Though starting a dropshipping business is quite easy, this business venture is more complicated than you imagine. It has many risks and legal issues. Learn how to avoid these legal issues and ensure success in this business.
Is it possible to sell products and earn money without inventory? Yes, it is possible in dropshipping.
Dropshipping is a retail fulfillment method where online stores do not need to touch the product inventories. The store purchases the product from a third-party supplier who then ships the products directly to customers. Thus, the seller has no hand in the processing and shipping of the products.
The concept of dropshipping is to help aspiring entrepreneurs start a business without the need for high capital. Unfortunately, this eCommerce scheme raises a lot of questions in terms of ethics from the customer’s perspective. Moreover, there are risks of legal issues concerning copyright, infringement, and trademark that you need to look out for.
As someone interested to venture this type of business, it is essential to do consistent research about dropshipping’s legalities. Learning the ins and outs of this business reduces the risks of legal issues. To ensure that you are operating your dropshipping business ethically and legally, here are some ways to avoid common dropshipping legal issues.
#1 Get a Business License
The first step in legalizing your dropshipping store is to obtain a business license. It limits your liability and reduces the chances of having legal issues in the future. Likewise, owning a business license boosts your store’s legitimacy in the eyes of customers and suppliers. Hence, more customers and suppliers will trust your store.
#2 Find a Good and Reliable Supplier
Some seller and customer issues in dropshipping sometimes stem from a fraudulent supplier. Thus, make sure to look for a legal supplier. You can look for recommendations online from trustworthy sources. Also, inspect the supplier’s terms and reputation. Communicate with the supplier and ask questions. If the supplier is unable to answer your questions and fails to clarify their terms, you should reconsider dealing with them.
#3 Practice Customer and Marketing Ethics
The intense competition between sellers in dropshipping is undeniable.
As a result, many sellers increase product prices to gain more revenues. Increasing product prices is reasonable to an extent. However, inflating prices is unethical for customers. Do not manipulate the prices for the sake of gaining more profit.
Also, make sure to abide by ethical marketing. Follow the practices of good marketing to avoid legal, copyright, and trademark issues.
#4 Establish Clear Terms, Conditions, and Refund Policy
Having terms, conditions, and refund policy are significant in a business regardless of its nature. These policies protect both the rights of the seller and customers. Moreover, establishing these rules and regulations gives assurance on the part of the customers, as well as boosting their confidence and loyalty to your store.
#5 Stay Away from Prohibited Products
Focus only on appropriate products to sell. No matter how profitable a certain product is, make sure to stay away from it if it is illegal. For example, avoid selling trademarked products. Selling such products will put your store in jeopardy, if not now but in the future. Selling a product from a well-known brand with a trademark is illegal.