{"id":203181,"date":"2021-03-04T16:29:30","date_gmt":"2021-03-04T03:29:30","guid":{"rendered":"https:\/\/legalvision.co.nz\/?p=203181"},"modified":"2024-10-09T12:47:19","modified_gmt":"2024-10-08T23:47:19","slug":"dropshipping-legal","status":"publish","type":"post","link":"https:\/\/legalvision.co.nz\/e-commerce\/dropshipping-legal\/","title":{"rendered":"Is Dropshipping Legal in New Zealand?"},"content":{"rendered":"\n<p>Many Kiwi entrepreneurs are looking to dropshipping as a potentially profitable side hustle since all you need is a stable internet connection and time. You can use well-known online marketplaces, like AliExpress or Amazon, to operate your dropshipping business or start from scratch and make your own website. A dropshipping business model requires careful preparation and active maintenance to be profitable. If you do not manage your&nbsp;<a href=\"https:\/\/legalvision.co.nz\/e-commerce\/setting-up-dropshipping-business\/\">dropshipping business<\/a>&nbsp;correctly and in line with New Zealand\u2019s laws governing online stores, you could find yourself in both financial and legal trouble. This article will explain:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>how dropshipping works in NZ;<\/li>\n\n\n\n<li>how you can set up a dropshipping business; and<\/li>\n\n\n\n<li>dropshipping\u2019s profitability as a business model.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">What is Dropshipping?<\/h2>\n\n\n\n<p>Dropshipping refers to the business model where:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>customers order and purchase items through your website;<\/li>\n\n\n\n<li>you forward the order to a third-party wholesaler, paying them for their product;<\/li>\n\n\n\n<li>the wholesaler then ships the product directly to the customer; and<\/li>\n\n\n\n<li>you pocket the price difference.<\/li>\n<\/ul>\n\n\n\n<div  class=\"box box--icon box--info\">\n    <p>For example, say customers purchase headsets from your dropshipping website at $50. You then place the order with your headset supplier and pay them their price of $40. They organise shipping the headset to the customer, and you pocket the $10 difference.<\/p>\n<\/div>\n\n\n\n<p>You do not have to handle inventory, so you do not need to store the products or facilitate delivery. Therefore, there is a low barrier to entry for dropshipping, and it could be a good option if you want to break into e-commerce.\u00a0<\/p>\n\n\n\n<p>Dropshipping is legal in NZ as long as you comply with laws around selling online, such as:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>notifying customers that you are \u2018in trade\u2019;<\/li>\n\n\n\n<li><a href=\"https:\/\/legalvision.co.nz\/regulatory-and-compliance\/consumer-guarantees-act\/\">guaranteeing product quality and safety<\/a>;<\/li>\n\n\n\n<li>providing customer remedies if something goes wrong;<\/li>\n\n\n\n<li>protecting your customers\u2019 privacy; and<\/li>\n\n\n\n<li>not engaging in\u00a0<a href=\"https:\/\/legalvision.co.nz\/regulatory-and-compliance\/five-ways-to-help-your-new-zealand-business-comply-with-the-fair-trading-act\/\">misleading advertising<\/a>.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Starting a Dropshipping Business<\/h2>\n\n\n\n<p>It is your job as a dropshipper to curate products for your customers, facilitate the advertising of those products and streamline the ordering process. Plan ahead, and you can save yourself a lot of trouble.&nbsp;<\/p>\n\n\n\n<p>If you want to start a dropshipping business, consider the following steps.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">1. Choose a Product<\/h3>\n\n\n\n<p>You need to find profitable products to operate a successful dropshipping business model. Do your research, and find a gap in the market. When choosing your products, consider:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>marketability;<\/li>\n\n\n\n<li>ease of shipping;<\/li>\n\n\n\n<li>price margins;<\/li>\n\n\n\n<li>local availability; and<\/li>\n\n\n\n<li>potential expansion to similar products.<\/li>\n<\/ul>\n\n\n\n<p>For example, selling smaller, more durable products, such as novelty phone cases, may make the shipping process more manageable, and there is less potential for something to go wrong.