Is Dropshipping Legal?

If you’re on this page you’re most likely not familiar with the dropshipping business model. You may have heard a friend, colleague or someone online say something negative about dropshipping. Why does dropshipping seem to have so many mixed opinions about it? Is it Legal? How does dropshipping even work?

If you any of the above questions then keep reading on to learn more about the history of dropshipping and why it can have so many mixed opinions despite seeming to be more and more commonly talked about today.

First of all, dropshipping is COMPLETELY legal.

Then why does it have such mixed opinions by so many people? To understand this we must understand what dropshipping is if you’re not familiar with it already.

Dropshipping is an e-commerce business model that eschews the traditional retail format when it comes to selling products. Traditionally retailers will buy from a wholesaler and store the purchased goods in warehouses before redistributing them to their stores or selling them online depending on how the business operates. This method is widely used as it ensures quick shipping from the retailer to the customer, reliable inventory as the retailer knows what’s in stock and what isn’t ahead of time, and an easy return process. With this business model however you need to have the ability to afford a warehouse to store inventory in as well as the logistics this entails. Dropshipping utilizes a more direct approach; these types of businesses operate online stores that customers can order from, after the order has been placed the dropshipper will have the item delivered to the customer directly from the wholesaler. As a result, there is no need for large warehouses to store inventory, expensive logistical solutions, and other similar expenses.

If you’ve read up to this point you might be wondering why then do so many people have such varying opinions about dropshipping? As this business model involves shipping products directly from the supplier there can be many issues encountered that might make for a poor customer experience.

These are 4 of the most common issues encountered by customers that end up creating bad experiences.

1. Long Shipping Times. This is one of the main reasons dropshipping seems to have so many differing opinions. The majority of dropship businesses rely on international suppliers for their products. This is largely due to the low costs of manufacture found internationally. Ordering from countries like China can create incredible profit margins for the dropshipper but you also may encounter problems such as extremely long shipping times. These shipping times can be affected by transfer flights, customs delays, and more. As a result, some customers will end up waiting months for a product and vow never to use a dropshipping business for their product needs ever again.

2. Poor Product Quality. This problem occurs when inexperienced dropshippers use the cheapest suppliers they can find in order to maximize their profit margins. What lots of people don’t realize is that these extreme low-cost options can lack any meaningful quality control processes for their products. This isn’t a problem more experienced drop shipping businesses face as they know it’s important to select good, reliable suppliers that will sell high-quality products customers will be able to rely on and enjoy.

3. Lack of Branding. This is especially true for dropshippers that offer a wide range of products to their customers. As their wares are sourced directly from a wholesaler these items will often have little to no branding at all. Items arrive in plain, unremarkable packaging that will often cause frustration for customers that thought they were getting a premium quality product. Even if the product is a high-quality item it’s tough to convince your customers when there’s a lack of branding and basic packaging.

4. Return Issues. As many of these items are shipped from international destinations many customers will have difficulties arranging for a return if they are unhappy with the product. Some suppliers will not even allow returns if the item’s cost was too low as they’ll end up paying more to ship it back. These problems again commonly occur when new dropshippers use poorly ranked suppliers that were selected solely for their ability to provide an item at the absolute lowest cost.

It’s important to know that with careful research, and planning these issues can be completely eliminated both as a buyer and a seller in the world of dropshipping. As this model of business requires virtually no money to be invested beforehand it’s simple for many people to get started running their own online stores using dropshipping; as a result, there has been an influx in bad experiences creating a negative stigma when the word dropship is used. Despite this dropshipping remains one of the most profitable ways to get started in e-commerce and is the livelihood of many people online. Dropshipping is legal all around the world so one doesn’t need to worry about any potential repercussions should they decide to start their own store in this way.

However, issues can and do arise when customers have bad experiences with refunds, returns, fraudulent or damaged items. Many countries have regulations around the world protecting customers from issues like this so it’s important for new dropshippers to be well educated when it comes to selecting suppliers as well as understanding the potential issues they may face. If you’re a buyer looking to purchase an item on a dropshipping store it’s always good to do your research and pick a reliable store that’s been around for a long time; the world of dropshipping seldom has stores with a poor reputation around for long so it’s always a good idea to select a store that’s been around a long time. In summary, dropshipping is legal for wholesalers, dropshippers, buyers, and sellers alike. It’s important to understand the negative light some people may view it in is not a result of dropshipping itself but of new, inexperienced, or irresponsible dropshippers.

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