Dropshipping is a supply chain process where retail stores partner with suppliers to sell goods to the consumers. These goods go straight from the suppliers’ store to the consumers. There is one burning question that frequently crops up though “is dropshipping legal?”
Dropshipping is a great alternative for online sellers who lack the funds to buy or manufacture their own products. It’s also great for saving inventory space.
It gives them the platform to partner with wholesalers and suppliers who permits them to create product awareness and sales. If you place an order for a product, it goes directly to the end-user without a retailer. However, the transaction is carried out with the retailer and the profit is the excess of what the consumer pays after the suppliers’ cost has been deducted.
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Is Dropshipping Legal?
Dropshipping is becoming widely accepted with many suppliers jumping on it as it helps to increase sales.
As a dropshipper, you do not need to take a physical inventory of goods as there are no goods to store. All storage issues are handled by the wholesalers and suppliers. You also do not need to incur both the risks and overhead costs that come with manufacturing, storage, shipping, packaging, and delivery of products. The risks are so minimal that you can start right away. As a dropshipper, your attention can be channeled to other marketing strategies rather than production and distribution. You also get the opportunity to showcase different products from different manufacturing companies and suppliers, which in turn, will attract more customers.
Having learned what dropshipping is, you probably may be wondering is Dropshipping legal? Are there legal risks involved in showcasing a supplier’s products and selling on their behalf? Is it legal to just make money off the products of other suppliers by selling them to consumers?
Well, in truth Dropshipping is beyond just selling products of suppliers. Dropshippers who know their trade must do a lot of research, comparing varying products from different suppliers; it involves comparing features such as color, shape, and design. You are also comparing functions so you get the best deals at the lowest minimum costs. In a way, you are indirectly helping out the consumer make a good choice from the very many options available.
Also, dropshipping involves developing marketing strategies. Dropshippers would have to attract customers to their websites. They have to also ensure their websites are always updated according to information from the suppliers’ end. They also offer customer support to customers. In this way, the supplier or wholesaler benefits as this helps to drive sales and supports their marketing efforts.
So the answer is Yes, Dropshipping is very legal. There are absolutely no reasons why this supply process that benefits both suppliers, wholesalers, consumers, the dropshipper and the country’s economy in some way should be illegal.
Other Factors to Consider
However, there are other factors to consider as regards the legality of Dropshipping. A frequently asked question would be, Is Dropshipping legal in my location or region? Would I get into legal trouble by carrying out this supply process in my location?
As far as is widely known and understood, dropshipping should be legal in all locations. There are no known Federal, state or by-laws against Dropshipping anywhere in the world. As long as goods being shipped from the suppliers are not contraband products or in any way illegal, you should be safe from legal issues.
The second factor would be the legality of dropshipping on major online stores who act as suppliers. This would be based on the different policies of stores like eBay, AliExpress, and Amazon.
It is legal to dropship on and from AliExpress. AliExpress is one of the most supportive major online retail stores when it comes to dropshipping. It even offers the AliExpress Dropshipping Center that helps dropshippers with research and selection of products and suppliers. As a supplier, you are allowed to create your drop shipping online store on AliExpress rather than go through the hassle of creating a website. As a dropshipper, you can also dropship from AliExpress by partnering with AliExpress suppliers.
Due to some strict policies by Amazon, dropshipping on Amazon may not be possible. You are not allowed to ask suppliers to send products directly to customers who come from you. You also not allowed to send transaction documents in any name but yours. This would pose a challenge because the supplier ought to be responsible for shipping and delivery. However, it is legal to dropship from amazon, as long as you are cool with the prices of products there when compared to the prices of similar or same products on other major retail online stores.
It is legal to dropship on and from eBay. All you need do is ensure the product gets to the customer with the space of 30 days. You have the duty of sorting this aspect of the business transaction out. You can also dropship from eBay; just ensure you register and have an account. This way you can find trustworthy suppliers whose products you can list on your account for consumers to purchase.
Other factors that can ensure you have no legal issues at all would be to partner with reliable suppliers so there are no questions as to the quality of the product being shipped. You can get banned and reported if a complaint is made against you for selling counterfeit or very low-quality products as against what was offered on your site. Getting a business license and including legal terms on your sites such as Return and Refund policies, Privacy Policies, Terms and Conditions, and Disclaimers are also effective ways of staying out of legal trouble especially when dealing with consumers.
Please note that dropshipping is still perfectly legal without doing all the above. These are just extra measures taken to ensure compliance on all levels.