Drop shipping is a trade model, where the seller (drop shipper) is not in physical possession of the goods and they are not available but at the same time he advertises them and in case of sale, he purchases them with his client’s money from the supplier, who in his turn has the obligation to deliver them.
Drop shipper may perform sales from any part of the world and has no obligations in terms of stock, personnel, packaging and delivery and at the same time has access to a rich product catalogue.
Drop shipping is applied for on-line sales or catalogue trade. The model is determined as risk-free and not requiring significant start-up capital.
The profit from the activity is on the basis of the difference between the wholesale price (manufacturer) and the retail price (buyer).
Brain Storm Consult offers accounting service in connection with the tax treatment of transactions from drop shipping trade.
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