If you want to start an online business, one option is to sell products via a third party. This article explains third-party selling, how it works, and the key ideas of this sales approach. We also outline the laws that apply to third-party selling in Italy.
What’s in this article?
- What does “third-party selling” mean?
- How to start selling online via a third party in Italy
- What are the costs of third-party selling?
- Regulations governing third-party selling in Italy
What does “third-party selling” mean?
Third-party online selling enables a business to sell products without holding them in inventory. When a customer makes a purchase, the business orders the product from a third-party supplier who then ships it directly to the customer. This business model is also known as “drop-shipping” and allows the seller (i.e., the business using third-party sales) to avoid managing a warehouse and handling product shipments.
For instance, a customer makes an online purchase from an ecommerce platform; the online store doesn’t physically stock the product but acts only as an intermediary. The supplier is responsible for packing and shipping the product to the buyer as well as handling the warehouse management.
Advantages of third-party selling
Selling online via a third party offers benefits for the seller, supplier, and customer.
Advantages for the seller
The initial investment is low, as the seller does not need to manage a warehouse or pay up front for the products. This also reduces the risk of debt and unsold inventory. Furthermore, the seller saves time because the supplier handles all logistics and inventory management. Another benefit is that the seller can operate their business either through their own ecommerce website or by using marketplaces and online auctions.Advantages for the supplier
The intermediary handling the supplier’s products takes care of the marketing strategy to promote the online store and attract customers, allowing the supplier to grow its online presence without needing to invest in advertising.Advantages for the customer
The third-party online sales model offers customers a wide range of options, giving them access to a variety of products from suppliers worldwide.
Disadvantages of third-party selling
Along with the clear benefits of drop-shipping, this system also comes with some drawbacks, such as:
Supplier reliability
When selecting a supplier, it’s important to assess all factors carefully to prevent issues, such as errors or shipping delays.Control over product quality and price
Keeping control over details—such as product quality and pricing—can be challenging, as businesses that rely on the third-party sales model depend on suppliers for sourcing products.Initial profit margin
While the initial investment is small, profits during the early stages also tend to be low. Marketing expenses and the cost of purchasing products must be deducted from the price paid by the customer. To run a profitable business in third-party sales, you have to collaborate with multiple suppliers and build a large customer base.
How to start selling online via a third party in Italy
If you want to start selling products online through a third party in Italy, you should follow four key steps:
- Start the business
- Select a sales channel
- Identify the products
- Choose the suppliers
Here are some details about each of these steps:
Starting the business
The important steps to start selling online via a third party are:
Obtain a value-added tax (VAT) number
To sell online through third parties in Italy, you need to officially start a business. Then, you need to get a VAT number with the Classification of Economic Activity (ATECO) code 47.91.10, which refers to “Retail trade of products via the Internet.”Get listed in the Business Register
To register in the Business Register, you must submit a Comunicazione Unica d’Impresa to the Chamber of Commerce for the province where your business is based.Register with the Italian National Social Security Institute (INPS) for Businesses
Registering with the INPS for Businesses is required for businesses that deal in goods (including third-party sales), services, or tourism. You can submit the Comunicazione Unica d’Impresa to fulfill all the administrative requirements for the Business Register and the INPS and to obtain a VAT number.Submit the Certified Notice of Business Start (SCIA)
You must present the SCIA (Segnalazione Certificata di Inizio Attività) at the One-Stop Business Advisory Center (Sportello Unico per le Attività Produttive, or SUAP) in the municipality where you want to establish the business’s registered office.Select a tax regime
It’s a good idea to consult with your accountant, as they can assist you in selecting the tax regime that best fits your needs.
Selecting a sales channel
To start selling online via third parties, you can either create your own ecommerce website or begin selling on existing marketplaces. The latter option involves just a few steps. In most cases, marketplaces allow you to sell freely—only paying a monthly fee, a commission on sales made, or both.
If you’re considering starting a third-party sales business, another important factor to take into account is your payment service provider. Selecting the right provider is important for managing payments efficiently and quickly, as well as for offering the most suitable payment methods for your business type. With its Optimized Checkout Suite, Stripe Payments lets you accept payments globally, both online and in person; boost conversion rates; and ensure compliance, saving thousands of hours of technical work.