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">2. Find a Supplier<\/h3>\n\n\n\n<p>The next crucial step is to find a reliable supplier. Since you rely on them for delivery and product quality, make sure to do your research and find an appropriate wholesaler. When choosing a supplier, you should consider factors such as:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>the cost of the product;<\/li>\n\n\n\n<li>shipping and delivery costs;\u00a0<\/li>\n\n\n\n<li>delivery timeframes;\u00a0<\/li>\n\n\n\n<li>warranties provided by the supplier; and<\/li>\n\n\n\n<li>returns, repairs and refunds.<\/li>\n<\/ul>\n\n\n\n<p>You can find suppliers and contact them individually. There are also online supplier directories, such as:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>SaleHoo; and<\/li>\n\n\n\n<li>Oberlo.<\/li>\n<\/ul>\n\n\n\n<p>In all cases, carefully read through any contract you sign with a dropshipping supplier. Be clear about what happens if there is an issue with delivery timing or if products are damaged during shipping.<\/p>\n\n\n\n<p>Once you have chosen your products and a potential supplier, you should order samples of the products and use the products over an extended period of time to verify the quality before sending the products to your customers.&nbsp;<\/p>\n\n\n\n<div  class=\"box box--icon box--info\">\n    <p>It is important to note that most suppliers will be based overseas, so the packaging and labelling of their products may not comply with NZ law. As the business selling the products in NZ, it is your responsibility to ensure the packaging of the products is appropriate and legally compliant. Certain products, such as textile or cosmetic products, have strict <a href=\"https:\/\/legalvision.co.nz\/regulatory-and-compliance\/labelling-packaging-laws\/\">packaging regulations<\/a>, so it is essential to be aware of these before you start dropshipping.<\/p>\n<\/div>\n\n\n\n<h3 class=\"wp-block-heading\">3. Create Your Website<\/h3>\n\n\n\n<p>The variety of e-commerce platforms available now means you have many options to choose from when deciding how to operate your dropshipping business online.\u00a0<a href=\"https:\/\/legalvision.co.nz\/e-commerce\/legal-considerations-for-shopify-business\/\">Shopify is a useful option<\/a>, and they offer many services for dropshippers, including Oberlo integration.<\/p>\n\n\n\n<p>Another option is to reserve your own domain name and create a website or operate from an online marketplace. Regardless of your choice, make sure it offers a secure payment method, and carefully read through any terms and conditions of the online store platform you use.<\/p>\n\n\n\n<p>When creating your website, be aware of common legal documents you may need, including:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/legalvision.co.nz\/commercial-contracts\/enforceable-terms-and-conditions\/\">website terms and conditions<\/a>;<\/li>\n\n\n\n<li>website terms of use; and<\/li>\n\n\n\n<li>privacy policy.<\/li>\n<\/ul>\n\n\n\n<p>Your terms and conditions will outline your legal relationship with your customers. As such, it may include the following terms:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>pricing;<\/li>\n\n\n\n<li>payment;<\/li>\n\n\n\n<li>refunds and exchanges;<\/li>\n\n\n\n<li>warranties and disclaimers;<\/li>\n\n\n\n<li>limitations to your liability;<\/li>\n\n\n\n<li>your IP ownership; and<\/li>\n\n\n\n<li>reference to your\u00a0<a href=\"https:\/\/legalvision.co.nz\/data-privacy-it\/i-am-building-a-website-for-my-startup-how-can-i-write-a-privacy-policy\/\">privacy policy<\/a>.<\/li>\n<\/ul>\n\n\n\n<p>Effective terms and conditions will help limit your liability and avoid potential legal disputes later on.<\/p>\n\n\n\n<p>Meanwhile, your terms of use will detail how your customers can appropriately use your website. It should outline acceptable and prohibited conduct, as well as consequences for breaching the terms.\u00a0<\/p>\n\n\n\n<p>Lastly, your privacy policy will enable you to comply with your obligations under the\u00a0<em>Privacy Act 2020<\/em>. The Act requires you to inform customers how you will collect, manage and store their personal information. Personal information is any data that can identify a person, such as names, physical addresses and contact details. Your policy can include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>how and why you collect information;<\/li>\n\n\n\n<li>how the information will be stored, collected and protected;<\/li>\n\n\n\n<li>who you will share the data with;<\/li>\n\n\n\n<li>how customers can contact you about their information;\u00a0<\/li>\n\n\n\n<li>whether providing the information is compulsory;<\/li>\n\n\n\n<li>consequences of not providing information; and<\/li>\n\n\n\n<li>your procedures in case of a privacy breach.