Dropshipping in Australia — your legal obligations explained

Dropshipping is appealing precisely because the seller never touches the stock. You list products, take orders, and pass fulfilment to a supplier. But under Australian law, the fact that you didn't pack or ship the goods is largely irrelevant to your legal position. The customer paid you, your name is on the checkout, and the law treats you as the seller — with all the obligations that brings.

This article explains the main legal frameworks that apply to an Australian dropshipping business: consumer guarantees under the Australian Consumer Law, GST and the low value imported goods threshold, privacy obligations, intellectual property risks, and what your contracts need to cover. It also touches on business registration, unfair contract terms, and where professional advice is typically required.

How the Australian Consumer Law applies to a dropshipper

The Competition and Consumer Act 2010 (Cth) — Schedule 2 of which is the Australian Consumer Law — applies to any business that supplies goods or services to consumers in Australia. "Supplier" in that context means the business that makes the sale to the end customer. As a dropshipper, that is you.

Consumer guarantees are non-excludable. The ACL provides a set of statutory guarantees that attach automatically to the sale of goods and services. For goods, the core guarantees require that products are of acceptable quality, match their description, and are fit for any purpose you represent them as being fit for. A customer cannot waive these rights, and you cannot exclude them by contract term or website policy. Displaying a "no refunds" notice, or publishing terms that say returns are only accepted at the supplier's discretion, does not reduce your liability under the ACL.

The seller is the first port of call. When goods fail a consumer guarantee, the customer is entitled to come to you — the seller — for a remedy. The ACCC is clear that you cannot turn a customer away by directing them to the manufacturer or overseas supplier. The distinction between minor and major failures matters: for a major failure (one a consumer would not have purchased knowing about), the customer may choose a refund, replacement, or compensation. For a minor failure, you are entitled to offer a repair first.

Misleading representations are your risk, not the supplier's. If you publish product descriptions, claims about health benefits, performance specifications, or delivery timeframes that you sourced from a supplier, and those claims turn out to be inaccurate, your business is exposed under the ACL's misleading and deceptive conduct provisions. The fact that the supplier gave you the information is not a defence.

GST registration and the low value imported goods threshold

Two GST issues arise in dropshipping.

The first is standard GST registration. Under the A New Tax System (Goods and Services Tax) Act 1999 (Cth), a business must register for GST once its GST turnover reaches $75,000 in a rolling 12-month period. You are required to register within 21 days of crossing that threshold. Registration allows you to collect GST from customers and claim GST credits on business purchases. If you operate below $75,000 in turnover, registration is voluntary.

The second issue is the low value imported goods (LVIG) regime. Goods with a customs value of $1,000 or less that are shipped from overseas to an Australian consumer attract GST. The GST obligation generally falls on the overseas supplier, electronic distribution platform, or redeliverer — not on the Australian buyer. For a dropshipper sourcing from an overseas supplier, this means your supplier may be required to register for, collect, and remit Australian GST on low value shipments, even if you are the storefront. For goods valued above $1,000, GST is typically collected at the border by Australian Border Force. You should confirm how your supply chain handles GST at each stage and ensure your checkout pricing accurately reflects the final cost to the customer.

Business registration and the ABN requirement

Before you start trading, you need an ABN. ASIC requires an ABN (or an ABN application reference number) before it will register a business name. If you are trading under a name other than your own legal name — which is almost always the case for an online store — registration of that business name with ASIC is required. Trading without a registered business name where one is required is an offence.

Business structure is a separate consideration. A sole trader has the simplest setup but no liability separation between personal and business assets. A company creates a distinct legal entity, which limits personal exposure to business debts in most circumstances. As a dropshipper, the practical question is how much exposure you carry from supplier failures, product liability claims, and ACL obligations — and whether that risk justifies incorporating.

Privacy law and handling customer data

Most dropshipping businesses collect personal information: names, delivery addresses, phone numbers, email addresses, and payment details. Many also run marketing tools, analytics, and retargeting pixels that collect browsing data. Whether the Privacy Act 1988 (Cth) directly applies to your business depends on your turnover.

The OAIC administers the Privacy Act, which currently covers businesses with annual turnover above $3 million, as well as certain smaller businesses regardless of turnover — including health service providers and businesses that trade in personal information for a benefit. If your business falls below the $3 million threshold and does not fall into an exception, the Privacy Act's Australian Privacy Principles (APPs) do not directly apply to you as a matter of obligation — but there are good reasons to comply anyway.

When you collect personal information, you typically share it with third parties: an overseas supplier receives the customer's delivery address, a courier receives contact details, email marketing platforms hold subscriber lists, and ad platforms receive behavioural data. Even where you are not legally required to have a privacy policy, publishing one that accurately describes your data practices is essential for customer trust and reduces the risk of complaints.

One area to watch is spam compliance. The Spam Act 2003 (Cth) applies to all Australian businesses regardless of size. If you send commercial electronic messages — including marketing emails and SMS — you must have the recipient's consent, identify your business clearly, and provide a functional unsubscribe mechanism. These obligations apply from your first marketing message, before you reach any turnover threshold.

