What is Drop Shipping?

Drop shipping is an arrangement between (i) a business and (ii) the manufacturer or distributor of a product that the business wishes to sell whereby the manufacturer or distributor (rather than the business) ships the product directly to the business’s customers.

What are the advantages of Drop Shipping?

For a business, the advantages of drop shipping are as follows:

  • You do not need to develop or produce products, which can be extremely costly.
  • You do not need to build your own inventory, which is costly and ties up your cash in inventory which you may or may not be able to sell.
  • No inventory means no leftovers. If the product you sell suddenly becomes outdated or obsolete, you are not the one left with a warehouse full of inventory that nobody wants. You do not have to offer heavy discounts, or take huge losses, on these products just to get them out of your warehouse to make room for new inventory.
  • You will be able to add new products to your website almost instantly, since you do not have to worry about stocking inventory.
  • You do not need to track your inventory.
  • You do not need to set up warehouse space.
  • You do not need to maintain a confusing shipping or receiving infrastructure.
  • It allows you to sell quality, brand-name products for a hefty profit, while someone else looks after product development and order fulfilment.

Conclusion

Drop shipping is becoming more and more popular. Indeed there are many advantages from a business perspective. If you are looking to enter into a dropship arrangement with a manufacturer or distributor, you should make sure you have a Dropship Agreement in place. A well drafted Dropship Agreement will set out the relationship between the business and the manufacturer or distributor, explain how products will be delivered, detail how each party will be paid and determine who is responsible for refunds. This will help avoid future disputes.

If you require a Dropship Agreement or have been provided with one and it contains provisions which you are unsure about, please get in touch with one of our specialised lawyers and they will be able to assist.

COVID-19 Business Survey
LegalVision is conducting a survey on the impact of COVID-19 for businesses across Australia. The survey takes 2 minutes to complete and all responses are anonymous. We would appreciate your input. Take the survey now.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. For just $199 per month, membership unlocks unlimited lawyer consultations, faster turnaround times, free legal templates and members-only discounts.

Learn more about LVConnect

Jill McKnight
Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

  • By submitting this form, you agree to receive emails from LegalVision and can unsubscribe at any time. See our full Privacy Policy.
  • This field is for validation purposes and should be left unchanged.
Our Awards
  • 2019 Top 25 Startups - LinkedIn 2019 Top 25 Startups - LinkedIn
  • 2019 NewLaw Firm of the Year - Australian Law Awards 2019 NewLaw Firm of the Year - Australian Law Awards
  • 2020 Fastest Growing Law Firm - Financial Times APAC 500 2020 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review 2020 AFR Fast 100 List - Australian Financial Review
  • 2020 Law Firm of the Year Finalist - Australasian Law Awards 2020 Law Firm of the Year Finalist - Australasian Law Awards
  • Most Innovative Law Firm - 2019 Australasian Lawyer 2019 Most Innovative Firm - Australasian Lawyer
Privacy Policy Snapshot

We collect and store information about you. Let us explain why we do this.

What information do you collect?

We collect a range of data about you, including your contact details, legal issues and data on how you use our website.

How do you collect information?

We collect information over the phone, by email and through our website.

What do you do with this information?

We store and use your information to deliver you better legal services. This mostly involves communicating with you, marketing to you and occasionally sharing your information with our partners.

How do I contact you?

You can always see what data you’ve stored with us.

Questions, comments or complaints? Reach out on 1300 544 755 or email us at info@legalvision.com.au

View Privacy Policy