Is Dropshipping Legal on Amazon? 2021 Facts!
If you are starting an online business or making an online store then “is dropshipping legal?” must have crossed your mind.
The simple answer would be yes, it is legal. Dropshipping is a type of fulfillment in which the sellers or retailers handle the sales and the suppliers handle the delivery or shipping. So, there is nothing wrong with dropshipping in simple terms. Dropshipping is a type of business model that many of the sellers follow. Even some of the huge firms do dropship. But that does not mean that everyone does this the right way. Moreover, Amazon has its own rules regarding dropshipping. We will discuss that one later.
First, let’s see where you can get in trouble or how you can get in trouble with dropshipping.
Selling Patented Products
The first thing is selling products that you are not authorized to sell. So, you are stealing someone’s brand and trying to make it your own. Or selling someone else’s hard work and making money the easy way. Patent products receive a special authority by the US and also a trademark. Therefore, selling which is not your own in any way is illegal. So, this is the answer to your question Is Dropshipping Legal when it is done wrong.
The way that it is done is simple. You find a brand that is selling like hot cakes in the season. So, you make a website and list all of their products on your website. Then you use someone to secure the items and sell them to the customers using your online store. You are not allowed to do that. Moreover, you can get permission to sell from the owners. If the permission is granted then you can do that. It will be good for the expansion of their business under some terms and conditions.
But if you are not authorized to do that, then you shouldn’t. it can get you in big trouble. The firm can sue you and you will lose more than just money.
Not Paying Taxes
The second thing is that is illegal and can get you in trouble. Dropshipping is a real business. Therefore, you need to keep things real as well. You are building a business with dropshipping and where there is a business then there are taxes. Money comes in and money goes out. You need to keep track of the money coming in and the money going out. The profits and the losses should be listed and kept as a record.
So, just like any business if you receive profits then you need to pay taxes. There are no avoiding taxes. If you think that an online business is somewhat less than the real market and you get tax compensations. Then you are wrong. Don’t think that you can escape from taxes when running an online business. If you do not pay taxes then you can get yourself in trouble. All business owners, minor or major need to pay taxes to sustain their business. If the taxes pile up, they can damage your personal life as well.
So, to avoid any complications pay your dropshipping taxes constantly and do not avoid this factor. Is Dropshipping Legal? Yes, it is legal when it is done the right way.
You cannot do a copy-paste dropshipping business. It is illegal. Products are protected by design patent utility. This means that no one is allowed to copy the design or the functionality of the product and sell it.
If someone is selling cheap copies of the original product then this can get you in trouble as well.
Selling products that are restricted or Prohibited
This one can get you in trouble. You cannot sell products that are not allowed. Things like supplements and things that have major claims behind them. You are allowed to sell those but only when you go through the proper channels to sell them. Make sure you have the right authorization. Make sure you follow the policies set by the company and fulfill all of their demands. Otherwise, you would not be allowed to sell the product. If you do manage to sell some then that would be illegal.
On Amazon, you need to have special permission as a seller to sell supplements. There are two categories of sellers, gated and ungated. You need to be an ungated seller and have the proper and current paperwork to sell supplements and other restrictive products. You must do whatever is necessary for the platform to get proper authority. You cannot just swing it and hope that things would work out.
Yes, dropshipping is legal on amazon. But the sellers are always on the sharp end of the sword, they can get suspended any time. If Amazon suspects that you are not following their rules and regulations then they will immediately suspend you.
For more information on dropshipping feel free to contact us any time.
Dropshipping is a simple and smooth business. Sellers handle the sales and suppliers handle the shipment and delivery.
Is Dropshipping Legal? Now, the answer to the question would be obvious. After all the facts, you now know what type of things to avoid when doing a dropshipping business. Pay your taxes, do not sell copies of other brands, do not sell other brands claiming them as your own, and do not sell restrictive products without authorization.