Unfair contract terms in your customer-facing documents

Since 9 November 2023, the unfair contract terms regime under the ACL has expanded in two significant ways. First, it now covers businesses with up to 100 employees or up to $10 million in annual turnover as "small businesses" entitled to protection. Second, using an unfair term in a standard form contract is now prohibited — not merely voidable — and attracts significant financial penalties.

For a dropshipping business, this affects your terms and conditions. Terms that are likely to be scrutinised include:

clauses reserving your right to cancel or change orders at will while giving customers no equivalent right
blanket "no refunds" or "all sales final" provisions that purport to exclude ACL guarantees
liability caps that are unreasonably low relative to the price paid
automatic renewal provisions with insufficient notice

The ACCC looks at whether a term creates a significant imbalance, is not reasonably necessary to protect a legitimate business interest, and would cause detriment to the other party if enforced. Terms that allocate all supplier-side risk (late delivery, wrong item, stock unavailability) onto the customer are particularly exposed.

Intellectual property — your brand and your product listings

Dropshipping creates two distinct IP risks.

The first is infringement by you. Supplier product images, descriptions, and brand names may be subject to copyright or trade mark rights held by third parties. A supplier providing you with images or descriptions does not mean the supplier holds the rights to those materials or that you have a licence to publish them. If you publish infringing material on your storefront, you are the party whose store is publicly visible — you are the easier enforcement target.

The second is protecting your own brand. If you invest in marketing and build a recognisable store name, that name is at risk if you have not registered it as a trade mark. Registration under the Trade Marks Act 1995 (Cth) gives you exclusive rights to use the mark in relation to your goods and services, and the ability to oppose third parties attempting to register something deceptively similar.

A separate IP issue arises when you source genuine branded goods from overseas suppliers and resell them in Australia. Section 123 of the Trade Marks Act 1995 (Cth) provides a defence against trade mark infringement for the parallel importation of goods bearing a trade mark that was applied with the owner's consent. IP Australia notes that this section was amended in 2018 to better reflect its original policy intent. The defence is relevant where you are importing authentic goods — but it does not protect the sale of counterfeit goods, and it does not resolve separate issues around product safety or regulatory compliance.

Common points of legal failure in dropshipping

Three patterns appear regularly in dropshipping disputes.

Delivery time representations. If your product pages or advertising state a specific delivery window that your supplier cannot reliably meet, you are creating potential liability under the ACL's misleading representations provisions as well as consumer guarantee obligations around fitness for purpose. Delivery timeframes should be realistic, labelled as estimates where genuine variability exists, and reviewed when you change suppliers.

Product safety and regulatory categories. Certain product categories carry mandatory safety standards in Australia — children's products, electrical goods, helmets, cosmetics, and products making therapeutic claims are examples. Even where your supplier holds overseas certification, the relevant Australian standard may differ. A product recall or injury complaint will involve the seller, not just the manufacturer. Before entering a new product category, check whether mandatory standards apply and ask your supplier for compliance documentation.

Supplier agreement gaps. Many dropshipping operations run on the supplier's standard terms, which are written entirely in the supplier's interest. A properly drafted supplier agreement should address who is responsible for defective goods, how returns flow, what happens to orders placed when stock is unavailable, IP permissions for marketing materials, and your right to terminate and transition customers if the relationship ends. Without these terms, a supplier's failure lands entirely on your business with no contractual recourse.

How Artificer Legal can help with your dropshipping business

Getting the legal foundations right for a dropshipping business spans several areas at once: business structure, ACL compliance, privacy, IP, and contracts. A legal practitioner working with a dropshipping client would typically:

advise on business structure and register the entity if needed
draft or review customer-facing terms and conditions, a shipping policy, and a privacy policy to ensure ACL compliance and to address the unfair contract terms regime
prepare or review a supplier agreement that allocates responsibility for product failures, returns, and customer claims
advise on GST obligations and coordinate with an accountant on the LVIG regime where relevant
advise on trade mark registration if the brand has been validated and marketing investment is planned
identify any product category-specific regulatory requirements before new lines are introduced

Summary

As an Australian dropshipping business, you are the seller in the eyes of the law regardless of who ships the goods. The ACL's consumer guarantees apply to your sales, cannot be excluded by contract, and require you to be the first point of contact for customer remedies. GST registration is required once your turnover reaches $75,000, and the low value imported goods regime means your overseas supplier may have GST obligations on sub-$1,000 consignments. The Privacy Act currently covers businesses above $3 million in annual turnover, but spam law applies to all businesses from the first marketing message. Since November 2023, unfair contract terms in standard form contracts are prohibited and carry penalties. Key takeaways:

Consumer guarantees under the ACL are non-excludable and you cannot redirect customers to the manufacturer
GST registration triggers at $75,000 turnover; overseas suppliers may separately owe GST on low value imported goods
Business name registration with ASIC requires an ABN
Privacy Act obligations currently apply above a $3 million turnover threshold, but spam compliance applies universally
Unfair contract terms have been prohibited (not merely voidable) since 9 November 2023
Your supplier agreement is where dropshipping businesses either protect themselves or leave significant risk unmanaged
Section 123 of the Trade Marks Act 1995 (Cth) provides a defence for parallel imports of genuine goods, but does not cover counterfeits or bypass product safety obligations