Do you want to start a dropshipping business? Do you want to do it without getting into trouble?
Well, if you answered “yes” at one of those questions, then you’re in the right place.
Starting an ecommerce online business is not easy. First of all, you need to have as much information as possible on how to set everything up properly.
Also, you need to be able to run profitable ads to your store. As we all know, driving free traffic to your dropshipping website is almost impossible.
In order to be successful, you need to master some kind of paid ads source (for example, Facebook ads).
But what should you do when you start making money. Is it possible to get into trouble with the law?
In this article, we will go over everything you should know about the legal aspect of dropshipping. Stay tuned!
Disclaimer: I am not an attorney or a judge. In this article, I’m just giving you the information I know regarding the legal aspect of dropshipping from the position of an ecommerce business owner. You should contact your local attorney or legal counselor if you want to educate yourself more on this specific topic.
However, I promise that I answer your question to the best of my ability and not hold anything back from you in regards to the legal aspects of this business model.
Let’s jump straight into it:
What Is Dropshipping?
In order to have a better understanding of the legal aspect of dropshipping, we first need to have a clear picture of the business model.
Dropshipping is one of the most profitable online business model in the world. The seller just needs to create an online store and drive traffic. He outsources all the other tasks to a third party supplier.
Such tasks include product creation, shipment, packaging and delivery.
If you have a dropshipping business, you kinda act as a middle mad between the supplier and the customer. That’s great because you can make money without the entire responsibility of the product. You don’t even touch with the product.
If a customer places an order on your website, that order is automatically sent to the supplier together with the shipping information. The supplier then takes care of everything.
If you want to have a successful business, the main thing you need to focus on is to find quality products from reliable suppliers. I suggest you try SaleHoo, as they make this process much more convenient.
There are, however, a couple of costs you need to keep in mind. The main one is obviously traffic. Because if nobody sees the products on your store, well … you don’t make any money (shocker!)
That being said, keep in mind you need to have an ads budget. Other than that, the rest of the expenses are honestly not that big.
Dropshipping Pros and Cons
Let’s have a look at some of the pros and cons of this business model, based on my experience:
- No inventory: This is a very big benefit that attracts a lot of people to this business model. I’m telling you, dealing with stock inventory is a huge pain in the ass. With dropshipping, you don’t need to think about that kind of stuff. Just drive traffic to your store and you will make money.
- Low risk: This is tied with the inventory. If you don’t make sales, you just stop driving traffic. As opposed to other business models, you don’t need to worry that you have a warehouse full of products that you need to sell in order to break even. You don’t buy stock in the first place.
- Global reach: It’s not like having a local shop in your neighborhood and you’re tied to that place. You are not limited in selling products in that area. With dropshipping, you can sell products to anyone.
- Outsourcing: You outsource most of the time-consuming and stressful tasks, such as shipment, packaging, product creation, delivery and so on.
- Focus on one thing: In order to have a successful dropshipping business, you need to focus on marketing … and that’s about it.
- Low entry barrier: Other business models where you need a ton of experience to get started. On the other hand, anyone can start a dropshipping business (with the right information, of course)
- Competition: Sometimes it can get very competitive when you’re trying to sell a product that you know it’s converting. BUT as I always say, never be scared of a bit of competition.
- Prices: If you buy the products in bulk, you can get them cheaper. However, the risk is also higher.
- Control: As you don’t create the product yourself, the supplier has more control over the business.
- Stock: Sometimes the supplier can run out of stock, which means that you will not be able to sell a specific product for a period of time.
Like in anything, there are pros and cons. In my experience, the pros outweigh the cons my a large margin. Dropshipping is a great business model and be sure that it will be around for a long time to come.
Why? Because it makes money
Now that you know how everything works, it’s time to look at the legal aspects.
Is Dropshipping Legal?
Yes, dropshipping is legal. However, there are a couple of things to keep in mind so that you don’t get into trouble.
For example, if you work with a low quality supplier that sells fake products (for example, fake adidas clothing or something like that), and he gets sued, you could get into some legal issues. By
That’s why it’s very important to pick good suppliers.
Also, depending on the country where you live, you need to take into consideration the taxes. Also, the country where your customers live may have restrictions on what products can be imported.
The most common question I get is regarding the business license. Do you need one?
Well … no. You are not required to have a business license in order to open an online store and partner with suppliers.
BUT it is recommended that you get one anyway. Because you will have an easier time with the payment gateways and things like that.
You will will feel more relaxed if you have one (I did). Not only that, but you get A TON of benefits if you have a business license.
This is a big one. Is you register your business and get a license, you will have limited liability. Therefore, you will be able to dodge some of the problems that may or may not occur.
For example, if there are problems with a product that a customer bought from your website, you will be a lot more protected. If you don’t have a license, you might have bigger problems.
Again, it’s not mandatory to have a business license, but it does help.
OK. Here is where I tell you to consult a legal advisor or a lawyer in your own country.
BUT in my experience, you pay less taxes if you have a registered business. That was my case at least.
Before getting my business license, I was paying more taxes to the government. Now I know that if you live in France for example, the taxes can be quite high.
But as far as I know, you do pay less taxes in most cases if you have a business license.
In dropshipping, as well as in affiliate marketing or any online business for that matter, your website should have a “Terms and Condisitons” page.
This is mandatory, as you will collect personal information from your customers.
Especially if you have an ecommerce online store, you do need to collect their information. Because it’s impossible for them to purchase a product without you collecting their data.
Dropshipping is legal. Don’t let anyone tell you it’s not.
I am running multiple ecommerce stores for a long time. And to be honest, I never had any problems with legal issues.
However, you should ask for legal advice from a professional after you start making money. It makes no sense to fill your head with such information if you don’t make any money.
If you want to start a successful dropshipping business, I suggest investing in a reliable and high quality course, like Dan Dasilva’s 100k Blueprint.
It will guide you through everything you need to know about running a successful ecommerce business. You just need to put consistent effort and you will make money.