When starting a business, you have to pay attention to a lot of details, especially those that have to do with the law. You’ve probably heard of dropshipping businesses and wondered if they are legal. Is it a rip-off? These questions are justified.
Many of us have either been ripped off online or know someone who has. Most people will be skeptical if you say you can start making money in 30 minutes after setting up an online dropshipping business. This makes people wonder if such a business is legal.
Yes. Dropshipping is legal. In this article, we’ll talk about the business model of dropshipping and what it can do for you, as well as the legal problems you might face.
Is Dropshipping Legal?
Dropshipping is legal. There are no laws or policies made by any government agency that make the business illegal. Only rules about dropshipping have been made. You have to follow the rules and regulations of the country you live in and the dropshipping platform you join. eCommerce sites like eBay and AliExpress like dropshipping because it helps them get more customers.
Is dropshipping allowed on the most popular online sites?
Dropshipping has different rules for each platform. Let’s talk about three of the most popular eCommerce sites: Amazon, eBay, and AliExpress.
Amazon
Amazon is the largest place to shop online. It has more than 5 million sellers, and sales from third parties were worth $160 billion just last year. Dropshippers should think about using its reach to help them reach their goals. But is it okay to dropship on Amazon?
Amazon lets you do dropshipping. Amazon does not let you dropship from other sellers on the platform or from Amazon itself. You can, however, dropship from suppliers other than Amazon as long as you follow its strict rules.
You must follow these rules if you want to dropship on Amazon.
- You cannot use Amazon’s Fulfilment By Amazon (FBA): You can only sell the items as “Merchant Fulfilled” products on Amazon. You can only use FBA if you already have the goods. Then you’ll send them to Amazon warehouses where Fulfillment by Amazon will take care of them. As a result, your goods can’t be shipped through Amazon Prime.
- As the seller of the item, your name must be on all receipts, tags, slips, and other paperwork.
- It would be best if you were in charge of taking in and dealing with the items that customers send back.
If you follow these rules, you can do drop shipping on Amazon. So, if you want to buy something from Amazon, you have to get it from a store that isn’t Amazon. For each successful sale, Amazon will charge you a small fee.
The amount can be up to 15% of each sale’s profit. But because Amazon has so many customers, you have the chance to sell a lot of products.
eBay
Dropshipping is something that you can do on eBay. Before you can start selling on eBay, you only need to make an account, find a reliable supplier, and start listing their items on your store. When you get a winning bid, you tell the supplier about it so that they can start the delivery. But eBay says you have to deliver the item within 30 days.
Many business owners have complained about suppliers who don’t do what they said they would do. You must be careful and pay close attention to the suppliers you work with to make sure they offer quality products and can deliver on time. If you don’t source carefully, you could get in trouble with the law. Remember that you are selling yourself to the buyers.
It’s important to know that if your suppliers don’t deliver, your customers can file a dispute with eBay. Because of these problems, eBay may ban your store from the site. eBay looks out for its buyers, and if you break any of the rules and cause a dispute, the buyers may ask you to pay them back.
How do I find trustworthy suppliers to stay out of trouble with the law?
Check their prices, terms, and reviews from other customers. Also, write up a full contract with your suppliers to make sure you’re covered and that they’ll pay for any losses if they don’t deliver to your customers.
AliExpress
AliExpress lets people do dropshipping. AliExpress is a great place for buyers and dropshippers to meet. It is built in a unique way that makes dropshipping possible in two ways.
- Dropshipping On AliExpress: Set up a shop on AliExpress and use it as a distribution point to sell products from sellers outside of AliExpress. Only people who live in China can use this method. It lets entrepreneurs use AliExpress’s huge customer base to sell to a lot of people.
- Dropshipping From AliExpress: In this case, you set up your own online store and use AliExpress as your supplier. When a customer places an order, you contact the seller through AliExpress, and they send the products to the customer according to your rules. With this option, you can take advantage of how trustworthy AliExpress sellers are and how the platform protects you.
Does my country allow dropshipping?
As a law-abiding citizen, you should find out if dropshipping is allowed in your country before you start. In many places, dropshipping is legal. But dropshipping is controlled by different rules in each country. Make sure you know these rules so you don’t get in trouble.
Is it okay to dropship in the United States?
Dropshipping is allowed in the US, yes.
What are the rules about dropshipping in the United States?
Have a U.S.A. Reseller Permit Follow the tax laws, especially if you’re running a dropshipping business outside of the US.
Is it okay to dropship in the UK?
Yes, dropshipping is okay in the UK.
What do the laws in the UK say about dropshipping?
Before starting to sell to customers, every dropshipping business must sign up for VAT.
Places where dropshipping can get you in trouble with the law
Dropshipping is legal. But there are some parts of the dropshipping business that can get you into trouble with the law if you don’t handle them carefully. Among them are:
Permissions and Trademark
Before you can run an e-commerce business like dropshipping in some places, you have to get a license or registration certificate. If you don’t follow these rules, you could get a fine. To avoid breaking any copyright laws, you must follow all the rules.
If you sell products that have trademarks, don’t say that they are your original ideas. If you ever got serious about dropshipping, it would be better to go the private label route. Check out the private label products guide we wrote.
Taking care of taxes
Some countries tax businesses that operate online. Before you start, you need to know how much tax you have to pay for e-commerce in your country. You will use this information to pay your taxes correctly and stay out of trouble with tax agencies. If you don’t pay your taxes, you could get fined a lot or even go to jail.
Once you understand how the tax systems work, make sure you pay all your tax bills to avoid these problems. Pay close attention to the rules for both domestic and international firms.
Selling Counterfeit Products
Selling fake goods is against the law everywhere. People who sell them could go to jail or pay a lot of money in fines. If you never see or talk to your suppliers, they can trick you into selling fake items.
You need to pay close attention to make sure that the supplier you choose will sell you original items and not give you any of these problems. Make sure they have all the quality assurance certifications they need.
Unreliable Suppliers
The deal you make with buyers has to be followed. You must make sure you follow all of the contract’s rules. If your supplier doesn’t do what you told them to do, your customers will tell you about it. Some may change their minds and ask you to give them their money back.
Some people could sue you if you broke the rules of your contract. These kinds of problems will only slow down your business and cost you money. So, the supplier you choose is very important to how well your service is delivered.
What is dropshipping and how does it work?
Dropshipping is a legal way to run a business. In the dropshipping business, there are three main groups. The buyer, the store, and the person who supplies the goods.
The seller is the most important link between the buyer and the manufacturer or supplier. How dropshipping works is explained below.
- The seller opens a store on the Internet.
- The seller will choose a niche of products to dropship, such as clothes.
- The clothes will be bought from the supplier at or close to wholesale prices.
- The seller will put pictures and descriptions of the items on their online store.
- The buyer will look for something they want and place an order for it.
- The order and payment will be sent to the seller.
- The seller tells the supplier about the order, the buyer’s shipping address, and how much money has been paid.
- The products are then sent straight to the buyer by the seller.
- The buyer will do this for every order they get and keep some of the money they make.
Read this tutorial to learn how to build a store in 12 minutes if you want to start your own store.
Key Takeaway
Dropshipping is a business that is legal. If you follow the rules and regulations, you can do it on many platforms and in every country. You should try to stay away from things that could get you in trouble with the law. Spend some time learning about the laws of the country where you do business. Also, it’s important to stay up to date on the rules that govern e-commerce businesses because they change all the time.
