What Is Dropshipping? Is It Legal? We’ve Got the Answers
Have you heard people mentioning dropshipping?
If so, you might already have an idea of what it is. People claim that dropshipping allows them to run a store without holding inventory, delivering directly from a manufacturer and taking customers’ money before even placing an order.
This explanation can leave us confused and asking questions. Is dropshipping legal? What exactly is dropshipping? And how can you learn more about it?
Dropshipping is a new way to revolutionalize eCommerce solutions–and businesses are utilizing it more and more in 2018.
Retail eCommerce is a huge industry, with online sales amounting to $409 billion in 2017. The market is only growing and expected to hit over $630 billion by 2022, so now is a great time to get involved.
This article will guide you through exactly what dropshipping is, how it works, and if it’s legal. (Spoiler alert: yes, it is.)
What Is Dropshipping?
The definition of dropshipping is pretty simple: Dropshipping is a supply chain management method in which the shop owner doesn’t need to keep goods in stock but instead transfers the customer’s orders and shipment details to either the manufacturer that will ship the product directly to the customer.
That means no worries or costs about having to hold stock in warehouses. You don’t have to spend time wrapping or shipping products, and you can run your store from anywhere in the world.
Sounds pretty cool right? So what’s the catch? Is dropshipping legal?
Is Dropshipping Legal?
This is the catch that a lot of people have shared concern over. If it’s that simple, surely it’s illegal, right?
So here’s the quick answer: No, dropshipping is not an illegal business.
But, since it’s a relatively new online business option, there are a lot of misconceptions about it. This method of online eCommerce leaves many people fearful after reading misinformation online.
We’re here to clear up those misconceptions once and for all.
How Does Dropshipping Work?
Dropshipping works for a lot of new companies. Instead of relying on heavy investment in stock, equipment, and packaging, you can start off with the bare essentials.
First, you pick a niche for your business or the product you want to sell. Don’t worry–you don’t have to stick to just one niche. You can change it up over time.
As an example, let’s say you’ve decided to sell women’s clothing. You pick your store name, register a domain, and set up your store using a WooCommerce platform or a store builder plugin software, like Shopify.
Once you set up your store, you look for your products and suppliers. Many drop shippers go to websites like AliExpress to find their products from overseas. Run by the Alibaba group, this company brought in over $24.8 billion in 2017, or they use software that helps to find Chinese dropshipped products like Yakkyofy
Once you find your product, you can speak to your supplier and begin selling through your store.
Is It Only Small Companies That Dropship?
It might sound like dropshipping is a shady tactic used by small online stores to exploit low foreign prices. In reality, that’s not the case at all.
There are many big companies that use drop shipping as their primary method of order fulfillment. There are probably many companies you know that use dropshipping.
For example, in 2012, dropshipping accounted for 34% of products sold by eCommerce mega-business, Amazon. If Amazon can amass nearly $14.2 billion in dropshipping sales, it’s a solution that can work for your business, too.
Other stores like Zappos and Sears also have incorporated dropshipping. And Wayfair.com has its entire business built around dropshipping.
How Do I Get Started with Dropshipping?
If you want to get started dropshipping, you should follow a few key steps.
Step 1: Find a Supplier
The first thing you want to do when dropshipping is identifying your product and niche. Then find a product and supplier to deliver your products.
Once you’ve identified your product, you should reach out to your manufacturer using the details listed online. Ask for a list of the wholesale suppliers. Ask these suppliers if they will support dropshipping.
Make sure you speak to these suppliers in a professional manner. You’re not going to have much chance of success with a poorly written email.
Or you can, more simply, find and import dropshipped products on your store with our app Yakkofy.
Step 2: Set up Your Dropshipping Store
Once you’ve got your product and niche sorted, it’s time to buy your URL and set up your dropshipping store. You can go with a basic WordPress site and incorporate WooCommerce.
Sometimes it’s more beneficial to go with a dedicated service like Shopify as an alternative. These tools have dedicated plugins for keeping your customers on your site for longer.
They improve average order values and prompt customers to make sales by notifying them when other customers have bought products.
Step 3: Get Traffic to Your Store
The third (and arguably the hardest) step to your dropshipping store is to get customers to your front door.
Marketing your eCommerce store successfully may take a combination of different tactics. This means you’ll need an understanding of different marketing techniques such as:
- Organic SEO for websites
- Facebook advertising
- Google AdWords
Understanding how to use these different techniques will help you to drive customers to your website. Although ads may be the most popular method, increasingly dropshipping stores are using other mediums to reach their customers.
This includes videos from websites like YouTube and using Instagram posts to drive customers to your store. Leveraging different social media sites is a great way to drive traffic to your eCommerce store.
Understanding how to get customers to your shop is the same online as it is in the real world. The success of your store will live and die by the number of customers your products reach.
It’s why many dropshippers opt for using sites like eBay or Amazon. Your potential customers are already present on these sites. So although they may take a cut of the sale, it’s worth it for the traffic they generate to your listings and products.
Is Dropshipping For You?
Dropshipping is an incredible new way for businesses without a lot of capital to begin selling online.
As for the original question, “Is dropshipping legal?” Yes, it is.
If you want help in getting your website set up with your dropshipping store,
and follow few simple passages. You will start to sell in few hours.