Are You Planning to Start a Dropshipping Business In Spain?
Tax Agency (Hacienda)
If you have a company which sells products made outside the EU, there is a way to save money. In this article, we are going to explain what dropshipping is, also called DropShipment, DropShip, DropShoppin, DropShop or DropShipping.
What is dropshipping?
Dropshipping is a business formula based on establishing an agreement with the manufacturer of the products you are going to sell. So he will be in charge of sending the merchandise directly to customers.
In this way, you only take care of getting new customers and making the products known. The manufacturer or wholesaler will take care of shipping them without you having to worry about this whole part of the buying process.
That is, if you already know a lot about marketing, running a blog, SEO positioning to run your website, but you don’t want to worry about orders and products, this is your formula for success!
The most famous dropshipping formula is book sales. eBay is one of the websites that use this formula among retailers.
Advantages of dropshipping
1. Initial investment savings
Internet sales are the most common in this dropshipping. They save the distributor the cost of keeping a stock of products waiting to be sold. Nor should you maintain a warehouse for such products, nor inventory expenses.
2. VAT savings
If you use this formula in your company to sell products that have been manufactured outside the EU in Spain, you will have fewer obligations regarding VAT.
The standard process is that you don’t carry out the dropshipping and your company leaves the goods in a Spanish warehouse and then moved them to the customers. In this case, you should assume the VAT on imports and then include this tax on to your sales prices.
By carrying out dropshipping, the goods go directly to your customers. They will be the importers and those responsible for satisfying import duties and VAT. Therefore, your company should not pass on this tax. You are selling from outside of Spain; therefore, your sales will not be subject to VAT.
3. Growth of your company without limits
By having an “unlimited” stock that you don’t have to control, you won’t be worried if you are short of products for an order that someone has suddenly made of 1000 fuchsia shirts.
In this way, your company can grow at the rate you want. Of course, to do that, you must be very careful in choosing the right supplier with excellent guarantees.
Disadvantages that you should consider
Legally in Spain, a two-year guarantee must be offered, and those responsible are the manufacturer or the seller. With this sales model, it is common to work with foreign wholesale suppliers who don’t always comply with this two-year guarantee. Thus, the only person responsible before the consumer will be the seller, that is, you.
The purchase price of your supplier may be agreed in a different currency than the one you use to work in your local market. Faced with a fluctuation in the foreign exchange market, you may find yourself in the situation of having lowered the profit margin enormously or even enter losses if the constant updating of sales prices in the local market is undervalued.
3. Claims and returns
In dropshipping the seller doesn’t get to see the merchandise since he leaves it in the hands of the manufacturing company. Therefore, the seller is in a somewhat complicated situation when he receives a complaint from the buyer.
You will have no choice but to deal with the claim, and this without having information to deal with incidents. Hence, it would be best if you chose your suppliers very well.
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