Identifying the products
At this stage, you need to decide which products you want to sell online through third parties. You might wonder what to consider when making this choice or how to select the right products. Here are some tips:
Conduct market research
Analyze purchasing trends using tools such as Google Trends; study customer needs to identify growing sectors; and assess demand to avoid products with low interest.Assess the competition
Research how many sellers already offer the products you want to sell. Highly popular items with a lot of competition might not be the best option. Identify an underdeveloped market niche where you can stand out and attract attention. Analyze competitors’ prices, customer reviews, and add-on services.Analyze product prices
Ensure the products provide a good profit margin by taking into account the costs of purchasing, shipping, and management.Offer quality products
Select reliable suppliers to ensure high-quality products with positive reviews. Offering quality products minimizes the risk of returns and enhances customer satisfaction.Select products that are easy to deliver
Choose lightweight, durable products that are not subject to strict regulations. Simplifying logistics helps lower costs and enhance the overall shopping experience.
Choosing suppliers
Selecting reliable suppliers is arguably the most important aspect of running a third-party sales business. The success of your business depends on it. To choose the best suppliers, consider those who:
- Have been in the market for a significant period and possess experience in their industry
- Enable clear and timely tracking of deliveries
- Provide simple and efficient return processes
- Accept multiple payment methods that align with your preferences or those of the ecommerce platform you use
- Do not charge extra costs or fees for joining their third-party sales program
- Are based in Europe, as this increases the likelihood of faster shipping times
- Can ship to the countries where you plan to sell, including outside of Europe (if you can accommodate longer shipping times)
What are the costs of third-party selling?
You might wonder what costs are involved in starting a third-party selling business. Consider the following expenses:
- Market research: Identifying products to sell
- Platform: Setting up an ecommerce website or selling through a marketplace
- Administrative costs: Obtaining a VAT number, hiring an accountant, and registering in the Business Register
- Marketing: Promoting products and growing your customer base
- Travel: Meeting suppliers
- Payment management: Obtaining payment service providers
Regulations governing third-party selling in Italy
Starting a third-party selling business in Italy requires you to follow several key regulations. This ensures legal compliance and provides safeguards for your customers. It’s important to understand the relevant laws so you can run your business professionally and avoid penalties.
In general, third-party online sales are governed by the same regulations as traditional ecommerce sales. Therefore, you must comply with the same rules for VAT application and ecommerce invoicing.
Here are the main regulations that apply to selling online through a third party:
Italian Consumer Code
The Italian Consumer Code (Legislative Decree 206/2005) governs the relationship between buyer and seller, establishing specific obligations for distance selling. The main factors to consider include:
- Right of withdrawal: Customers have the right to return a product within 14 days of receipt, without needing to provide a reason. The seller must refund the entire amount, including the original shipping fees.
- Transparency: Information about the price, product details, delivery times, and return conditions must be clearly displayed on the website.
- Legal guarantee: Every product sold must come with a minimum two-year guarantee against conformity defects (Consumer Code, Article 128 et seq.).
Ecommerce Directive
Directive 2000/31/EC on electronic commerce—which was adopted in Italy through Legislative Decree 70/2003—sets guidelines for online sales, including those made via third parties:
- The seller’s details—including company name, address, contact information, and VAT number—must be displayed.
- Online advertising and commercial communications must follow specific rules.
- Businesses must fulfill certain requirements for concluding electronic contracts, including the customer’s right to receive confirmation of the order placed.
Product safety legislation
EU Regulation 2023/988 of the European Parliament and Council states that anyone selling products online, including through third parties, must adhere to product safety requirements, report unsafe products, and ensure there is a responsible economic operator (such as the manufacturer or their representative) within the EU. It also outlines the responsibilities of manufacturers, importers, and distributors.
Privacy and personal data protection
In Italy, running a third-party sales business involves collecting and processing personal data, which is governed by the General Data Protection Regulation (GDPR) in EU Regulation 2016/679. Online stores and suppliers must comply with the GDPR. The key obligations include:
- Informing customers about how their data is collected and used through a specific Privacy Policy
- Obtaining explicit consent for specific data processing activities, such as marketing
- Ensuring the protection and security of the collected data
- Granting customers the right to access, modify, or delete their personal data
Invoicing and VAT
Even in third-party selling, VAT and accurate invoicing are important:
- If the seller is located in Italy and their total intracommunity distance sales within the EU are less than €10,000, they must charge Italian VAT to private EU customers, unless specific exceptions under the One Stop Shop (OSS) regime apply. However, if the total sales exceed that threshold, the standard tax rule applies based on the country the goods are sent to.
- For sales to customers outside the EU, VAT exemption is typically applied with the wording “Nontaxable transaction, Art. 8 DPR 633/72.”
- You must issue an invoice or receipt for each sale to Italian customers, except for exemptions in B2C ecommerce transactions with private individuals (unless the customers specifically request an invoice).
The content in this article is for general information and education purposes only and should not be construed as legal or tax advice. Stripe does not warrant or guarantee the accurateness, completeness, adequacy, or currency of the information in the article. You should seek the advice of a competent attorney or accountant licensed to practice in your jurisdiction for advice on your particular situation.