Drop shipping has become an increasingly trendy business especially when internet can assist in propagating marketing messages. People can now become retailers without having to actually stock goods and sell them from a specific store they own. They don’t even have to ship the goods to the customers. People who perform drop-shipping business market and sell goods by receiving orders from customers and then transferring those orders directly to wholesalers or manufacturers they are associated with. This business becomes trendy because it eliminates the necessity to procure upfront inventory and because by allowing retailers to gain profit when purchases are made without requiring them to stock goods, it promotes positive cash-flow cycle. One disadvantage of this business is that retailers cannot always promise that the products that the customer requests are ready in stock.
Because drop-shipping business involves an agreement between the drop-shippers and the wholesalers they are associated with, a contract must be made between them. The contract may cover many important issues, such as:
1. Wholesaler’s agreement to ship goods to customers with retailer’s brand name and address printed on the package
In a blind shipping procedure, this is necessary because customers must believe that the products they receive come from the retailer instead of the wholesaler.
2. Measures to be taken to prevent backordering
Backordering is a direct consequence of the retailer’s inability to promise to the customers that the goods are ready in stock. When their orders are transferred to the wholesaler but the ordered goods are out of stock, customers often have to wait. This, obviously, may severely damage the retailer’s reputation. Measures to be taken to prevent backordering are often included in the contract.
3. The length of the contract
This determines how long the contract between the wholesaler and the retailer will be in effect.
Wholesalers mostly want to make sure that the retailers who drop-ship their goods are real business establishments. They rarely make deals with individuals without employment identification number who have not registered their business. This important issue is also often included in the contract.
Two different dropshipping contracts are not always the same. Therefore, if you want to use a dropshipping contract template to create the contract, be sure that you have modified it to make it suitable for the agreement you wish to make with your wholesaler. A help provided by an attorney can make sure that such modification can go right.
Drop Shipping Contract Template (36.0 KiB, 894 hits)