account information to transfer funds.


What is the flow of sales tax collection from production to post production, which is one of the key features of an e-commerce business and an understanding about sales tax flow is vital to avoid complications to comply with the taxing authorities?

It is important to have an understanding with each marketplace who will receive sales tax on taxable items from an end user and I will share a flow of sales tax collection and its distribution.

  1. A manufacturer does not collect sales tax unless, the manufacturer sold taxable items to a direct user.
  2. A wholesaler does not collect sales tax unless, the wholesaler sold taxable items to an end user.
  3. A retailer collects sales tax from an end user rather than a manufacturer or a wholesaler.
  4. A sales tax collector is responsible to collect sales tax from an end user and pay collected sales tax to the taxing authorities.


Where do you register a company since the internet clienteles and deliveries are across the country?

Fulfillment center or shipping point is a key to decide the origin of the state, whether a company will be registered in one state or in a multiple. Let me explain to help you to decide the origin of a company with a few examples:


Example One :

A person lives in New York with a fulfillment center and all deliveries are shipped from New York only across the country. A business name will be registered in New York only regardless selling and shipping to across the country.


Example Two:

A person lives in New York, but that person has multiple fulfillment centers in different states. In this scenario, business name will be registered in every state where that person has a fulfillment center.

Is business name registration necessary to join a marketplace?

Business name registration is not required to register in a marketplace rather you can simply sign up with a marketplace under your legal given name and marketplace may ask you a social security number instead of the federal identification number which is issued issues by the Internal Revenue Services under a legal entity.

A legal entity includes;

  1. Corporation
  2. Limited Liability Company and
  3. Partnerships


What are the responsibilities of a vendor to maintain when selling a marketplace?

It is a key question to prevail a sell on different marketplaces. Generally, a marketplace has very strict guidelines to maintain your account in a good standing.

It has been observed upon termination or taking off temporary or permanent, of an account of a vendor from a marketplace involuntarily derailed a vendor from everywhere to nowhere. It has also been noticed that such issues may take months or forever to resolve.

Even though, a marketplace apparently looks a great facility to develop a business, but same time it always keeps you in a fear to go forever, so it is highly recommended to a seller to always keep an alternative of a marketplace.

Let me highlight a few points which may derail or take your account off from the track and you end up on a forever bar from marketplace to do business:


  1. Review each marketplace policies very carefully to follow their protocol. Because, one small mistake may involuntarily and indefinitely cease your account by a marketplace. The internet is with a full of stories from marketplace victims.
  2. Maintain quality of your products and deliver an order on time as per your commitment that you have mentioned on your marketplace wall.
  3. Do not ever sell permanent and temporary prohibited products that may bar you from selling in a marketplace again.
  4. Keep checking inventory on shelves. Offering an empty shelf inventory may become a cause to close your account forever from a marketplace.
  5. Misleading of personal information may permanently terminate your marketplace account.


Can a Non-US-Resident also participates in Marketplaces in the United States?

A Non-US-Resident is eligible to participate in a marketplace, regardless of residency status. The only hurdle which a Non-US-Resident may face opening a business checking account without being presented in the United States.



I thank you Kel Rae for having me on DueClixVoiceFM and let me conclude this program with a few tips for my listeners:

1. 100% Dependency on a third party is not a wise way to set your envision.

2. I recommend to sell your products on your portal as well.

3. Depend on a marketplace just to generate additional revenue only..

4. Finally, It is a compulsory condition for a successful business. Be an independent rather than a dependent.

Frequently Asked Questions



Change Company Status from Corporation to LLC or LLC to a Corporation

You have to check with the secretary of state, if your state allows changing your existing company structure from one entity to another entity