Dropshipping: Selling Online without E-commerce
You have a company and would like to sell your goods online or, again, you are starting a line of gadgets to put on the net. The opportunities offered by the internet, especially in this period, are there for all to see. E-commerce, however, can be difficult and burdensome to manage : the law in fact provides for numerous obligations to protect consumers in the case of contracts concluded online (the right of withdrawal , information obligations, etc.) and the legislation on privacy requires careful data management in any case.
However, it is not the case to be discouraged: selling online through dropshipping could in fact overcome all these problems . In this way, even companies that do not have sufficient resources to set up an e-commerce (or who are not interested in doing so) or to open a company profile on a marketplace can benefit from the economic possibilities offered by the internet.
What does dropshipping mean?
First, let’s understand together what dropshipping means and how it works.
With a dropshipping contract, the operator of an online portal (intermediary) concludes a commercial agreement with one or more producers of goods. Unlike the usual, however, the manufacturers will provide them with the goods only in the event that online purchases are made . In other words, the goods will not first be purchased by the intermediary and then resold, but will be delivered to him only upon request and to the extent already ordered by the end customers. Indeed, the intermediary may not have a warehouse. The supplier, on the other hand, can save himself the costs of managing an e-commerce or an online store, while still being able to take advantage of the online presence of his products.
Marketplace vs dropshipping: the differences
What are, however, the main differences compared to other types of online commerce?
A subject can decide to open an e-commerce site to sell only and exclusively their products . In this case, he will have to take care of opening the site, of bringing it into compliance from a legal point of view, of producing the goods and of taking care of shipping and transport. Of course, all of these functions can be outsourced through procurement or other forms of outsourcing . In any case, however, the obligations and responsibilities will ultimately fall to the owner of the e-commerce.
Alternatively, it will be possible to open a company account in an existing marketplace . This is, in all probability, the most widespread model, which involves a considerable simplification of the IT management of the business.
Finally, we find dropshipping : in this case, there will be no online business space. The products will be offered for sale directly by a third party, who will have direct relationships with consumers.
What are the pros and cons of drop shipping?
As you may have guessed, the benefits of dropshipping are remarkable.
With the dropshipping model, in fact, it is possible to avoid all the costs and charges associated with opening an e-commerce or a shop on a market place . In short, it is an agile way of extending one’s distribution network.
Secondly, only a contractual relationship will have to be established with the intermediary and not, instead, multiple relationships with all buyers . As a consequence, subject to the exceptions provided for by law, the rules of the Consumer Code and the law on electronic commerce will be borne by the site manager.
In all likelihood, however, the dropshipping agreement may provide for different breakdowns of obligations.
So let’s see what the minimum content of a dropshipping agreement is.
How to manage intermediaries through the dropshipping contract
When selling through dropshipping, a company entrusts the marketing of its products to a third party. As you can guess, it is a very delicate operation . The intermediary, in fact, is not directly involved in the production process and has no ownership of the trademarks , patents and distinctive signs of the company. Nonetheless, its activity will affect the image and diffusion of the products. For these reasons, the dropshipping agreement should clearly and comprehensively answer at least the following questions: in what form and in what manner can the goods be sold? Should combinations with other brands be avoided? What happens if the consumer, within 14 days of receiving the ordered product, exercises the right of withdrawal provided for by the Consumer Code?
Other aspects to be carefully regulated concern the logistical management of the goods, the limits to the use of trademarks and distinctive signs of the supplier company and the possible presence of exclusivity and / or non-competition constraints. Furthermore, it will be very important to pay attention to the division of responsibility in the event of disputes with consumers or other economic operators.
These and other issues can be regulated with the dropshipping contract: an agreement with which all the issues for which the law, at least for the moment, does not give an answer will be regulated.
Dropshipping without VAT?
We are often asked if it is possible to dropshipping without having registered a VAT number. In this regard, let’s go back to the discourse already mentioned before: dropshipping, at the moment, is not a specific type of contract, with autonomous rules and different from other contracts. It follows that the activities carried out following this business model are subject to the tax regulations in force . Therefore, if they are exercised in a habitual way, with professionalism, they will be subject to taxation for VAT purposes.
Selling online through the dropshipping contract
As we have seen, selling online through the dropshipping contract could be very advantageous, especially for those who are new to online commerce.
The very idea of opening an e-commerce based on dropshipping could be tempting for many.
If not correctly set up, however, this activity scheme could give rise to numerous doubts and questions , also thanks to the current regulatory uncertainty.
Also Read : best dropshipping apps for shopify