Drop-shipping is a system where a customer orders on an e-shop (1) which transfers it to a provider (2) which will take care of the delivery and stock management (3)
The drop-shipping benefit is that it enables the merchant to sell online without handling yourself logistics and product storage.
However this systems has also downsides. Indeed, the providers are often located in foreign countries. and their delivery time can be high.
The customs controls are common and even systematic for bulky goods, this leads to further delays.
Thus, resorting to drop-shipping leads to a considerable increase of delivering time as well as a dependency on the provider and the impossibility to control the flow of goods. Indeed, if an incident beyond the merchant's control happens, he won't be able to deliver his customer on time, or to control the goods' quality.
Drop-shipping can also bring other issues the e-merchant could have to handle directly:
- His customers' public dissatisfaction (damaging for the brand)
- Refund's management and emission to be done (if the goods cannot be delivered or following a return due to damaged goods)
- Chargeback risk (when the delay becomes too long and the refund wasn't made)
- In case of customs control, the VAT/tax can be applied for any purchase below 150€, coming from a country outside the European Union, which can generate dissatisfaction from the parcel's addressee.
Can I have a PayPlug account if i have a drop-shipping business?
You can, but drop-shipping creates a risk regarding the e-merchant's activity, and PayPlug cannot guarantee an account activation when having a drop-shipping business. The account are looked at one at a time, and the decision is made, taking into account all the elements around.
When submitting your account for activation you shall have finalized website, displaying the product sold and the prices as well as your General Terms and Conditions and Legal Notices.
PayPlug's account operation in case of drop-shipping
- If your account is activated, a provision can be imposed to you on 30 days. That means that a part of the received amounts on the last 30 days will be blocked on your PayPlug account, in order to allow refunds in case of unforeseen events, and to reduce chargebacks risk. You should have then enough working capital. Our team reserve the right to do routine checks before validating your transfers, to make sure your customers have been delivered.
- The period of transfer can be extended for several days.
- In case of frequent claims, we could impose restriction on your account.