How to dropship products
Dropshipping is selling products online without owning a physical inventory. The supplier does that. However, you remain responsible and liable for the products you sell. Read here what you have to deal with when you start dropshipping
How does dropshipping work?
In dropshipping, you sell products through your own webshop or an online sales platform. For example, smartphones, tools, and white goods. Your customer buys the product through you, but you do not ship the product to the customer yourself. You order the product from the supplier, who sends it to the customer.
Advantages and disadvantages of dropshipping
Dropshipping offers both advantages and disadvantages. For example:
- You don't need to buy and store stock.
- You don't need staff for packing and shipping.
- You are responsible for the buyer receiving the product even though you do not ship it yourself.
- You are liable for damage caused by products that are not safe.
Read more about the pros and cons of dropshipping.
Comply with online sales rules
If you sell products over the internet, you must abide by the rules for online sales. This also applies to dropshipping. The rules state that you must:
- Be clear about your products and prices. For example, provide clear information about the products' features.
- Clearly display your contact details on your website.
- State what rights your customer has around payment, delivery, service, and cooling-off period.
- State that it is not you, but another supplier who supplies the products.
- Keep good records of which products you sell to which customers. By law, your products must be findable if something is wrong.
Check the requirements for your products and packaging
Every product you sell must be safe. This is why there are requirements for the products you ship. Does your product not meet the safety requirements? Then you are at risk. For example, you must pay compensation if an accident happens due to your product. What exactly your responsibilities are depends on your role and the type of product you sell. Follow the decision tree of the Netherlands Food and Consumer Product Safety Authority (NVWA) for each product to see which rules apply to you. There are also requirements for product packaging and labelling.
Check trademark law
Check carefully that the products you sell do not infringe the trademark rights of others. If you sell counterfeit products, you will be liable for this.
Use general terms and conditions
It is also wise to use general terms and conditions when dropshipping. These state what rights and obligations your customers have when they order something from you. General terms and conditions can reduce your risks as an entrepreneur.
Calculate and pay VAT
VAT rules can be complicated with dropshipping. How and where you have to pay VAT partly depends on where your supplier is and where you deliver. Are you supplying abroad? Then, in many cases, you need to register VAT in the customer's country. Several options are available for international dropshipping.
Comply with GDPR
You will have to deal with your customers' personal data. For example, name, phone number, and address. In doing so, you must comply with the rules of the General Data Protection Regulation (GDPR). You should always handle your customers' data with care.
Protect your customers from formjacking
Many websites use input fields where website visitors can leave data. For example, to enter payment details. These input fields can be used by criminals to steal data. Find out what you can do to prevent formjacking.
Questions relating to this article?
Please contact the Netherlands Chamber of Commerce, KVK