View Full Version : contracts for drop shipping help?

12-09-2003, 10:09 PM
Hello all...
I have been asked by the owner of a cat website if I can drop ship some of my Tuff Kitty t-shirts if they sell them from their site. They will sell the item from their site, send the order to me along with payment at a wholesale rate and I will ship out the item to their customer. I need to write up a contract with the owner of this website and since I've never done this before, I'm hoping someone out there can give me some tips or even share a sample contract?
I want to make sure I cover all the bases so nobody gets burned.

Thanks! :cat:

12-09-2003, 10:57 PM
Hi tuffkitty,

I remember reading a thread on this subject. I'd point you straight to it but I think it was on the Crafts Report forum, and that's been out of order for the past couple of months, drat the luck.

Let me see if I can remember the gist of the conversation...

I think that most people were rather leery of such an arrangement for two reasons.

(1) It's a lot of trouble. You're shipping onesies and twosies, which is a lot of hassle, packing each package individually and running back and forth to the post office. The usual wholesale arrangement is the retailer buys your stuff in big batches, so you make only one trip to the PO every once in a while.

(2) The risk is all on your side. With a drop-shipping arrangement, these website folks don't have to purchase anything, so they kind of get a free ride, if you see what I mean. The burden is on you to maintain sufficient inventory to cover potential sales, but if those sales fail to materialize, who's left with money down the drain?

I think a lot of people concluded that it was more worth their while to just have their own website, rather than selling through someone else's and getting a smaller cut. What's the difference to the customer? Only if it's a huge site, like guild.com or something, will they get much more traffic than you ever could.

If you do go for it, you should certainly get much more than your usual wholesale price, to cover the extra packing/shipping time and the fact that you're the one taking all the risk.

How frequently would you be expected to ship? Every day?

Are you set up to handle a huge volume of orders or a tiny trickle, whichever happens? A huge volume can overwhelm a small company and send it straight into bankruptcy if the cash flow is a problem. You'd want some clause in your contract limiting your responsibility to a reasonable volume that you know you can handle.

Also think about shipping insurance. What happens when a customer claims their item didn't arrive?

I don't mean to sound negative, but you definitely need to go into this with your eyes open.

Good luck, and please let us know what you end up doing!