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Dropshipping is an ethical way of doing business as long as you’re doing it transparently and your customers understand the nature of the sale. However, there are instances in which dropshipping may fall into the ethical gray area, like when some dropshippers mislead customers into thinking that they have an item in stock.
Although some sellers view dropshipping as a side hustle, it’s a perfectly valid business model that can be very lucrative. But for you to succeed in your dropshipping business in the long terms, you have to fully understand and follow its ethics and regulations. In this article, you’ll learn about dropshipping best practices to help you start your business on the right foot.
What Is Dropshipping?
Dropshipping is a type of digital retail business in which the retailer lists products on an online marketplace, like eBay, and accepts orders from customers without keeping physical inventory. When a customer places an order, the seller purchases the item from the supplier or manufacturer or transfers the order to the supplier for order fulfillment.
Some dropshippers also purchase products from other retailers to fulfill their orders, although some e-commerce sites don’t condone that kind of dropshipping and it’s best to abide by the policies of each platform.
In most cases, you, as the retailer, are only responsible for marketing and selling the products. You don’t have control over the quality, inventory management, storage, and shipping.
When you’re thinking about the kind of dropshipping you want to do, you have to consider two main client profiles: high-ticket dropshipping and low-ticket dropshipping. High-ticket dropshipping involves selling high-priced, high-value items, while low-ticket dropshipping involves selling ordinary, low-priced products.
Traditional dropshipping is largely focused on low-ticket items because most sellers want to sell relatively cheap and fast-moving products. But today, this tradition has changed because many sellers have realized the benefits of selling high-priced items through dropshipping, making high-ticket dropshipping very popular.
But before you venture into this new model of dropshipping, it’s important to understand how high-ticket sales work and how to choose the best high-ticket dropshipping products. You also need to familiarize yourself with dropshipping best practices, as these will determine how successful your venture will be.
Basic Dropshipping Principles
As the dropshipping industry continues to grow, more retailers are finding new ways of increasing their sales through dropshipping. This business model offers you an opportunity to expand your product listings without having physical inventory. With the growing number of dropshippers, running a successful dropshipping venture won’t be a walk in the park, which is why you need to do it correctly by following good dropshipping principles.
Business License
Although dropshipping is a legitimate business, it’s not a must to have a business license. Many retailers start a dropshipping business without a license; however, the lack of this license can be a big deal in some countries. So, be sure to check what commerce laws in your country stipulate before you launch your business.
Liability
As a retailer, you’re responsible for the satisfaction of your customers. Although you’re not the one handling product development, storage, inventory management, and shipping, you have to ensure that what is delivered to your client is exactly what you sold them. This means that you have to work with honest and reliable suppliers and manufacturers.
You should also have a variety of suppliers and manufacturers on hand so that you have a sufficient product supply to fulfill all your orders–if one supplier doesn’t have a specific product, you can simply get it from the next supplier. You’re also responsible for ensuring that the products delivered to your customers are of the right quality.
Therefore, you must review samples of the products before you start selling them to your customers; otherwise, you risk tarnishing your reputation by selling subpar items.
Taxes
To avoid legal problems, you have to pay your taxes where applicable. If you’re not sure about your tax situation, consult your attorney or accountant. They’ll understand the commerce laws in your country and be able to advise you on taxation.
Terms and Conditions
To avoid lawsuits, create a policy document for your dropshipping business with clear terms and conditions–your attorney can help you develop the policies.
All in all, dropshipping is ethical as long as you follow the principles and regulations in place, and if you should have any questions regarding licensing, liability, taxes, or terms, be sure to consult your attorney.
