Law on Trade

Dropshipping as a form of electronic trade

The Law on Trade (“Official Gazette of RS,” No. 52/2019) governs dropshipping as a method of conducting electronic commerce in Serbia. Following the provisions of Article 17 of the Law on Trade (“Official Gazette of RS”, No. 52/2019), dropshipping is defined as a form of electronic commerce in which a retailer sells goods through an electronic store or an electronic platform, while the goods are delivered to the consumer directly from the manufacturer/wholesaler.

According to the above definition, there are three people involved in the described dropshipping form of electronic commerce:

  1. manufacturer/wholesaler
  2. seller of goods on the platform (dropshipper)
  3. customer (consumer).

Establishing a business relationship of a dropshipper as a seller of goods in electronic retail with a manufacturer/wholesaler

The business relationship of the dropshipper with the manufacturer/wholesaler is established by a framework agreement on the sale of goods (further: Framework Agreement), which defines the rights and obligations of the manufacturer/wholesaler (in the capacity of the seller) and the dropshipper (in the capacity of the buyer) who procures goods to sell them to end consumers.

Following the Framework Agreement, the dropshipper, as a seller, forms its offer on the platform and orders/purchases individual products from the manufacturer/wholesaler after receiving the customer’s order.

It is essential to regulate the following issues with the framework contract: ordering and acceptance of orders, price of ordered products, delivery, handling of consumer complaints, replacement of advertised devices, and supply of spare parts to the market.

Due to the safe and timely delivery of the ordered products, it is important to agree that the order delivered by the buyer (dropshipper) to the seller (manufacturer/wholesaler) is considered accepted when the buyer receives the seller’s notification of acceptance of the order. Upon receipt of the notification, the individual sales contract is considered concluded.

Within the notification sent to the customer within the agreed period, the seller approves or confirms the ordered quantity and delivery time of the ordered products.

Unless otherwise agreed, the seller sells the ordered products at prices according to the valid price list, which is an integral part of the Framework Agreement. The seller determines the price of the product and is valid on the date of sending the order acceptance notification.

To organize sales benefits for consumers in a legally prescribed manner (promotion, discount, sale, etc.), it can be agreed that the customer (dropshipper) can ask the seller (manufacturer/wholesaler) to deliver the warehouse to him on the required date, and how could to organize and implement appropriate sales activities.

As far as delivery is concerned, which is a significant segment in the dropshipping form of electronic sales, it is crucial to agree on deadlines for the preparation of the goods and their delivery to the courier by the seller (manufacturer/wholesaler), as well as the right of the buyer (dropshipper) to cancel the individual sales contract if the seller (manufacturer/wholesaler) does not confirm that he has the goods in stock within the agreed term by notification, as well as if he does not prepare the goods for collection by the courier within the agreed term.

Also, it is essential to agree in detail how the replacement of advertised devices, repairs, etc. will be done, bearing in mind that the dropshipper is responsible to the consumer for compliance per the Law on Consumer Protection (“Official Gazette of RS”, No. 88/2021), while the manufacturer/wholesaler is liable to the dropshipper for material defects of the sold item following the Law on Obligations (“Official Gazette of the SFRY”, no. 29/78, 39/85, 45/89 – decision of the Supreme Court of Justice and 57/89, “Official Gazette FRY”, No. 31/93, “Official Gazette of SCG”, No. 1/2003 – Constitutional Charter and “Official Gazette of RS”, No. 18/2020).

It is essential to agree that the manufacturer/wholesaler of the sold goods will ensure the fulfilment of all consumer rights and other rights of buyers/consumers based on the given legal and contractual guarantees, the conformity of the goods, and all per the regulations that regulate the protection of consumer rights and consumer rights, as well as to ensure the possibility of service and the availability of spare parts for goods, if applicable.

Legal obligations of dropshippers as sellers of goods in electronic retail and consumer rights

According to consumers, the dropshipper is in the capacity of a seller of goods and undertakes all obligations from the laws governing electronic retail – the Law on Consumer Protection, the Law on Trade, the Law on Electronic Commerce), and the Law on Advertising.

These obligations include, first of all, pre-contractual information to the consumer, issuing an invoice for the sold goods, handing the consumer certain documents along with the sold goods (form for withdrawal from the purchase, pre-contractual notice, etc.), responsibility for the conformity of the goods within a period of two years from the purchase, the obligation to resolve complaints and maintaining a book of complaints, refunding funds to the consumer in case of cancellation of an online purchase, keeping a KEP book, etc.

According to the provisions of Article 13 of the Rulebook on types of fiscal accounts, types of transactions, payment methods, referring to the number of another document and details of other elements of fiscal accounts (“Official Gazette of RS”, no. 31/2021, 99/2021, 10/2022, 49/2022, 50/2022 and 57/2022) the dropshipper/seller is obliged to issue fiscal invoices to consumers for goods sold over the Internet.

If the dropshipper/seller conducts exclusively online sales, he issues fiscal invoices to consumers electronically.

However, if it is an omnichannel seller (does online + offline sales), the invoice can be issued electronically with the consent of the buyer of the goods, i.e. the consumer.

Organization of discounts and reductions for consumers within the dropshipping model of electronic commerce

Dropshippers/sellers can organize consumer sales incentives (promotions, reductions, discounts, etc.).

The method of organization, advertising, and conditions of certain sales incentives are defined by the Law on Trade (“Official Gazette of RS”, No. 52/2019) (Articles 36 to 38). The dropshipper/seller must decide whether to conduct the sale regarding the specific sales incentive, e.g.

Records of turnover achieved by the dropshipping electronic trade model – KEP book

Bearing in mind that a dropshipper is a seller of goods in retail, it is necessary to keep turnover records, like all retailers, by the Law on Trade (“Official Gazette of RS”, No. 52/2019) and the Rulebook on turnover records (“Official Gazette of RS”, no. 99/2015 and 44/2018 – other laws).

Article 30 of the Law on Trade (“Official Gazette of RS”, No. 52/2019) stipulates that the trader must keep turnover records. For distance trading records shall be kept on the level of the entire distance trade of such trader on the market of the Republic of Serbia or separately for individual organization units in line with previously adopted decision of the trader.

The record of the turnover of goods includes data on the procurement, sale and selling price of goods.

The provisions of the Rulebook on turnover records (“Official Gazette of the RS”, no. 99/2015 and 44/2018 – other laws) regulate the content, form, method of keeping, and place of storage of goods turnover records.

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