I'm setting up a dropshipping online store with multiple international suppliers and a gloabl customer base.
I have two questions:
1. I'm trying to figure out how to configure the shipping costs at checkout so that if a customer buys products from multiple suppliers, the shipping costs are calculated based on each suppliers address. The products will be shipped directly from the suppliers to the customer, and the suppliers are in difference countries, so the shipping needs to be calculated based on the product. Currently I only see one option for shipping origin, even though you can fill in multiple dropshipping and fulfillment services (both in the shipping section of settings).
2. How do I calculate tax rates by product? I will have both international suppliers and international customers, so I'm not sure how to organize the tax aspect of it. For example US customer's will have to pay US sales tax on US products, but UK taxes are included in prices, so customer's should not be charged taxes on those products.
Can anyone help me?!
Aria here, one of the Social Care gurus at Shopify. ?
The most cost effective way of figuring out your shipping rates is to do free shipping on everything and incorporate the cost of the shipping in to your item price. Alternatively, you can charge flat rate shipping and if the shipping for a particular item is going to cost more than the flat rate, you can incorporate part of the shipping cost in the item price. As well as being a free option, it is also less confusing for your customers than having different shipping rates for different products. This guide goes in to more detail about how to set up those rates. I would recommend using Price Based Rates for this option.
If you're sure you want different shipping prices for individual items, you'd need an app. The best one is likely to be Bespoke Shipping. There is also Better Shipping. In addition to the cost of the app, you'd need Carrier Calculated Shipping set up for your store. There are 3 ways to add Carrier Calculated Shipping. You can either upgrade to the Advanced Shopify plan which is $299 per month, add it to your existing plan for an additional $20 per month or you can pay annually rather than monthly. This will give you 10% discount on your plan and you’ll get FREE Carrier Calculated Shipping.
Sales tax is not calculated on a per product basis. For each product, you can say it's taxable or it's not. All of the actual settings are under Settings > Taxes.
Your sales tax rate is based on the location of your business address. Some companies do have more than one business address which affects their tax rates but if you're just starting out, I'm guessing you just have one. Although your suppliers are based in different countries, the address of your suppliers would be considered their business address, rather than yours. If you're business address is in the USA, nobody outside the US would normally be charged tax on physical goods. There is an exception for digital products sold to European Countries. You can find more information on sales tax here. Please keep in mind, as gurus we are not tax experts. I would always recommend you take advice from an accountant or another professional local to you to ensure you are operating legally.
Does this all make sense? We are always around if you need further support. I wish you the best of luck with your business!
Social Care Guru
Sales tax can get a bit confusing when it comes to drop shipping and there are several scenarios to evaluate.
In a traditional drop-shipment transaction, two separate sales occur simultaneously at the point the goods are delivered to your customer.
The first sale to occur is between your vendor and your company. This first sale is, most likely, a “sale for resale” from your vendor’s perspective. Your vendor is billing you for the purchase price of the items your company has purchased and had delivered to your customer. There is a transfer of title from your vendor and your company at the moment the goods are delivered to your customer.
Upon delivery, the second sale occurs. That sale is between your company and your customer. This sale is documented by the sales proceeds you receive from your customer for the goods they purchase. Assuming that your customer is the end-user of the products sold, this second sale is a retail sale and is taxable as dictated by the laws of the state where your customer is located.
I recommend giving TaxJar's blog post "Sales Tax 101: I’m in a Drop Shipping Relationship. Now What?" a quick read. I think you'll find it helpful. Cheers!