If you’re setting up an online shop, you’ve probably spent a lot of time thinking about products, suppliers, margins and how you’ll actually get orders to customers. Somewhere in that mix, the word “dropshipping” has probably appeared.

On paper, it sounds ideal: you market the product, take the payment, your dropship supplier ships the parcel, and you keep the difference. No stock, no warehouse, low upfront cost.

But behind that simple idea are some important legal questions. Who is responsible if something goes wrong? What exactly do you have to tell customers? And how much control are you really giving up?

This article walks through what dropshipping actually is, why it’s attractive - and the key legal pros and cons to be aware of in a UK context.

What is dropshipping, really?

In a traditional retail model, you buy stock, store it yourself and fulfil orders from your own inventory. In dropshipping, you never touch the product.

The basic flow looks like this: a customer places an order on your website; you send a matching order to your dropship supplier or manufacturer; they then pack and ship the goods directly to your customer, often in packaging that makes it look as though it came from you.

From the customer’s point of view, they bought from your store. They don’t know – and mostly don’t care – that a third party did the picking and packing.

Legally, that matters - because the law usually treats you as the retailer.

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Why is dropshipping so attractive?

The appeal for startups and side hustles is obvious. You don’t have to spend thousands on stock you’re not sure you can sell. You don’t need a storage unit or a sophisticated fulfilment operation. You can test different products and niches quickly, then drop anything that doesn’t sell without being left with a pile of dead stock.

This is why so many decide to get started in dropshipping, dropshipping lets you experiment with far less upfront risk.

But the risk doesn’t disappear; it just changes shape. Instead of worrying about unsold inventory, you’re dealing with quality, delivery, expectations and legal responsibility – all of which sit much closer to you than to your supplier.
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Your legal responsibilities as the retailer

Even if you never see the products, the law tends to see you as the seller. The customer’s contract is with your business, not with the factory or wholesaler at the other end.

That means you’re generally responsible for:

• making sure your product descriptions aren’t misleading;
  
• ensuring goods are of satisfactory quality and fit for purpose;
  
• dealing with faulty items, returns and refunds; and
  
• complying with UK consumer law if you sell to consumers.
  

For UK consumers, the main legislation here is the Consumer Rights Act 2015. For business customers, implied terms under the Sale of Goods Act 1979 often apply. Both sets of rules say, in different ways, that what you sell has to match its description, be of satisfactory quality and be fit for purpose.

You can’t simply say, “It’s the supplier’s fault, talk to them.” Your customer will look to you first. You might then have a claim against your supplier based on your contract with them, but that’s a separate relationship.

If you sell online to consumers, you’ll also need to comply with distance selling rules, which normally give customers a 14-day cooling-off period to change their mind and get a refund for most types of goods (subject to some exceptions, for example for personalised items or certain perishable goods). That applies whether you hold the stock or dropship it.
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The risk of misleading customers

Dropshipping can make it easier, often unintentionally, to mislead customers about things you don’t fully control, like stock levels and delivery times.

If your website promises “next day delivery” on every order, but your supplier sometimes runs out of stock or ships from overseas, you could be setting yourself up for trouble. Likewise, showing items as “in stock” without any real-time information from the supplier can cause headaches if orders can’t be fulfilled.

Under UK consumer law (including the Consumer Protection from Unfair Trading Regulations), giving false or misleading information, or omitting key facts, can be unlawful. And from a contract perspective, clear promises about delivery and availability can become binding terms.

Your website copy, delivery promises and returns policy aren’t just marketing - they’re part of the legal agreement between you and your customers. They will be judged against consumer law if something goes wrong.

That’s why it’s safer to:

• avoid guarantees you can’t control;
  
• build in realistic delivery windows;
  
• and be honest where there might be delays or variability, particularly if items ship from overseas.
  

Product quality, safety and liability

Even though you’re not manufacturing or packing the goods, you can still find yourself in the middle of product quality and safety issues.

If a product is defective, poor quality or - in the worst case - dangerous, you could face:

• claims from customers under the Consumer Rights Act or Sale of Goods Act; and
  
• potential liability if someone is injured or suffers loss as a result of an unsafe product.

In practice, that means you need to take supplier selection seriously. You should know who you’re buying from, where products come from, and what safety or quality standards they meet. It’s also wise to consider product liability insurance, so you’re not exposed to a large claim based on something you couldn’t see.

