Are you thinking about launching your website and making money online? Dropshipping is something you may be curious about. Many people are curious if dropshipping can be legal.
This post will explain the legality and ethics of dropshipping. This post will explain how to ensure that your ecommerce website operates ethically and is up-to-the-mark from the beginning.
Dropshipping is a good idea.
It doesn’t make economic sense for sellers to pay shipping costs or labor for many products. This is especially true for large, heavy products which can be costly to ship and store.
The companies don’t have the resources to transport the products to their warehouses. They would have to pay for shipping and storage. They would then have to pay shipping charges again once the shipment reaches its destination.
Dropshipping can be a win-win situation. Dropshipping is a win-win situation for both suppliers and customers. Sellers make more sales through their website and don’t have to pay shipping and storage costs. Because shipping and storage costs are reduced, customers receive lower prices.
Dropshipping is legal and it’s not illegal, even though some may think it sounds devious. Dropshipping is also in accordance with many of the best online sellers’ business practices.
Dropshipping is a great way to sell high-ticket items. We have explained all the differences between dropshipping high-ticket items and low-ticket items.
Listen to our podcast episode about high-ticket dropshipping niches for more information.
Let’s now look at the steps you can take to ensure that your dropshipping website is legal and runs smoothly.
Do you need a BUSINESS license to sell on SHOPIFY
The short answer to this question is no. To start dropshipping or selling on Shopify, you don’t need a business license. It is simple to get started on a site like Shopify. Simply log in and create an account. Once you have uploaded your bank information and social security number, you can start selling.
The truth is, however, more complex. It doesn’t necessarily mean you shouldn’t have a business license. A business license is a necessary step for three reasons: Liability; Legitimacy & Simplicity; and Taxes.
Liability
A business license can help you reduce your liability. Registering as an LLC, an S Corp, or the equivalent in your country or state will limit your personal liability for products purchased through your online storefront.
No matter what product you sell, liability is an important consideration. It is particularly important if your products are sold through a site such as AliExpress. This can sometimes seem like an easy route for dropshippers.
Dropshipping is one of the most well-known forms of dropshipping. You have likely come across one of the many blogs posts, or videos, encouraging you to start your own ecommerce website through AliExpress.
This is a horrible business model. We don’t know of anyone who has created a huge, profitable ecommerce website with AliExpress products.
AliExpress has a lot to offer, but there isn’t a lot trust between you and your manufacturer. The customer will see you as the cause of any problem with the product. If a product breaks or causes injury, your customer will turn to you and not to a Chinese supplier.
You can reduce your risk by only working with suppliers who have legitimate products and a U.S. presence in your country (European Countries or Canada, Australia, etc). So that customers can easily contact suppliers with any issues or concerns, choose suppliers they are familiar with.
It’s simple. You need to build relationships with suppliers if you want to create a large, meaningful ecommerce site.
This is how profitable online retailers like Wayfair and Amazon operate. This is also how large, well-established brick and mortar retailers such as Lowes or Home Depot do it. As they stock shelves and create product pages, they have developed trust with brands and built a relationship of familiarity.
Legitimacy & Simplicity
This brings us to the second reason why you need a business license before you launch your dropshipping website. You must show trustworthiness if you want to establish meaningful relationships with trusted suppliers. If you don’t appear legitimate, no reputable brand will work with you.
Suppliers will be impressed by your ability to register as an LLC/S Corp.
It makes it easy to establish business relationships. Once you have completed the forms, you can start to build business relationships with suppliers.
Taxes
As a business owner, taxes are your largest expense. While we won’t go into too much detail, it is clear that you need a business in order to maximize your tax write offs. It’s essential that you take your online business seriously.
The Wrong Way: Exploiting other online sellers
Dropshippers may sell products on Amazon and Ebay. Dropshippers might purchase a product from Walmart and then create a listing on Amazon for it with a price markup. The dropshipper will then make a sale via the Amazon listing. They take the markup profit.
This could be against the rules depending on which site you use. Sites will see you as a suspect or untrustworthy seller if you do this.
You may also run into logistical issues. You will get negative feedback from customers who want to return products but are unable to do so. You could lose sales if you have too many negative experiences. Your account could even be suspended or closed. Tax liability can also lead to you being in trouble.
Yes, it has happened to someone we know. They tried dropshipping eBay to make a living.
These methods can put you at risk professionally by dropshipping via Amazon and eBay. Instead of investing the time and effort to build your site and customer base, dropshipping through Amazon or eBay is a way to get a few dollars. It’s even worse: you already have all this experience, and it’s much more difficult than doing it legally!
The right way: Building Online Presence
Dropshipping is possible using Amazon and eBay in a certain way. It makes sense to increase the Amazon presence of a trusted brand if they do not currently have one. It’s possible to create a listing for the product on your website.
This method is fine. We recommend this method! The supplier will be able to get more customers and Amazon and eBay will promote your products. Everyone wins when you do it ethically.
It is possible to make big money by getting the supplier to accept you as their exclusive Amazon/Ebay seller.
Copyrighted images and videos should not be used
Many people are unfamiliar with copyright law. It’s simply the right to copy, sell, publish, or otherwise use another’s work, such as images, videos, etc. Only the author has the right to sell, copy, or publish their work. Copyright infringement occurs when you copy, sell or publish the work of another author.
Copyright violations can be very serious in some countries, such as the USA. It could lead to a lawsuit that could result in you having to pay a lot of money. You should ensure that your products comply with all copyright laws in any country you dropship to. Dropshipping internationally requires you to have this protection.
It is possible to read the copyright laws of the countries in which you do business. If your products contain images or intellectual property from someone else, you should identify them. If not, you can go ahead. If it is, you should find a way to fix it as soon as possible.
You don’t have to copy work created by others. Canva is one of the most useful tools. You can create images and videos with this tool without worrying about copyright. You can also find photos that are not subject to copyright on websites such as Pixabay and Shutterstock, Pexels or Burst.
You must not sell trademarked goods without permission
Dropshipping in 2021 will be made easier by not selling trademarked products without permission. Nike, Rolex and others are examples of trademarked goods. These products are very well-known and have been marketed internationally by many international brands. Dropshipping this type of product requires permission from the owner. You can also ask your suppliers or your sourcing agent dropshipping for permission to sell the product.
Your business could be sued or shut down if you don’t comply. Beware of trademarked products, and don’t sell counterfeit branded products.
Partner with trusted suppliers and sourcing agents
Finding the right product for dropshipping is only half the battle. You also need to find a reliable supplier or sourcing agent. They are your business partners. They should be trusted to work with you. It is better to choose a supplier who has a good track record in the industry. Before making any decisions, inspect the product thoroughly if necessary.
They should be able to brand your products in a flexible manner. They should be available 24/7 to assist with any problems. They must provide good shipping services and proper packaging. They will make you successful. Dropshippers will depend almost entirely on them for sourcing, fulfillment branding packaging and shipping.
To verify the reliability of your supplier or agent, you could try a test order. You could also look at reviews about the supplier to get more information. Before you sign any agreement with them, make sure to read it carefully. This is one of your best tips for avoiding being sued in dropshipping 2021. This is because if something happens, you are responsible for your business and not your suppliers or sourcing agents.
It is essential to build customer trust.
Dropshipping can be avoided by building customer trust. You must build customer trust to win their business and improve your reputation. You will reduce the chance of being sued if you manage your business professionally.
Satisfied customers are more likely to protect you against being sued in the future for any reason related to shipping or return products. Make sure you have clear policies and that they are followed. To win their loyalty and grow your company, make sure you have a great team.
