Right, you had a question. Drop-shipping is a process in which your business sells items you don’t keep in stock. Instead, you collect the money and forward the order to a distributor or manufacturer, who ships to the customer, often using your business's packaging. The drop-shipper bills you for the sale.
Who's responsible? Short answer dept. The short answer is that, according to the FTC, you (the person taking the order) are responsible for fixing errors. So even though you may have a contract in which the drop-shipper promises to correct errors, ultimately, you, not the drop-shipper are responsible. So, we're sorry to report that you're the one who will have to either refund the money or supply a working product.
The downside of drop-shipping. As you can guess, we're not wild about drop-shipping and here are some more reasons why:
- You may be required to pay expensive setup fees — always avoid any drop-shipper who requests this.
- You may have to make monthly minimum orders regardless of your sales — watch out for this requirement.
- You will have little control over an item's price The drop-shipper may suddenly mark up an item, cutting into your profits.
- Drop-shippers are often in long lines of distribution, so that if any step along the way has a problem — manufacturer, wholesaler, middleman — you will suffer.
- You will unlikely have any warning before the drop-shipper runs out of stock — again, more negative feedback.
- Drop-shipping sometimes triggers additional legal requirements.