A reseller purchases goods and services from a company with the intention of selling them to others. Physical stores are resellers of various brands. A reseller does not buy a service or product for their consumption. Reseller Economic System is an economic system that supports resellers with small physical stores to increase their earnings by selling various products.

Working of Reseller Economic System

The government develops a website with a registration option for large companies as primary sellers. Another registration option is provided for resellers, such as physical stores. The only condition for resellers to join in this portal is that they should have GST registration and a verified business place. The total annual turnover of resellers should be less than 50 crores in the previous year.

A product such as a borewell submersible motor is sold by XYZ company. There are 500 distributing retail shops across the country for that company. XYZ will register on the website as the primary seller. All other 500 physical stores will register as resellers. The website will have options provided to XYZ in which they can offer cashback benefits for physical stores that cross five borewell pump sales per month. The cashback amount will be credited once all five sales bills are uploaded to the website and approved by XYZ. In addition, the physical stores can track their progress and income via their login on the website.

A unique ID is allocated to the GST holder of the physical store on the website. Now if the physical store wants to partner with other borewell company pumps, then the same unique id can be used for login for the physical store. Company XYZ or other companies will not see the details of companies associated with the physical store. A single physical shop can register with hundreds of companies simultaneously.

In the same way, the primary seller companies will have a unique id to which they can add different resellers and distributors, and details will be visible only to them. However, large companies will find running with a single login challenging. Large companies like XYZ should be able to create an additional distributor login system in which ten distributors of company products will control the 500 retail shops. So, company XYZ needs to communicate with only ten distributors.

Cashback is just one form of reward. Other forms of rewards can also be promoted. However, 10 per cent of the total value of the reward provided by the company to various resellers should be taxed to maintain the website.

The website should have multiple ways of analysing sales of each store. For a kirana store, there are small products, and the distributor is not directly from one company. A distributor from a large company gives their product to another distributor who collects products from different companies and later distributes them to other shops. So, if companies do not have a connected chain like this, it is impossible to distribute benefits to such physical stores. In such cases, the company can transfer benefits to the immediate distributors. For example, a biscuit company QWE can give benefits to the distributors and dealers. The distributor then gives the biscuit boxes to another dealer, Z, who collects biscuits from various companies and other consumer products such as soaps from different companies. So, a login should be provided to dealer Z, who collects products from different companies. Dealer Z, who supplies products to various shops, can provide perks based on the sales amount of the various shops.

Products of high value, especially above 500 rupees, have a higher probability of a hierarchical system in which large companies have direct or indirect access to reach the bottom level.

Benefits of the Reseller Economic System

Many companies have websites that sell their products or mention their products. But most companies do not care much about the distributors and resellers of their products. This platform will help companies to take care of their resellers, i.e., small businesses, to make more money from sales of their products.

Small businesses are finding it difficult to compete with large e-commerce websites. This platform will help large companies communicate and transfer some perks to businesspeople.

Legal Changes

Government should make it mandatory for all large companies to register their distributors and dealer physical shops on this platform. Small companies will automatically register, as increasing sales is essential for all companies.

Every large company with above 1000 crore annual turnover should be asked to spend a part of their profits on providing additional benefits to the sellers of their products.

One per cent additional tax should be imposed on all online transactions that do not include in-store purchases. For example, if a customer buys a product from the retail store’s online website, a 1 per cent additional tax would be applicable. However, if they purchase the same product as in-store purchase, 1 per cent would not be applicable. Cash payment and card transactions via specially provided POS machines are part of the in-store payment and will not be taxed additionally. In addition, UPI, bank transfer, and card payment via payment gateway are part of online transactions. As a result, E-commerce items are made costly, whereas digital transactions made at physical stores directly are cheaper. This will ensure that many people will visit physical stores, and such stores will get more attention from larger companies. The reseller economic system will get an additional boost as purchases from brick-and-mortar stores increase.

How to Fund the Reseller Economic System?

Ten per cent of total cashback received by physical shops can be charged as tax. The government also does not need to run a website directly. An Indian company like TCS can be granted the rights to run the website, and they can take the 10 per cent received to fund the website. Since the government directly backs the website, the system would always be safe for resellers and companies.