In the business world, you must expect to come across problems occasionally; when problems occur, just as you see in your daily activities, the obvious thing is to try and resolve them. When you encounter problems while going about your daily activities, it does not mean that what you are doing is not legal.
Like any other business endeavor, dropshipping is fraught with risks. However, you must understand the intricacies that surround the dropshipping business and how to circumvent these risks.
When you encounter legal problems with your customers in the dropshipping business, your goal must always be to a resolution that benefits everyone. Dropshipping is a branch of the eCommerce industry; the only difference to traditional eCommerce is that you don’t need to keep inventory.
To start a traditional eCommerce business, you need a physical structure where you can display your products, staff to help run it, and probably warehouses. All these require financial involvement.
However, setting up a dropshipping business does not require much funding since it’s an order fulfillment method. Once you secure a laptop, website, functional internet, and a client base, you are ready to start a dropshipping business.
The ease of starting a dropshipping business has made it very competitive, but people still ask if dropshipping is legal.
Is dropshipping legal?
Is dropshipping legal? That must be the ideal question for anybody who wants to purchase products. For a market size that can rise from $128.6 billion in 2020 to an estimated $476.1 billion between 2021 and 2026, dropshipping must be a very appealing business.
But does that make dropshipping legal? Dropshipping is a business you do with documentation; when you place an order and pay for it, you have initiated a binding contract with the drop shipper; since the drop shipper agrees to fulfill the order and accepts your money.
The question, “Is dropshipping legal?” should not have arisen in the first place, but due to the unconventional way of doing this eCommerce business, it will not be wrong if people express their concerns.
In the U.S. and other countries, dropshipping is a legal business; the customer can approach the courts for redress if the drop shipper infringes on agreements.
What are some infringement issues you can encounter in dropshipping?
The dropshipping business does not give room for the retailer to come into direct contact with products; this creates a lot of chances for infringement issues such as:
- Trademark copy
- Replicas and copycats
- Illegal categories such as medicine and drugs
It falls on drop shippers to fully understand the intricacies and implications associated with the products they sell. The products are your responsibility; the customer is not interested in the fact that you did not come in contact with the product.
The law will not want to look at that angle; you cannot plead ignorance in this case; it’s a business you decided to embark on, and you must thoroughly research the products you sell. An area you must avoid as a plague is counterfeit goods.
Why you shouldn’t dropship counterfeit goods
Customers can discover counterfeit products; when this happens, the effect on your dropshipping business can be devastating. It may even lead to a complete closure of your business because customers will use different social media platforms to tell others about your business.
To avoid such, you must practice due diligence with product research. If you don’t research your products thoroughly, you may unintentionally sell counterfeit products.
The consequences on your dropshipping business are the same whether you intentionally or unintentionally sell counterfeit products.
Some effects of dropshipping counterfeit products include:
- Legal actions by customers
- Payment gateway freeze
- Closure of Ad accounts by most social media platforms
Intellectual property infringement
Dropshipping is legal, and as with any other business, you must not get yourself entangled with intellectual property infringement. Your suppliers may not even know that they are violating intellectual property by selling some products to you; it is, therefore, your responsibility to carry out due diligence.
The legitimacy of any product you drop ship is very crucial to the survival of your business. However, you may not come in direct contact with the products you sell before you display products on your website; it is, therefore, necessary for you to thoroughly investigate their authenticity.
Some processes you have to go through to ensure you are not infringing intellectual property include:
- Conducting in-depth research on every product before displaying it on your website.
- Ensure you have the distribution permits for the different products you sell.
- Where you are in doubt about the intellectual property status of any product, you must seek legal counseling and interpretation of the laws.
A refund policy may not be very critical to the success of your dropshipping business, especially if you are just getting into the business. However, you will save yourself a lot of trouble if you have one in place.
It will prompt you to offer exceptional services to your customers and know how to protect your business. Just as you can use social media platforms to spread positive news about your business, your customers can also use the platforms to give negative reviews about the same products.
When you have a refund policy in place, your business stands a better opportunity with your customers. If your customers ask for refunds, you can refer them to the section that explains your refund policy; this will enhance the good customer-business relationship your dropshipping business needs to thrive.
Transparent shipping time
In the dropshipping business, third parties handle product delivery; however, it is crucial to customer satisfaction. Processing time and shipping time make up delivery time; customers purchase products to meet their needs and want the products delivered when they need them.
When you delay the delivery of products to your customers, they can initiate legal actions and demand refunds. A drop shipper can avoid all these problems by making shipping time transparent.
You can display information about your shipping time on your website or Q&A pages for your customers. Even if you are not directly in charge of shipping the products, you can get the relevant information for your shipping agents.
When you have the information on how long it will take to source, label, and package the products, you can add that to the time it takes for shipping to have in-depth knowledge of the shipping time.
“Is dropshipping legal?” Nobody needs to ask this question again. Dropshipping is legal, and as you have with any other business, you can seek redress any time a drop shipper infringes on your rights.