Dropshipping is a business model in which an online store sells products that are shipped directly from the supplier to the customer. The online retailer does not need to keep the products in its own warehouse. However, the company behind the online store remains responsible for the sale and for the customer.
This guide explains how dropshipping works in Sweden, which laws apply and what to consider when choosing a supplier. It also explains how the model differs from fulfillment and third-party logistics.
What is dropshipping?
In traditional ecommerce, a company usually buys products, stores them and ships orders from its own or an external warehouse. Dropshipping works differently. The product is purchased from the supplier only after a customer places an order. The supplier then picks, packs and ships it directly to the customer.
The customer may not notice any difference. The purchase is made from the online store, and the customer contacts the store if delivery is late, the product is faulty or they wish to cancel the purchase. The supplier handles the physical goods, but the online store remains the customer’s contractual partner. Outsourcing storage and delivery does not remove responsibility for the customer experience.
How does dropshipping work?
The setup varies by supplier and ecommerce platform, but the order flow usually follows the same steps:
The online retailer chooses the range and supplier. Products are published in the online store with prices, images, product information and delivery terms.
The customer places an order. Payment is made to the online store, just as in other ecommerce purchases.
The order is sent to the supplier. This can happen automatically through an integration or be handled manually.
The supplier picks and packs the product. It is then shipped directly to the customer.
The online retailer follows up the purchase. Customer service, complaints, cancellation rights and delivery information are handled by the company that made the sale.
The online store and supplier need to share accurate information. Outdated stock data can result in a sold-out product being sold. Poor tracking makes it difficult to help when a shipment is delayed. The technology behind the order flow is therefore just as important as the product range.
Dropshipping in Sweden: which rules apply?
Dropshipping in Sweden is subject to the same consumer protection requirements as other ecommerce. It does not matter whether the product is shipped from Sweden, another EU country or outside the EU. The company selling the product is responsible to the customer.
The online store must, among other things:
Describe products accurately
Provide clear company and contact details
Explain prices, payment and delivery terms
Provide correct information about cancellation rights and complaints
Tell customers when a product is shipped from outside the EU
Ensure that products meet the applicable safety requirements
Supplier product descriptions and images should never be published without checking them. Incorrect claims about material, origin or quality may constitute misleading marketing. The Swedish Consumer Agency provides information about companies’ responsibilities in dropshipping, including complaints and cancellation rights.
Dropshipping, VAT, tax and customs
VAT treatment depends on where the company, customer and supplier are located and where the product is actually shipped from. Sales to consumers in other EU countries may be covered by special ecommerce VAT rules, including intra-EU distance sales, the One Stop Shop (OSS) and the Import One Stop Shop (IOSS). The applicable rules depend on where the product is located when sold, where the customer lives and where delivery begins.
When a product is shipped from outside the EU, customs duty, import VAT and other charges may apply. Delivery may also take longer than the customer expects. The store should clearly state when a product comes from a non-EU country and whether the purchase can result in additional costs.
The Swedish Tax Agency has up-to-date information on VAT regarding e-commerce sales to private individuals, while Swedish Customs explains the charges that may arise in online shopping.
For recurring import flows, Posti’s customs management services can bring declarations and other customs tasks into a clearer process.
How to start dropshipping
Starting a dropshipping business requires less capital for inventory than many other ecommerce models. It is not, however, a shortcut around business planning, product responsibility or customer service.
Start with the market. Assess demand, competition and whether the margin covers marketing, freight and returns. Then register the business and clarify tax and VAT matters.
Evaluate suppliers and build an order flow that keeps stock, prices, order status and tracking up to date. Before opening the store, test the entire purchasing journey with a real order. This shows how the product is packed, how long delivery actually takes and whether the returns process works as promised.
Prepare the online store before the first order arrives. Product information must be accurate, delivery times realistic, and cancellation and complaint terms easy to find. Decide who responds when a customer asks where a parcel is, how address changes are handled, and what happens if the supplier reports that an item is out of stock after purchase.
A small order flow can be handled manually, but it quickly becomes vulnerable as volumes grow. An integration between the store and supplier reduces manual steps and helps keep stock and tracking information current.
How to choose a dropshipping supplier
A dropshipping supplier becomes part of the customer experience. For businesses selling in Sweden, the supplier’s warehouse location affects delivery times, customs flows and returns. A low purchase price is of little value if stock data is unreliable, delivery is slow or quality varies.
Check the following:
Where the supplier and warehouse are located
Which markets the supplier delivers to
Normal and maximum delivery times
How frequently stock and prices are updated
Whether orders and tracking data can be transferred automatically
How product quality is checked
How products are packed and labelled
Where customers should send returns
Who assesses complaints and damaged products
Additional freight, return and administration costs
How the supplier manages campaigns and seasonal peaks
A warehouse in Sweden or elsewhere in the EU can provide shorter, more predictable delivery and may simplify customs flows. Location does not solve everything. Reliable systems, consistent quality and clear routines are equally important.
