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Industry (trade) Dropshipping - help

  • 13-05-2010 03:25PM
    #1
    Fukuyama
    Registered Users, Registered Users 2 Posts: 3,023 ✭✭✭


    Having crunched numbers, worked out the competition and done a little leg work, I think I might be onto a winner here. Or at the very least a good money earner that will require very little input once the ball gets rolling.

    However, if somebody could read my plan below and tell me if its all above board etc... or inform me about any issues that I might be overlooking, that would be great.

    ---->>>

    Step One - My website, which has become known to the customer via my marketing and starts attracting hits.

    Step Two - John, who owns a small shop in Tralee likes the look of a few products I have for sale and places an order and makes a payment to me using the website.

    Step Three - I then forward said order to my supplier in the UK (<-- might be an issue, lwould anything crop up?) who then fills Johns order and sends it straight to him.

    Step Four - I then pay the Supplier the balance owed to them and keep the rest of what John paid me as gross profit.

    Now, who is the supplier here? Me or the company in England? Am I just a middle man?

    Also, does the fact that John will be receiving his order by post from another country, which he will be selling in his store, cause any issues?

    Sorry if I sound like a noob, I'm new to THIS area of business. Mostly an online kinda guy myself. Rarely dealing with actual goods.

    All replies much appreciated on this one.

    Thanks,
    Dean.


Comments

  • #2
    jimoc
    Registered Users, Registered Users 2 Posts: 634 ✭✭✭jimoc


    You'll probably need to get a tax accountant involved to get proper advice but from John's point of view you are the supplier.

    He will be paying VAT on the goods at the Irish rate wherease I think you will be paying at the English rate.

    as for selling the goods on, unless there are restrictions on the import/export of the goods in question or regional licencing implications I think it should be okay for him to sell them on.


  • #3
    RUDOLF289
    Registered Users, Registered Users 2 Posts: 794 ✭✭✭RUDOLF289


    Hello Dean 0088,

    Suggest you register for VAT. Reason being is that if you are registered for VAT, your supplier in the UK will not have to levy UK VAT. Not having to pay UK VAT reduces your cost price by 17.5%. You will account for the Irish VAT liability that you incur in your VAT return. Because you are entitled to claim VAT back on your purchases, what you accrue as a liability on one side, you claim back on the other side of your VAT return. Therefore the product you buy in the UK is VAT neutral.

    Because the order is placed with you in Ireland and you raise the invoice to your customer here in Ireland, you are obliged to charge 21% (once you are a VAT registered trader). It is that VAT you will remit to Revenue.

    The concerns I would have in your venture is as follows ;

    1) Can you get the cooperation from your supplier to deliver to a different address ?
    2) Is the transaction with your client a once off or do you expect repeat business ? What would stop your client to go direct to the source after the 1st delivery ?

    Other than that, best of luck with your venture

    Cheers,
    Rudolf289


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