Is Dropshipping Legal?
Updated: May 20
One of the most frequently asked questions in the e-commerce world today is whether or not dropshipping is legal, and that’s exactly what this article will help you figure out.
We’ll go over the ins and outs of dropshipping and give you some basic information on how to run your business legally without worrying about whether or not you’re doing something that can put you behind bars.
So buckle up, and let’s talk about dropshipping legality!
What Is Dropshipping?
Dropshipping is a practice in which sellers do not keep inventory on hand, but instead send orders directly to a third-party fulfillment company.
These fulfillment companies receive and fulfill orders, often from multiple sources, then send them to customers.
Because there is no additional inventory for sellers to manage and store, it can be a cost-effective way for sellers to move merchandise.
However, it’s important to note that some products are not eligible for dropshipping because of licensing or regulatory requirements; you should verify whether your dropshipable product complies with any government regulations or business agreements prior to beginning dropship sales.
The Pros of Dropshipping
dropshipping is a very flexible business model that’s relatively easy to get into and doesn’t require a ton of capital to get started. This is perfect for anyone who wants to try their hand at e-commerce but isn’t ready or able to invest heavily in their own inventory.
Depending on your situation, you might be able to hire an overseas supplier and never have any money at risk (other than, perhaps, shipping fees).
Of course, many dropship businesses also rely on supplier credit—which can be risky—but it's another great way to reduce start-up costs.
And dropshippers are everywhere; there are hundreds of them offering thousands of products. Anyone with internet access can get in on dropshipping without even leaving home!
The Cons of Dropshipping
While dropshipping is legal in most countries, there are some downsides to using a dropshipper. The biggest downside is that it can be hard to separate yourself from your supplier, which could potentially lead to legal issues down the road if they commit fraud or violate copyrights.
In addition, you have no control over price increases and communication with overseas suppliers can be difficult. Finally, when using a dropshipper you’re legally responsible for all business practices that relate directly or indirectly to your products (such as copyright infringement).
Depending on where you live and what kind of business you run, these responsibilities could be very expensive to cover.
So Is Dropshipping Legal?
The answer to whether dropshipping is legal depends on who you ask. Some may claim that they’re following all laws and regulations set by different states, while others are more dubious.
But before you take that yes or no at face value, consider these two points:
(1) all businesses have to follow federal guidelines;
(2) a lot of people selling online don’t always sell products for a living—instead, they use sites like Etsy or eBay as creative ways to earn extra income.
If you meet those qualifications, there's no reason why your dropshipping business should be considered illegal in any way.
Is Dropshipping legal - The Bottom Line
The process of dropshipping is usually legal, but of course it can depend on what you are are shipping, e.g. guns or drugs clearly will not be legal in most countries.
You just need to make sure that you conduct yourself professionally and honestly as possible and put measures in place to protect both your customers and yourself from getting involved with anything illegal.
If you have doubts about whether your own dropshipping is legal for your country, you should consult an attorney before launching a company.
It's better to be safe than sorry!