Advantages of dropshipping
The main advantage is that the company does not need to buy and store a large range before sales begin. This reduces tied-up capital and the risk of being left with unsold products.
Dropshipping can also be used to test products. If demand becomes stable, the company can later buy larger volumes and move them to its own or an external warehouse. The model can therefore be a practical way to test the range before building a larger logistics setup.
The supplier also handles all physical processing, so the company does not need warehouse premises, equipment or picking and packing staff. A supplier with warehouses in several markets may also make it easier to test sales in new countries.
Disadvantages and risks of dropshipping
Delivery depends on the supplier. If stock data is wrong or an order is processed late, the online store still faces the customer. The delay affects the store’s brand, not the supplier’s.
The customer experience is harder to control. There may be limited control over parcel labelling, packaging and whether several products can be sent together. Products from different suppliers may arrive in separate parcels at different times.
Returns require a well-planned process. The return address may be in another country, and the supplier’s routines may not match the store’s terms. Decide in advance where returns go, who checks them and how quickly the customer receives a decision.
The margin is more than the difference between purchase and selling price. Freight, advertising, payment solutions, customer service, returns, customs duties and import VAT also affect the result. A product that looks profitable on paper may be expensive when the full order flow is included.
Split deliveries can create several freight charges for one order. Customers should be told that their order will arrive in separate shipments and should be able to track each parcel. Otherwise, a partial delivery may be mistaken for an incomplete order.
What is the difference between dropshipping, fulfillment and 3PL?
The terms describe different ways of organising sales and logistics. In dropshipping, the supplier stores the product and ships it directly after the online store makes a sale. The online retailer usually does not own inventory.
Fulfillment covers the work carried out after an order is placed: warehousing, order receipt, picking and packing, distribution and returns. In ecommerce fulfillment, the online retailer usually owns the products while an external partner handles the physical flow.
3PL, or third-party logistics, is a broader arrangement in which a company outsources all or part of its logistics to an external partner. It can include fulfillment as well as inbound logistics, inventory management, transport, customs and other parts of the supply chain.
A company can combine the models. Products with uncertain demand can be sold through dropshipping, while bestsellers are purchased and placed with a fulfillment partner. This improves control over the most important deliveries without requiring the entire range to be stocked from the start.
When is it time to move from dropshipping to your own warehouse or 3PL?
Dropshipping can work well while a company tests a product or builds sales. Once demand becomes stable, the same model can begin to limit the business.
Typical signs include a need for better control of stock and delivery times, combining products in one parcel, branded packaging, expensive returns or freight costs that put pressure on margins. The same applies when sales expand across Nordic markets and deliveries need to become more consistent.
Demand is stable enough for larger purchases
Volume purchases can reduce the unit price
Products need to be stored closer to customers
The supplier cannot meet the required delivery times
Returns take too long or cost too much
The company needs better data on stock, orders and returns
Base the decision on the full cost per order. Compare the supplier’s product and freight price with purchasing, warehousing, picking, packing and distribution costs in a fulfillment or 3PL setup. Also consider the value of shorter delivery times, fewer support contacts and stronger brand control.
Posti offers scalable logistics solutions for warehousing, picking and packing, distribution and returns. This allows a company to bring more of the flow together with one logistics partner when dropshipping no longer provides enough control.
Key points to remember about dropshipping
You remain responsible for the customer even when the supplier stores and ships the product.
Check delivery times, stock status, product quality and return routines before sales begin.
Find out how VAT, customs duties and import charges are affected by where products are shipped from.
Calculate the full order cost, including freight, marketing, customer service and returns.
Consider fulfillment, 3PL or ecommerce logistics when you need shorter delivery times and more control over stock, packaging and returns.
Frequently asked questions about dropshipping
Is dropshipping legal in Sweden?
Yes. Dropshipping is legal, but the company must follow the same consumer protection rules as other online retailers. The online store remains responsible for correct product information, delivery terms, cancellation rights and complaints even when an external supplier ships the product.
Do you need a registered business for dropshipping?
If the activity is carried out independently, professionally and with the aim of making a profit, it is normally considered a business activity. It must then be registered and managed under the applicable business, tax and VAT rules. Check the exact assessment with the Swedish Tax Agency and relevant business authorities.
How does VAT work in dropshipping?
It depends on where the seller, customer and supplier are located and where the product is shipped from. Different rules may apply to sales within Sweden, sales to consumers in other EU countries and imports from outside the EU.
How do you find dropshipping suppliers?
Suppliers can be found through wholesalers, industry contacts, supplier networks and dedicated dropshipping platforms. Consider not only price but also warehouse location, quality, delivery time, integrations, tracking and returns.
Is dropshipping profitable?
It can be, but profitability depends on the product, pricing, competition and sales volume. The calculation should include marketing, freight, payment solutions, customer service, returns, customs duties and VAT.
What is the difference between dropshipping and fulfillment?
In dropshipping, the supplier normally stores the products and ships them directly after a sale. In fulfillment, the online retailer usually owns the inventory while an external partner stores the goods and manages picking, packing, delivery and returns.