You have undoubtedly heard of and likely used sites like eBay and Airbnb. These are two high-profile, highly successful international online marketplaces. They link consumers with goods and service providers, allowing consumers to browse and select from the providers that meet their needs. Online marketplaces are becoming increasingly popular and could be an excellent opportunity for your business or a great place to start out. If you want to set up your online marketplace, here are three key things you must consider.
Legal Relationships
To set up a marketplace, you need to have a good grasp of the following:
- what you are trading;
- why you are trading; and
- who you will be trading with.
A large part of your business will involve establishing contractual relationships between sellers and buyers. If you only provide a marketplace, you will not want to be a party to the specific agreements formed between the buyer and seller, such as the terms of delivery or the issuing of refunds. You need to make this clear in your business terms and conditions. You do not want to be liable for any agreement between the buyer and seller or any failure of the buyer or seller to meet the agreement they have struck.
If your marketplace is also an app, your terms and conditions must outline how your marketplace intersects with any usage rules or additional terms and conditions implemented by app hosts such as Apple or Android.
Money Flow
It is critical to determine how you, as the marketplace operator, get paid. It is also important to be clear on how payment flows between the buyer and seller. You need to establish when you will get paid and how your customers will pay you. This is one of the most important things to get right because it will form the basis of how your marketplace operates.
Questions you will need to ask yourself are:
- will the sellers pay you a fee to register on your marketplace?
- will any fee be a one-off fee or an ongoing subscription?
- will you receive a commission from buyers when they purchase a product or service through your website?
You need to address these issues in the business terms and conditions.
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Intellectual Property
There are intellectual property issues that you must address when setting up an online marketplace. You will have your intellectual property, such as logos and other branding, uploaded to the marketplace. Also, your users can post content.
You need to ensure that your customers understand that you have rights to:
- use;
- edit; or
- remove
any content they post on your marketplace.
The terms and conditions on your marketplace should clearly state that the material on your marketplace is owned or licensed by you. Use of the marketplace by your customers does not grant them rights to reproduce, use or modify any trademarks, logos or any other material without your express permission.
Key Takeaways
Online marketplaces are a continually growing sphere of trade that you can harness to grow. You could even begin your own business with one. Once you have a good idea of what you want to offer through your marketplace, you will need to consider important legal issues such as how money will flow, including how you get paid and protect your IP.
If you need help or advice setting up an online marketplace, LegalVision’s experienced e-commerce lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
Three key things to consider are your legal relationships with others, such as the buyers and sellers, how the money will flow and protecting your IP.
Your terms and conditions must outline how your marketplace intersects with any usage rules or additional terms and conditions implemented by app hosts such as Apple or Android.
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