<\/li>\n<\/ul>\n\n\n    <div class=\"my-7 lg:my-10 border-y-2 border-gray-100 py-7 lg:py-10 flex flex-col sm:flex-row items-start gap-10\">\n                    <img decoding=\"async\" class=\"w-52 mx-auto my-0! rounded\" src=\"https:\/\/img.legalvision.com.au\/wp-content\/uploads\/sites\/2\/2021\/12\/22115855\/cytonn-photography-GJao3ZTX9gU-unsplash-e1640129621597.jpg\" alt=\"Front page of publication\"\n                 loading=\"lazy\" width=\"208\" height=\"298\">\n                <section>\n            <div class=\"text-2xl font-bold\">Commercial Contracts Checklist<\/div>\n            <div class=\"body-text\">\n                <p>To protect your business, ensure supplier contracts meet your business\u2019 needs. Our free Commercial Contracts Checklist will help.<\/p>\n            <\/div>\n            \n\n<a href=\"https:\/\/go.legalvision.co.nz\/Commercial_Contracts_Guide_NZ.html\" class=\" block px-5 py-3.5 max-w-fit bg-orange button__hover transition rounded text-white font-bold text-lg no-underline uppercase leading-tight text-center\" target=\"\" rel=\"\">Download Now<\/a>        <\/section>\n    <\/div>\n\n\n\n\n<h3 class=\"wp-block-heading\">4. Sell, Market and Engage<\/h3>\n\n\n\n<p>Once you have set up your online store and listed your products, you can get to selling. Your success will hinge on how well you can market and engage customers and maintain that engagement as you add new products. You may wish to promote your business on social media, such as by starting an Instagram page to showcase your products. Take advantage of search engine optimisation and other web algorithms to draw customers to your site.&nbsp;<\/p>\n\n\n\n\n<a href=\"#content-next\"\n   class=\"block p-4 mt-10 text-xl font-bold text-center text-white no-underline bg-gray-800 rounded-t-xl\">\n    Continue reading this article below the form\n    <i class=\"text-xl fa-regular fa-arrow-down\"><\/i>\n<\/a>\n<div class=\"px-6 pt-10 pb-12 mb-10 text-center bg-gray-100 rounded-b-xl sm:px-12 test\">\n    <div class=\"mb-8 text-2xl font-bold text-orange\">\n        Need legal advice?\n        <br>\n        <span class=\"text-lg not-prose\">\n                            Call <a href=\"tel:+64800005570\" class=\"not-prose\">0800 005 570<\/a> for urgent assistance.\n                <br>\n                Otherwise, complete this form, and we will contact you within one business day.\n                    <\/span>\n    <\/div>\n\n    \n\n<div class=\"not-prose flex justify-center text-left gform_input_bg_white    \">\n    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However, you will need to invest in providing good customer service. If something goes wrong, you are the first point of contact for customers. It is your job to hear their complaints and resolve their issues. Make trustworthy customer service and availability a focal point of your business, and you can establish footing against larger competitors in the market.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Key Takeaways<\/h2>\n\n\n\n<p>Dropshipping is a business model where you curate and sell products to customers, but a third-party supplier manages inventory and the delivery process. Be mindful of the time and effort you need to make this business model profitable, engage in effective marketing practices and maintain customer goodwill.&nbsp;<\/p>\n\n\n\n<p>If you would like more information or help with your dropshipping business, our experienced&nbsp;<a href=\"https:\/\/legalvision.co.nz\/online-business-ecommerce-lawyers-lp\">e-commerce lawyers<\/a>&nbsp;can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers who can answer your questions and draft and review your documents. Call us today at&nbsp;<a href=\"tel:+64800447119\">0800 447 119<\/a>&nbsp;or visit our&nbsp;<a href=\"https:\/\/legalvision.co.nz\/membership\/\">membership page<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Frequently Asked Questions<\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1728431029144\"><strong class=\"schema-faq-question\"><strong>What is dropshipping?