Is Dropshipping Legal?

I was asked this question a few days ago and was taken aback a little. This was the first time I have ever been asked this question and I had a puzzled look on my face for about half a second.


We have been providing legitimate dropshipping supplier information to online business owners for almost 2 decades now.

Yes of course dropshipping is legal! But there are some gray areas & something that some consider dropshipping but is actually something else.

Legal Drop Shipping is simply a fulfillment method. It's when a store owner doesn't hold the inventory for products they are selling. When a customer orders that product from the retailer, the retailer purchases it from the manufacturer or distributor and then the manufacturer/distributor will ship the order to the retailers end customer.

This allows retailers to offer all kinds of different products without having to purchase upfront inventory nor maintain the costly expenses that keeping a warehouse and staff would entail.

Dropshipping is not something new that was invented when online stores came to fruition in 1994. It has been around for a very long time and is even used by brick and mortar stores. Ever go to a large product store like a furniture store or large appliances and you are ready to buy but have to wait a week or so for delivery? That's because they are ordering the product directly from the manufacturer to ship to you or to their store for you to pickup. They don't hold that in their inventory. Remember mail order catalogs? Yes, mostly Dropshipped products.

Now, the important thing here is buying from the manufacturer/distributor, that's what makes it legal dropshipping.

There is something called "retail arbitrage" that many are confusing as legal dropshipping. This is NOT legal dropshipping in our opinion and will simply cause upset customers and many of these are being shut down from sites like Amazon.

Retail Arbitrage is when large chain stores like WalMart or Target is offering something at a discount, but you offer that product on your site or third party selling site for more. When a customer purchases that from you, you then buy it from WalMart or Target and ship it to the customer and keep the profit. Or you go to the store, buy it while it's on sale and then offer it at a higher price. Flipping for profit.

This is buying from a retail store and not from an actual legal wholesale supplier. This is not a sustainable way to conduct a business and there are gray areas, like copyright infringements.

As mentioned above, I have seen two kinds of retail arbitrage. One where the "retailer" is buying products from the clearance rack at the store and tying to sell it from their built up inventory and the other, they are buying online and entering the shipping information of the end customer as they are getting the product from Walmart.com or Target.com and etc. This latter one is causing the legal dropshipping confusion.

Customer perception for retail arbitrage is not received well with the "drop shopping" version (yes, I called it drop shopping). If you are buying something from a site, you expect it to come from that site or seller on that site, not shipped in a Lowe's or WalMart box with an invoice included in the box with someone else's name and a lower price than what you paid for it. Causing upset customers that can result in getting shut down.

Secondly, there are many brands that you MUST have permission to resell online. If you do not have that permission, you can get in lot of trouble for using their brand name and offering that product as a retailer, when you didn't have permission to do so. You can get your site shut down and penalized for it.

Retail Arbitrage "Drop Shopping" is not a long-term business model and does not create a sustainable profitable business.

But genuine legal drop shipping manufacturers and distributors, now THAT'S who you should work with to avoid legal complications and to start a profitable long term business. It's a scalable model and can be built upon and 100% legal. Where do you find those legal wholesale suppliers? Here at Worldwide Brands of course!