Is Dropshipping Legal - 10 Reasons Why It's Legit and Not a Scam

Is dropshipping legal or is it a scam?

Maybe you’ve been considering the idea of starting your own dropshipping business but you’re just not sure if this thing is legit. Or maybe you said something to your friends at work and they all told you it was a scam and not to waste your money.

Often times drop shipping is misunderstood by people and how it really works and in this article, I’m going to share 10 reasons why it is legal.

#1 Drop Shipping Works Similar to Brick & Mortar Stores

When it comes to selling stuff online dropshipping is nothing more than a way to sell products. In fact dropshipping works very similar to your typical brick and mortar stores.

For example, when you go to Walmart to buy a baseball bat you’ll notice that Walmart didn’t make that bat.

Nope.

Rather they work with thousands of different retailers all around the world selling their products at their physical locations. With dropshipping on the other hand you’re selling your products strictly through an online store through the Shopify platform.

However, dropshipping e-commerce stores differ in one particular way. With stores like Walmart that have physical locations, they have to invest a lot of money to buy products up front to stock their shelves. With drop shipping, you only buy the products from your suppliers once a customer has bought the product.

To understand this better here is a great video to help you out.

#2 You Work With Real Companies

To go a step further on point one drop shipping stores work with real companies. For example, if I sell wireless keyboards I could call companies like Logitech or Dell to sell their stuff.

My point is that you are working with real companies that have a brand associated with them. I’ll talk more about this in point number 10.

#3 Big Brands

This may come as a big surprise to you but there are some big brands that you may have heard of that do nothing but dropship. Yes, you heard me right.

For example, did you know that Wayfair started out as a drop shipping company?

Wayfair started out in one person’s living room selling products in several different niches. He had nearly 200 niche drop shipping sites and then merged them all into one online store called Wayfair. Today they do over a billion dollars in sales per year.

Not bad for a guy just getting started out of his house.

#4 They Have Rules

When it comes to companies that allow you to sell their products they have rules that you normally must follow. If dropshipping were not legal they wouldn’t have any rules and anybody could do anything they wanted.

For example, one rule most companies have if you plan to sell their product is that you cannot sell it on Amazon or eBay. They do this for competition reasons so you don’t get a bunch of people competing against each other.

Most suppliers also enforce something called MAP policies which prohibit sellers from pricing products below the minimum to advertise price.

These rules create boundaries for drop shippers and build trust.

#5 They’re a Trusted Site

Drop shipping sites are also trusted by other big sites. For example, here is a Shopify site that sells headphones called Master & Dynamic.

After doing a quick backlink search I found that Master & Dynamic was featured on the New York Times back in 2016.

Sites like the New York Times or any other big site don’t just link to sites like this out of the blue. Links like this have to be earned and must be a trusted quality site.

#6 They Give Refunds

Dropshipping sites also give refunds. Would a scammer give you a refund? Nope. In fact, most sites will have a refund policy clearly listed on their site. They do this to give consumers confidence and show them that they can be trusted.

Now I know what some of you are thinking that anyone can create a refund policy and slap it on their site, but the thing is someone looking to make a quick buck off of you will likely not take the time to do this.

#7 They Have a Real Office Location

Dropshipping sites will also have a real physical location. More than that they will have a physical address that they will typically disclose as well. Now, this doesn’t necessarily make someone legit because they have an address but what it does do is gives you a way to research them more.

Here’s an example of a dropshipping store below called, Outdoor King.

As you can see they have an address right in the footer of their website. Knowing that we can input that address into Google Maps see where they are located and even get a look at their physical building.

As you can see this drop shipping store is a legit business located in New York.

#8 They Have a Phone Number

Dropship stores also have phone numbers. Here is a dropshipping store called Lighting Direct. They sell every kind of lighting fixture that you can think of, and most importantly they have a phone number in the upper right-hand corner of there website.

On top of that, they also offer a live chat or a real person to help you out. All of these signs point to a business opportunity that is legit and legal.

#9 They Have Store Hours

Like any other business, dropshipping businesses may have real hours like any other business, because they are a real business. Now I should mention that not all dropship stores will not have store hours.

Why might you ask?

This is mostly due to the fact that the internet runs 24 hours a day which means that they can sell products at any hour of the day including weekends and holidays. The reason they display the stores is just for those who would like to talk to someone in customer service.

#10 They Are Affiliated With Trusted Brands

Finally, when it comes to dropship stores the one thing that makes this business legit beyond a doubt is the fact that they can be affiliated with top product brands. For example, going back to Lighting Direct here is just a snippet of brands affiliated with this store.

In order to get affiliated with almost any brand, you need to call them and ask to sell their products which includes signing an agreement. Getting affiliated with all of these brands can be fairly tough based on the company and some companies will only take a certain number of stores.