Is Dropshipping Legal? The Ethics of a Dropshipping Business

Is dropshipping legal? What are the ethics of a dropshipping business? Is dropshipping ethical?

These are common questions many beginners have when looking to get started with dropshipping.

Legal Disclaimer: The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Readers of this website should contact their attorney to obtain advice with respect to any particular legal matter.

In short, yes dropshipping is legal. However, depending on how you operate your business you may be subject to good or bad legal practices.

What Is Dropshipping?

First and foremost, dropshipping has existed years upon years and has been around for a very long time. It is an order fulfillment service that is provided by suppliers or an external company (such as a 3PL aka third-party logistics).

A company like Wayfair has been operating on the dropship model since its inception.

If you have an eCommerce store (maybe a Shopify store), selling bracelets and jewelry, you can fulfill those orders by using dropshipping.

Dropshipping is when someone places an order on your online store you go into the backend and click “fulfill” to submit the order details to the company that supplies your products. This may also constitute sending an email and forwarding the order details to your supplier.

Once the supplier receives the order, they then send and ship the product directly to the customer without your involvement.

This model has existed for years and is nothing revolutionary in the world of online commerce. It’s just a way to fulfill orders.

Is Dropshipping Legal?

If you choose to utilize AliExpress as a dropshipping fulfillment method, there are some suppliers that are going to offering a variety of different products and shipping methods. Some of which, may not be legal to sell or best for the customer.

For example, it’s best to avoid selling any merchandise that features any licensed branding or logos. This can range from Louis Vuitton bags or Nike shoes to superheroes, movies, TV shows, and gaming related merchandise.

The sale of counterfeit goods in China is something the United States is cracking down on for product imports. This may cause you legal issues if a company like Disney sends you a cease and desist letter for illegally selling unlicensed products and infringing on intellectual property in your online store. Or if the U.S. government seizes counterfeit goods at a trade port.

How likely are either of these scenarios to happen? While that’s uncertain, it’s not a risk worth taking and best to avoid altogether.

Is Dropshipping Ethical?

When it comes to ethics, you also want to make sure that you’re offering the best experience for your customers at the end of the day.

This is the most ethical way to run your business.

If you have a good relationship with your customers, they’re also more likely to come back and purchase with you again when you continue to provide value.

Still, many people run into the dilemma of if dropshipping is legal due to the typically long shipping times from AliExpress. Some dropshipping companies get a poor reputation for not treating customers well.

A popular story in recent news is from Kylie and Kendall Jenner endorsing “knock-off” Apple products as reported by BBC.

The whole “bad rap” that dropshipping gets are from bad business people and the use of unethical practices. It’s not the dropshipping business model that’s wrong at all. These include abuse reports such as:

• Not answering customer emails
• Not responding to customer questions
• Never shipping the products
• Avoiding refunds
• Websites going down and “disappearing”

Chinese Product Alternatives for Dropshipping

Or, you can forgo using AliExpress altogether and instead dropship with direct supplier relationships similar to Wayfair.

You can also use a company like Spocket, which offers access to dropshipping suppliers of original US/EU products with 1 to 3-day shipping times.

How you choose to supply products in your eCommerce store as a retailer is up to you.

To Conclude

At the end of the day, you’re acting as the middle man by providing products to your customers and shipping directly to them. As long as you maintain a healthy relationship with your customers, and you treat them well, you’re in the clear.

It’s your job as a dropshipping company to run your business well with ethical practices.

The people who run into dropshipping legal issues are the scammy dropshipping marketers who treat customers like trash and go the wrong way that end up hurting the long-term sustainability of the business.