The dropshipping in which a customer places an order on a website or platform, but the order is fulfilled by a third party
With the help of e-commerce platforms such as Etsy and AliExpress, Amazon dropshipping has grown tremendously in the past five years. Dropshipping is not limited to an online store that sells products it purchases from a third party when it comes to VAT in the EU. All direct online sales to customers outside the EU are included in this category.
In the European Union, dropshippers face three major obstacles:
As a result, it can be difficult to import goods into the country where the customer is located, which creates friction in the fulfilment model. A variety of customs forms and declarations must be completed, and customs representatives may be required, resulting in the delay or return of several shipments.
Dropshippers will also have to deal with an increased cost of sale as of July 2021, when VAT and duties will be required on low-value items that were previously exempt. VAT rates vary widely across the EU, making it difficult to determine what to charge at the point of sale, regardless of whether they pass this cost on to the customer.
According to the seller’s shipping arrangements, deliveries can be significantly delayed, and in many cases the buyer will have to pay VAT or duties before the goods are finally delivered – which makes for an uncertain and irritating experience on the part of the buyer.
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