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E-commerce brands face many challenges when expanding to new markets. Some of these challenges may include:
- Government regulations and policies that favor local companies
- Customer awareness and general distrust of new brands
- Managing local payment methods and general customer purchase behavior
- Restrictions by local e-commerce platforms (Shoppee, Lazada) that restrict access to local companies
Despite these challenges, e-commerce companies are eager to expand to new markets, especially Southeast Asia, which has a huge e-commerce market opportunity. Indonesia alone is forecasted to reach a USD 95 Billion market value by 2025.
The easiest way for businesses to grow and take advantage of these market opportunities is to partner with a Merchant of Record (MoR).
What is a Merchant of Record (MoR)?
A merchant of record (MoR) is a business that acts as the legal seller of goods and services on behalf of another business, typically an e-commerce company, in a particular country or region.
What this means is that a foreign e-commerce company can sell its products in a market without having to be physically present in that market.
Why does an e-commerce business have to be physically present in a market to sell?
- Legal entity: In order to sell products on many of the e-commerce platforms in Southeast Asia, it is required to have a local legal entity. This is where an MoR can help.
- Payment method: Local customers use payment methods that are usually not compatible with the country of origin of a foreign e-commerce company. Using an MoR removes this hassle and the MoR company processes the international transfer directly to your account.
- Product registration and compatibility: Some products need product registration before they can be sold. Having a MoR facilitates the product registration (FDA) with the local authorities
Learn more about running a successful e-commerce business in Southeast Asia
Advantages of using a Merchant of Record
The biggest advantage of using a Marchange of Record to expand a business is the speed of entry. A Merchant of Record can support a foreign e-commerce company with the following from day 1:
- Payment processing: MoRs can process payments from customers in a variety of currencies and payment methods.
- Tax compliance: MoRs can help e-commerce businesses comply with complex sales tax and VAT regulations in different countries.
- Chargeback management: MoRs can handle chargebacks on behalf of e-commerce businesses, saving them time and money.
- Customer support: MoRs can support e-commerce customers, answering their questions and resolving any issues they may have.
- Compliance: MoRs can help e-commerce businesses comply with a variety of regulations.
How does a Merchant of Record work?
- The end customer places an order on a local e-commerce platform, and the order is received by the MoR
- The MoR buys the product from the e-commerce company
- The MoR resells the products to the end customer
- The end customer pays in their local currency and all payments are handled by the MoR.
Frequently Asked Questions about Merchant of Record Services
Do I control my brand if I use a MoR?
The MoR is the legal entity representing the e-commerce company. The stock, the brand, the marketing, and the pricing are handled by the e-commerce company.
Can I control my customer service?
By using a MoR you can hire people under the MoR company and manage the customer relationship in the local language or let the MoR company handle the relationship on your behalf.
What is the difference between a merchant of record and a seller of record?
A seller of record (SoR) and a merchant of record are almost similar. The main difference is that an SoR is the authorized representative for the foreign company, and is the official seller. In addition to the responsibilities of an MoR, the SoR manages a stock on behalf of the e-commerce company and is the legal seller in the eyes of the customer.
An SoR usually works on a profit-sharing model. The SoR will handle the sales process, the invoicing, the shipping, and the customer relationship.
- Manage orders, inventory, and last-mile shipping and delivery.
- Legally responsible for the quality of the product
- Handle the full sales cycle and product returns
- Provide support and manage the pricing, marketing, and platform channels
- Record all bookkeeping and financial transactions
Do I need to come to Indonesia or SEA to set up my e-commerce business?
No – all agreements and setup can be done online
How long does it take to use a merchant of record or seller of record?
Once the agreement is signed the e-commerce company can start to operate in a few weeks.
How much does it cost to use a merchant of record or seller of record?
Depending on whether you use an MoR or SoR and if it involves a profit sharing agreement, the common fee is as follows:
- Sharing profit or percentage on each transaction
- Set up fee with each platform where you want your brand to be placed
How can Emerhub accompany me?
Selecting a trustworthy partner for MoR and SoR services is pivotal for businesses eyeing global expansion. Emerhub, with its years of experience in international business solutions, stands out as a reliable partner.
- Setting the entity
- Marketing
- Platform registration
- Tax and custom management
- Product registration (FDA)
- Payment method registration and payment registration
- Bookkeeping and financial report
- Warehouse selection and inventory management
Why should we choose Emerhub?
- Comprehensive and local Expertise: Emerhub boasts an in-depth understanding of global markets, enabling businesses to navigate the complexities of international transactions with ease.
- Regulatory Compliance: With Emerhub as your MoR and SoR partner, rest assured that your business will comply with all legal and tax regulations in every market you enter, ensuring a smooth and secure operation.
- Customer-Centric Approach: Emerhub’s customer-focused services ensure that businesses can concentrate on their core competencies while their global transactions are handled efficiently.
