Legality of dropshipping in Australia

Hi,

Is dropshipping really legal in Australia? I've read somewhere that you can't sell things that you don't have in your possession. I know others are doing it but it would be good to know for peace of mind. I'm just looking at a couple of sites that offer this (i.e. oo.com.au)

My apologies if this has been asked before, can't find any related thread.

Cheers.

There seems to be a lot of confusion among Australians because of the OzDirect case, which was kind of a landmark in fighting fraud. But the issue with OzDirect, the specific regulation they violated that is often mistakenly cited as saying "dropshipping is illegal" simply states that anyone selling items cannot do so if there are "reasonable grounds" to suspect that the seller will not be able to fulfill the order. In the OzDirect case, they certainly knew they weren't going to be able to fulfill the orders; they were bankrupt and had credit lines with wholesalers being frozen or held to review, and were spending incoming order revenue on operating costs. It's a fraudulent representation that happened to have been made by a company that was dropshipping.

The specific cite in the case was section 58 of the Trade Practices Act, but not sure how you'd look it up now since the TPA has since been rolled into the C&C Act. But at the time of the OzDirect case the TPA was a "free standing" law, and it was section 58 that contained the verbiage often misinterpreted/misrepresented to outlaw dropshipping.


Frank

Frank,
Thanks for your detailed reply. So i'll take that it's legal provided one doesn't do what ozdirect did?

Yes SM, Dropshipping is quite legal. As a dropshipper, you are in essence an agent or broker for the company you are dropshipping for.

It's illegal for anyone to trade insolvent, no matter what the business model is under the Australian Trades and Practices act.

Frank,
Thanks for your detailed reply. So i'll take that it's legal provided one doesn't do what ozdirect did?

Although Marc beat me to it :) - I was still reading on the issue lol

Yes it is legal to dropship in Australia

The practice of drop shipping is legal and there is nothing inherent in the practice itself that offends the consumer protection provisions of the TPA.

You might find this Link hidden: Login to view helpful, it itemizes why OzDirect was penalized.

All the best!

Hi All,
Thank you for all the prompt replies.
Very much appreciated.
Cheers

Hi,
Is dropshipping really legal in Au? I've read somewhere that you can't sell things that you don't have in your possession. I know others are doing it but it be good to know for peace of mind. I'm just looking at a couple of sites that offer this eg. oo.com.au.
My apologies if this has been asked before, can't find any related thread.
Cheers.

Hi,

I've heard something similar as well (being a local in Sydney) and its illegal I believe to see items that are not created, ie selling items and then getting them manufactured in china.

If it was against the law then 80% of people on eBay would be offending, as they either ship from dropshippers like yourself or they are located in Chinese warehouses.

If you need a hand with the dropshipping/wholesaling part let me know and I'm happy to give some free advice.



Alex C Ryan
Managing Director
Import Export Exposed
startimportingnow.com.au