Does the law allow for drop shipping?
The answer is yes. In addition to being one of the most lucrative business models, dropshipping is perfectly legal in every country.
Many people are sceptical of dropshipping because it seems too good to be true: no large initial investment is required and profitable results can be seen almost immediately. However, there are a few legal hurdles to jump over before you can open for business as a drop shipper. You can learn more about the legitimacy of dropshipping and how to make the most of it in this article.
Dropshipping 101: What You Need to Know
Before we talk about whether or not dropshipping is legal, let’s talk about some basics.
Dropshipping is a popular way to run a retail business in which the brand that takes the customer’s order does not keep the inventory or handle the shipping. Your dropshipping business would have a storefront where customers could talk to you. But when a customer orders a product, the order goes straight to a supplier or fulfilment body, which handles shipping and stock
So, as a front-end retailer, you are only in charge of marketing the product and talking to customers.
You can make a direct profit from your dropshipping store because you don’t have to worry about stock, storage, shipping, and other logistics.What to Know About Whether Dropshipping Is LegalAs was said above, dropshipping is legal everywhere, and you can run a successful dropshipping business on your own terms.
But there are a few things you should do to make sure that your dropshipping business won’t get you in trouble with the law.
Business License
In theory, you don’t need a business licence to start an online dropshipping business. To start a business, all you need is a storefront that can work with a dropshipping tool.
Still, getting a licence would be helpful if you want to grow your business or open a store with real walls.
Taxation
Getting your dropshipping business up and running is only half the job. It can take a lot of time to run your store. This means submitting your tax returns on a regular basis.
In an ideal world, it would depend on your country or state, your income, and how you like to handle money. You can file taxes as an individual or as a business entity. Just make sure you follow the rules of your state or country to avoid tax problems.
Liability for Products
The item your customer ordered from an international vendor has finally arrived. It’s possible that something will go wrong with the shipment or the order while it’s being delivered.
That’s why it’s a good idea to invest in product liability insurance: it’ll safeguard your company and help you keep your customers happy. This way, you won’t have to worry about legal complications and can immediately get your money back for the damaged product.
Dropshipping Agreement
Having a dropshipping agreement signed with the manufacturer or supplier is highly recommended by industry professionals. Include terms related to pricing, uninterrupted product delivery, and anything else absolutely crucial to the smooth operation of your enterprise.
Your company will benefit from having the seller and you bound by a specific agreement in the event of a dispute.
Customer Policy
Finally, since you’d be managing all kinds of interactions with customers, it’s crucial that you have open customer policies.
Make sure your website clearly states your policies on privacy and returns to avoid legal trouble. Include the court system that would have jurisdiction over any disputes with the customer.
By being up-front and honest from the get-go, you not only ensure that your clients are well-informed, but also that you avoid any potential for conflict.
Is It Worth It to Do Dropshipping in 2023?
As you can see, dropshipping is legal, and anyone with the right mindset can start a dropshipping business. People also want to know if dropshipping is still a good way to make money or not.
In short, dropshipping is still a profitable business model, but the exact results would depend on many things.
Some of the main things that will make your business successful are your suppliers, the products you sell, your marketing strategies, your business model, etc (or a failure).
Google Trends
The best way to tell if something is popular or not is to check Google Trends. As you can see, dropshipping is still popular and has grown a lot in the last 5–6 years. This means that more people are getting into dropshipping, which is leading to new ways of doing business.
Dropshipping’s Future
The top experts say that the dropshipping market is not getting saturated, but is instead getting more stable. There are a lot of new dropshipping businesses, and not all of them are successful, but each day, more and more of them start making money.
About 27% of online stores use dropshipping, which can lead to a profit margin of up to 50%. (which is not likely in the traditional model).
On top of that, the ongoing pandemic has made more people buy things online, which has helped the eCommerce industry grow. Now, retailers are seeing a 30% rise in sales, which has given the eCommerce industry a $4 billion profit.
Even though it might sound strange, the dropshipping industry is expected to have a market share of $557.9 billion by 2025. This isn’t the end of dropshipping. Ideally, now is one of the best times to invest in a dropshipping business and grow it in the coming years.
Hopefully, after reading this, questions like “is dropshipping legal or not?” will no longer be on your mind.
To learn more about how to avoid legal trouble when dropshipping, read on.
Even though dropshipping is legal, there are still administrative details to iron out to ensure a smooth operation.
This is why, an excellent dropshipping automation tool, is so widely recommended.
You can put your attention where it needs to be—on the store—and let the handle the ancillary tasks.
