Will dropshipping be dead in 2019

What has to be considered with "dropshipping" from a legal point of view

The so-called "dropshipping" method is enjoying increasing popularity in the mail order business. The sold goods are not sent to the buyer directly by the seller but via a third party. Usually it is the manufacturer or a wholesaler who has the goods in stock and, in the case of an order on behalf of the seller, sends them directly to the buyer. However, from the seller's point of view, there are some legal problems to consider, which will be examined in more detail in the following article.

Why actually "dropshipping"?

"Dropshipping" is of particular interest to small and medium-sized companies who do not have sufficient storage capacity themselves and who would like to save the associated costs and risks by using "dropshipping". The currently largest dropshipping partner in Germany is likely to be Amazon. For some time now, Amazon has offered sellers in the Amazon Marketplace the option of storing goods on Amazon and, in the case of an order via the Amazon Marketplace, of sending them directly to the buyer on behalf of the retailer ("Fulfillment by Amazon"). But such an approach is also associated with legal problems that most traders are not aware of.

Legal problems related to "dropshipping"

1) Contractual problems in relation to the dropshipping partner

If you want to sell your goods using the dropshipping method, you must conclude a contract with the dropshipping partner, which should take into account both the storage and delivery modalities. In particular, the typical risks of storing and shipping goods should be taken into account. In practice, the problem often arises that the dropshipping partner is located abroad, often even in non-EU countries, which already raises the question of the legal system according to which contracts are concluded and where and according to which law in the event of disputes claims against the contractual partner must be enforced.

2) Liability to the buyer

In addition, the retailer is also dependent on the dropshipping partner, as he remains responsible to the buyer for the proper execution of the concluded sales contract. This applies in particular to the quality of the goods and their timely delivery to the buyer. If the buyer receives defective goods from the dropshipping partner or if the dropshipping partner does not deliver the goods within the delivery time promised by the dealer, the buyer can address his claims directly to his contractual partner, i.e. the dealer. This may then still have recourse claims against the dropshipping partner. However, their enforcement causes considerable difficulties, especially with contracts with companies in non-EU countries.

3) Problems related to the statutory right of withdrawal for consumers

Another problem arises with regard to the statutory right of withdrawal for consumers for contracts that are concluded at a distance. Basically, the dealer must take back the goods that the customer sends back within the framework of the statutory right of withdrawal. However, this could pose major logistical problems for the retailer if he does not have sufficient storage capacity himself. Therefore, in practice, agreements are often made between the retailer and the dropshipping partner, according to which the dropshipping partner should also take over the returns management for the retailer. In this respect, the retailer must therefore consider where the buyer should send the goods back in the event of cancellation and he must take this into account in his cancellation policy.

If the revocation goods are to be returned to an address other than the address of the retailer, the retailer must fully state the return address in his cancellation policy. On the one hand, the problem arises that the legal model for the cancellation policy does not provide for a deviation between the cancellation address and the return address for the canceled goods, so that the retailer would have to deviate from the legal model for this, with the result that he may no longer be on can invoke the legal privilege in the use of the legal model. On the other hand, the question arises as to whether it is at all reasonable for the consumer to send the revocation goods to an address in China, for example, especially if he should do this at his own expense.

4) Problems with data protection law

Finally, there are also data protection problems in this context with regard to the transfer of personal customer data to a third party who is not involved in the purchase contract. Personal data in this sense are individual details about personal or factual circumstances of a specific or identifiable natural person. This includes in particular the name, postal address and email address of a natural person.

If the dropshipping partner is based within the EU or within the Agreement on the European Economic Area, the retailer can rely on § 28 Paragraph 1 Clause 1 No. 1 BDSG for the transfer of the delivery data, since the transfer of the delivery data is necessary for the implementation of a legal contractual obligation with the person concerned is required. If the dropshipping partner is based outside the EU and outside the Agreement on the European Economic Area, the retailer can rely on Section 4c (1) No. 2 BDSG for forwarding the delivery data, as the forwarding of the delivery data is necessary for the fulfillment of the purchase contract is.

In both of the aforementioned cases, however, the retailer must inform the buyer in accordance with Section 4 (3) No. 3 BDSG that his address data will be passed on to a third party for the purpose of delivering the goods. Corresponding information can be found in the retailer's data protection declaration, for example.

However, the retailer does not have to name the specific recipient of the data. Rather, it is sufficient to assign these to a category of recipients, such as "shipping partner".

Tip: Of course, the legal texts of the IT law firm take the subject of "dropshipping" into account.

In this context, it is important that the retailer may only pass on customer data to the dropshipping partner for the purposes mentioned and that he may only pass on data that is absolutely necessary for the delivery of the goods to the customer. This includes the name and delivery address of the customer. However, other data, such as the customer's email address, may not be passed on without the customer's express consent.

Conclusion

The topic of "dropshipping" is playing an increasingly important role, especially in mail order. In addition to the opportunities that this business model offers, especially for small and medium-sized entrepreneurs, the legal risks associated with it must also be taken into account. A disclosure of the exact identity of the respective dropshipping partner to the customer is, in our opinion, not necessary for data protection reasons, at least according to the current legal situation. Nevertheless, the retailer must ensure that he only transmits customer data to the dropshipping partner that is absolutely necessary for the delivery of the goods.

Do you have legal questions about dropshipping? We are happy to be at your disposal.

tip: Do you have any questions about the contribution? Feel free to discuss this with us in the entrepreneurial group of the IT law firm on Facebook.

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