<\/strong><\/strong> <p class=\"schema-faq-answer\">Dropshipping refers to the business model where customers purchase products from your website, and you place their orders with a third-party supplier, paying the cost price. The supplier then facilitates delivery, and you profit from the price difference.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1728431038756\"><strong class=\"schema-faq-question\"><strong>Is dropshipping legal in NZ?<\/strong><\/strong> <p class=\"schema-faq-answer\">Dropshipping is legal in NZ as long as you comply with laws regarding trading online. This concerns consumer guarantees, privacy, and engaging in fair trading practices.<\/p> <\/div> <\/div>\n<div class=\"not-prose m-feedback-prompt\">\n    <!-- Thumbs up\/down bar -->\n    <div class=\"m-feedback-prompt__main\">\n        <div class=\"m-feedback-prompt__title\">Was this article helpful?<\/div>\n        <div>\n            <!--span class=\"m-feedback-prompt__button--text\">Thanks!<\/span-->\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--yes\"\n                    data-analytics-link=\"feedback-prompt:yes\" aria-label=\"Agree\">\n                <i class=\"fa-regular fa-thumbs-up fa-3x\"><\/i>\n            <\/button>\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--no\"\n                    data-analytics-link=\"feedback-prompt:no\" aria-label=\"Disagree\">\n                <i class=\"fa-regular fa-thumbs-down fa-3x\"><\/i>\n            <\/button>\n        <\/div>\n    <\/div>\n\n    <!-- Feedback form -->\n    <div class=\"m-feedback-prompt__form\">\n        <div class=\"m-feedback-prompt__form--thanks \">\n            <div>Thanks!<\/div>\n            <p>\n                We appreciate your feedback \u2013 your submission has been successfully received.            <\/p>\n        <\/div>\n        <form id=\"contact-form\" class=\"m-feedback-prompt__form--form\" action=\"\" method=\"post\">\n            <input type=\"hidden\" id=\"authenticity_token\" name=\"authenticity_token\" value=\"ed19fd34f0\" \/><input type=\"hidden\" name=\"_wp_http_referer\" value=\"\/api\/wp\/v2\/posts\/203181\" \/>            <input value=\"https:\/\/legalvision.co.nz\/e-commerce\/dropshipping-legal\/\" type=\"hidden\" name=\"currenturl\"\n                   id=\"currenturl\">\n            <input value=\"Is Dropshipping Legal in New Zealand?\" type=\"hidden\" name=\"currenttitle\"\n                   id=\"currenttitle\">\n            <label>\n                <!-- display on thumbs-up -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--yes\">\n                    Can you tell us <span class=\"font-semibold\">why<\/span> you found it helpful?\n                <\/span>\n\n                <!-- display on thumbs-down -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--no text-lg\">\n                    How can we better improve this article?\n                <\/span>\n                <textarea name=\"feedbackmessage\" id=\"feedbackmessage\" required><\/textarea>\n            <\/label>\n\n            <div class=\"m-feedback-prompt__form--error\" id=\"form-submit-error\"><\/div>\n            <button id=\"submit-contact-form-button\" type=\"submit\" name=\"commit\" class=\"m-feedback-prompt__form--submit\"\n                    data-analytics-link=\"feedback-prompt:submit\">\n                Submit            <\/button>\n        <\/form>\n    <\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Many Kiwi entrepreneurs are looking to dropshipping as a potentially profitable side hustle since all you need is a stable internet connection and time. You can use well-known online marketplaces, like AliExpress or Amazon, to operate your dropshipping business or start from scratch and make your own website. A dropshipping business model requires careful preparation<a href=\"https:\/\/legalvision.co.nz\/e-commerce\/dropshipping-legal\/\">Continue reading <span class=\"sr-only\">&#8220;Is Dropshipping Legal in New Zealand?&#8221;<\/span><\/a><\/p>\n","protected":false},"author":13388,"featured_media":896,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"1404,219097,219316,1639,1213,1205","_relevanssi_noindex_reason":"","editor_notices":[],"footnotes":""},"categories":[6],"tags":[25,442,447,451,638],"class_list":["post-203181","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-e-commerce","tag-small-business","tag-dropshipping","tag-shopify","tag-supplier","tag-misleading-advertising"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Is Dropshipping Legal in New Zealand? 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