Many dropshippers work with suppliers outside the UK. That can add another layer of risk: enforcing your contract or pursuing a claim against an overseas manufacturer is often difficult and time-consuming, even though your UK customers still expect you to fix the problem quickly.
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Delivery problems: where does risk sit?

From the customer’s point of view, they paid you and are waiting for their parcel. If it arrives late, damaged or not at all, they’re coming back to you.

In consumer sales, UK law generally treats the goods as your responsibility until they are delivered to the consumer (unless very specific conditions are met). In business-to-business sales, you have more flexibility to decide contractually when risk passes, but if you’re dropshipping, you still need to be very clear about what happens at each stage.

All of this should be addressed in your agreement with the dropship supplier.

That contract should spell out:

• who is responsible for loss or damage in transit;
  
• what happens if orders are late or incomplete;
  
• what quality and packaging standards apply;
  
• and how returns, replacements and credits will be handled.
  
  

If you sell through marketplaces like Amazon, eBay or Etsy, their platform terms can also impose additional obligations, refunds or penalties if orders aren’t fulfilled as promised. You’re effectively juggling three sets of expectations: the customer’s, the platform’s and your supplier’s.

Without something strong in writing with your supplier, you’re relying largely on goodwill and hoping that, if they make a mistake, they’ll fix it at their cost. That’s not always a safe assumption.
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Intellectual property and branding

From an IP perspective, dropshipping usually falls into one of two patterns.

In one pattern, you’re effectively running a private label business. The products are manufactured by a third party but branded and packaged with your name and logo. In that case, you’ll usually own the intellectual property in your brand identity - the name, logo, website and marketing materials - and may also own any original designs you've created, depending on your contracts.

In the other pattern, you’re reselling existing branded products. Here, you don’t own the product IP, but you still need to make sure:

• you’re authorised to sell those branded goods;
  
• and you have the right to use the brand names, images and descriptions you’re displaying.
  

Either way, it’s sensible to protect your own brand (for example, through trade mark registration where appropriate) and to get clarity in your supplier agreement about who owns what and what you’re allowed to use.
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The big downside: control vs responsibility

Legally and commercially, the biggest downside of dropshipping is that it separates control from responsibility.

You don’t control stock.
You don’t control how items are packed or handled.
You might not control what goes into the box.

Yet in the eyes of the customer – and often the law – you’re the one accountable. That can show up as:

• inconsistent delivery times;
  
• variable product quality;
  
• packaging that doesn’t match your brand;
  
• poor or slow responses when something goes wrong.
  

Those aren’t just customer service issues. They feed directly into legal risk if customers complain that goods were late, damaged, not as described or not of satisfactory quality.

For that reason, many businesses use dropshipping as a starting point to validate products and markets, then shift over time to holding their own inventory or using more tightly integrated fulfilment solutions once they know what works.

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Wrapping up

Dropshipping can be a smart way to test ideas and start an ecommerce business with low upfront costs and a lot of flexibility. It lets you move quickly without committing to stock or warehouses.

But it doesn’t remove your legal obligations. As far as your customers are concerned, you are the retailer. You carry responsibilities around product quality, honesty in your descriptions, delivery and refunds - and you’ll be the first port of call when anything goes wrong.

If you’re considering a dropshipping model, it’s worth:

• Getting a well-drafted dropshipping agreement in place.
• Tightening your website terms, delivery promises and returns policy.
  
• Checking your consumer-law compliance (including cooling-off rights).
• Looking carefully at insurance and product safety.

A commercial or consumer law specialist can help you structure your dropshipping arrangements so you get the benefits of the model while managing the legal risks in a way that’s proportionate to your business.

If you’re thinking about dropshipping, Sprintlaw’s expert lawyers can help you navigate your options and stay compliant. As a Crunch business, you’re also eligible for complimentary 12-month access to Sprintlaw’s Plus Membership - including unlimited lawyer consults and other benefits (normally £399/year, now £0 for your first year).

Disclaimer: All content contained in this publication is intended to provide general information in summary form on legal and other topics, current at the time of first publication. The content does not constitute legal (or other) advice and should not be relied upon as such. You should obtain specific legal or other professional advice before relying on any content contained on this website.

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