Checklist: Rules for dropshipping products
Dropshipping is selling products online without owning your own physical stock. The supplier has the products. However, you are still responsible and liable for the products you sell. Read here what you must deal with when you start dropshipping.
How does dropshipping work?
In dropshipping, you begin an online shop without an inventory. Your customer orders the product from your business. But you do not ship the product to the customer yourself. You order the product from the supplier, who sends it to the customer. You can sell the products through your own online shop or an online sales platform.
Dropshipping has both advantages and disadvantages. For example:
- You do not need to buy and store stock.
- You do not 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.
To reduce the risk associated with dropshipping, you can take out business liability insurance. Read more about the pros and cons of dropshipping on kvk.nl.
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 for the payment, delivery, service, and a 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.
Read all the rules for online sales.
Every product you sell must be safe. This is why there are requirements for the products shipped on behalf of your business. 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. Use the online tool to determine your role.
There are also requirements for product packaging and labelling.
Check carefully that the products you sell are not counterfeit and do not infringe the trademark rights of others. Also pay attention to branded products that come from outside the European Economic Area (EEA). These may only be brought into the EEA with the permission of the brand owner.
It is a good idea 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.
Read more about drafting and using general terms and conditions.
VAT rules can be complicated with dropshipping. How and where you must pay VAT partly depends, for example, on:
- if you are selling to a private consumer or another business
- if you are trading within or outside the European Union (EU)
Are you supplying abroad? Then, in many cases, you need to register the VAT in the customer's country. Several options are available for international dropshipping.
Do you deliver products to customers within the EU? The VAT rules are different from when you only supply products to Dutch customers. For sales within the EU, for example, there is a single threshold amount of €10,000. After that, you start paying VAT in your customer's country of residence.
Read more about VAT and doing business abroad.
Do you import goods from suppliers outside the EU? You will usually have to pay import duties on products from outside the EU.
You will have to deal with your customers' personal data. For example, name, phone number, and address. In doing so, you must follow the rules of the General Data Protection Regulation (GDPR). You should always handle customer data with care. For example:
- You may not ask for more data than necessary. For example, to send a package, you need the address but not a date of birth. So you may not ask for a date of birth, unless you are selling a product restricted to customers 18 years and older.
- If you collect personal data via your website, you should at least use a secure transfer protocol (https). This prevents criminals from reading the traffic to your website.
- Your online shop's default settings should support the privacy of your customers. For example, you should not pre-tick a field with ‘Yes, I want to receive news about offers’.
- You must let your customers know what you do with their personal data. You do this with a privacy statement on your website.
- You must not share your customers' personal data with others.
Rules also apply to the processing and storage of personal data. Read more about the GDPR.
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. This is called formjacking. Find out what you can do to prevent formjacking.
Ask your supplier where the product comes from and how it is made. What raw materials are used? How many hours do the employees work and under what working conditions? If you do business abroad, the government expects you to operate in a socially responsible manner. So make sure you know what is happening in your production chain. And check whether there are any risks to people and the environment.
Do the CSR Risk Check to assess the risks for your products and find out how you can manage them. Read more about supply chain responsibility.
Ask for help and advice from the CSR support centre
Are you having problems? Or would you like to know more or get advice about international corporate social responsibility? Contact the Netherlands Enterprise Agency’s CSR support centre. This website is in Dutch, but you can contact their advisers by email in English.