The dropshipping industry is estimated to reach about 557.9 billion dollars before 2025. Therefore, many people are diverting into the industry. Many people who want to go into the eCommerce business have been asking if dropshipping is legal and what risks they can come across.
Let’s get straight to the point. Dropshipping is legal, but there are some risks involved. Before going into business, you need to understand the requirements and see if you’re up for the task. This guide is divided into two sections. First, we’ll describe why dropshipping is legal, and the second part will describe some of the risks involved in dropshipping.
Is Dropshipping Legal?
Dropshipping is entirely legal anywhere in the world. To avoid trouble or loss, you must have a solid understanding of dropshipping. One of the significant reasons people doubt if dropshipping is legal is because they wonder how a dropshipper makes over $1000 per day just from reselling products from AliExpress.
The truth is that dropshippers invest a lot of their time and energy into ensuring people get exactly what they ordered. Even though it requires little or no money to start, they need to pick the right niche, conduct research on products, and look for suitable suppliers.
Evidence That Dropshipping Stores Are Legitimate
Although a refund policy is not necessary according to the law, it is better to have a refund policy. It is a legal document that helps build trust between customers and you. Dropshipping is legal because there is a policy protecting customers and dropshippers. Shoplazza has great dropshipping refund policy generators to show customers the legitimacy of your business.
Terms and Conditions
Business owners use terms and conditions as legal documents to protect themselves. It states your responsibilities and rights as well as those of your customers. Dropshipping allows you to incorporate terms and conditions to be ready for any arising issues.
This legal document describes how a business gathers, uses, reveals, and safeguards its customers’ information. For any online store to collect customer information, they need to have a refund policy. This is another reason why dropshipping is not illegal; all customers’ data are protected.
5 Things That Could Go Wrong When Starting a Dropshipping Business
Here are some of the risks associated with starting a dropshipping business
1. Suppliers May Defraud You
Any dropshipping business’s success depends on the supplier. You won’t be managing the inventory, so you’ll need to find a reliable supplier. Here are some of the risks related to dropshipping suppliers:
Signs of a shady dropshipping supplier:
2. Low Profit Margins
E-commerce is a low-capital business. Anyone with a stable internet connection and a laptop can start it. This means that many people are in the industry, and many sellers might be selling identical products from the same supplier. There is a high chance of competition. To thrive, you might have to keep your prices low, lowering your profit margin.
3. You Could Easily Get Banned on Major Marketplaces
Amazon and eBay dropshipping are practical business tools. You are open to millions of customers who want to buy your product. However, you need to follow strict rules to survive in these marketplaces. For example, you can get suspended if your shipment is always delayed. You may also get banned if you sell retail products from Amazon or eBay.
YouTubers and social media influencers might make dropshipping look easy, but remember that it is not a get-rich-quick scheme. The fact that you don’t oversee your inventory doesn’t mean it is easy. With the completion involved, you’ll need a lot of hard work to ensure success. You may have to spend your whole time improving your e-commerce store, and this can get you tired.
5. Customer Support May Become Overwhelming
When you are new to the dropshipping business, you have to take on many tasks – you’re the web designer, the salesperson, customer service, and social media manager. The most stressful of all is the customer service. You’ll have to deal with several complaints regarding the delivery delays, mixups and the quality of your products. Yes, you don’t have to manage the inventory, but you have to take the blame for your supplier’s error.
If you wish to go into the dropshipping business and doubt whether it’s legal, your doubt should have been cleared by now. Another essential thing to note before going into this business is to understand that there’ll be risks. Read this guide to learn about the risks associated with starting a dropshipping business.
(Contributed by Ayotomiwa Omotosho & Hermes Fang)