Starting a webshop

What is dropshipping? How it works, costs and rules

What is dropshipping? It is a way to sell online without keeping stock: a customer orders in your webshop and your supplier ships the product straight to them. This guide explains how it works, the pros and cons, what you earn and spend, how to find a supplier and which rules apply to you as the seller in the EU.

Updated 20 October 2026 9 min read
In short
  • Dropshipping means you sell, and a supplier stores and ships the products for you.
  • You need no stock and buy nothing in advance, but you control less of the process.
  • Your margin is your price minus the purchase price, and your other costs still come out of it.
  • You are the seller, so consumer rights, returns and product safety are your responsibility.
  • Goods from outside the EU bring import VAT and, since 1 July 2026, extra customs duty on small parcels.

What is dropshipping?

Dropshipping is a way of selling where you do not keep the products yourself. You run the webshop, the marketing and the customer service. A supplier, often a wholesaler or a manufacturer, holds the stock and ships each order straight to your customer. For your customer it looks like any other webshop. They buy from you, pay you and contact you when something goes wrong. That last part matters: in the eyes of the law you are the seller, not your supplier.

How dropshipping works, step by step

Every dropshipping order follows roughly the same path. The faster each step runs, the better the experience for your customer.
  • A customer orders and pays in your webshop
  • You pass the order to your supplier, by hand or through a connection
  • You pay your supplier the purchase price
  • The supplier packs the order and ships it to your customer
  • You share the track and trace and handle questions and returns

Pros and cons of dropshipping

The advantages are easy to see. According to the KVK, the Dutch chamber of commerce, you have no stock and so no storage costs. You only buy a product after a customer has paid for it, so you do not get stuck with unsold goods. You do not pack or ship anything yourself, and you can add products quickly. The downsides are just as real. You depend on someone else for stock, packing and delivery, but your customer holds you responsible.

The downsides to plan for

  • Mistakes by your supplier damage your reputation
  • You cannot check the products before they ship
  • Other shops often sell the same products, sometimes cheaper
  • Delivery can take weeks when goods ship from outside the EU
  • You handle customer service and returns yourself

Margins and costs in plain terms

Your margin is what is left of the selling price after you pay the purchase price. That is not your profit yet. Your other costs still come out of that margin, and they add up quickly. Work out your numbers per product before you start. Take your selling price without VAT, subtract the purchase price and the shipping costs, then subtract your share of the costs below. If little is left, raise your price, choose other products or look for a supplier with better terms. Other shops can often sell the same products, so competing on price alone rarely works. Good advice, clear product information and fast service are what make customers choose you.

Costs to include

  • The purchase price and any order fee from your supplier
  • Shipping costs charged by the supplier
  • Payment costs per transaction
  • Returns and refunds, including the original delivery costs
  • Advertising to bring visitors to your shop
  • Your webshop subscription and domain
  • Import VAT and customs duty for goods from outside the EU

How to find a reliable supplier

Your supplier decides a large part of your customer experience, so take your time. Wholesalers in your own industry are often a better start than anonymous sellers on large platforms. You can call them, visit them and make clear agreements. The KVK advises putting agreements on delivery time, guarantee and returns in a contract. You may not sell counterfeit goods, so ask suppliers to confirm that their products do not infringe trademarks. For suppliers outside the EU, ask for the technical documents that show a product meets EU rules.

Questions to ask a supplier

  • From which country do you ship, and how long does delivery take?
  • Can you ship in neutral packaging?
  • How do you handle returns and faulty products?
  • Can I receive product data, images and stock levels automatically?
  • Who is the manufacturer, and is there a responsible person in the EU?
  • Do you send track and trace for every order?

Your legal duties as the seller

You never touch the product, but you are still responsible for delivery, customer service and product safety. These are the main EU rules for selling online to consumers. Customers may withdraw from a purchase within 14 days of receiving the goods, without giving a reason. If you do not inform them properly about this right, they get an extra year. After a withdrawal you refund the full amount, including the original delivery costs, within 14 days. A newer EU rule, applying from 19 June 2026, also asks webshops for a clear online way to withdraw, such as a withdrawal button or link. Check how your country has put it into law. Customers also have a legal guarantee of at least 2 years on faulty goods, and they claim it from you, not from your supplier. Product safety is your job too. Under the EU General Product Safety Regulation, which applies since 13 December 2024, an online offer must show the manufacturer's name and contact details, an EU-based responsible person when the manufacturer is outside the EU, product identification and any warnings. Products such as toys, electrical and electronic equipment and personal protective equipment need a CE marking.

Show this before the order button

  • Your business name, address and contact details
  • The total price, including delivery and other costs
  • The expected delivery time and the country the goods ship from
  • That another company delivers the product
  • How withdrawal works, a return address and who pays for returns
Good to know
This guide gives general information, not legal or tax advice. Rules differ per country and change over time. Check the official sources in your country or ask an adviser.

Goods from outside the EU: VAT, IOSS and customs

Many dropshipping suppliers ship from outside the EU. That brings extra rules, and your customer should never get a surprise bill at the door. VAT is due on every import into the EU. For parcels worth up to €150 there is the Import One-Stop Shop (IOSS). With IOSS the seller charges the VAT of the customer's country at checkout and declares it in one monthly return, so no VAT is paid again at import. Sellers from outside the EU need an EU intermediary to register. Without IOSS, the VAT is collected at import, often by the carrier, who may add a fee. Excise goods such as alcohol and tobacco are excluded, and above €150 the normal import procedure applies. Customs duty has changed too. Since 1 July 2026 the EU charges a temporary flat duty of €3 per product category on small parcels up to €150 sold to consumers. A parcel with two types of products costs €6. Above €150, the normal duty rates apply, based on the customs code of the product.

Before you sell imported goods

  • Ask your supplier where goods ship from and whether they use IOSS
  • Show prices including VAT and any import costs
  • Tell customers upfront if they may have to pay on delivery
  • Check the customs code of your products
  • Ask a tax adviser before you import at scale
Good to know
Import rules are changing quickly. This is general information, not tax advice. Check the website of your tax office or customs before you start.

Start a dropshipping webshop on SitePack

On SitePack you set up a webshop without technical work. You add unlimited products, with variants that have their own price and stock, set shipping rates per country and run discounts. Payments run through SitePack Payments with iDEAL, Wero, Bancontact, cards, PayPal and SEPA direct debit. Links to your legal pages, such as your terms and return policy, appear in the footer by themselves. Hosting is in the EU, with SSL and daily backups. A real example is Pendlr, formerly Kruitbosch, one of the largest wholesalers in the cycling industry. With the Pendlr app a bike shop sells the Pendlr range without entering products by hand. Bikes, parts, images, purchase prices and stock come in automatically for the categories you choose. When a customer orders, the order goes to Pendlr as a dropshipment. Pendlr ships straight to your customer and the track and trace comes back to the order by itself. You need a Pendlr dealer account to use it. A webshop starts at €25 a month on Starter, billed yearly. You can try it free for 14 days, without payment details. Prefer to have it built? We build your webshop for €750 one-off.

Your first steps

  • Start a free trial and pick a design
  • Set your shipping countries and rates
  • Add your legal pages and return policy
  • Connect your supplier or add your products
  • Test an order from checkout to delivery

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