What must an online store tell buyers about delivery, and what changes if you dropship?

Delivery cost and the single price

Section 48 of the Australian Consumer Law treats the delivery charge in two steps. First, a person is not required to include, in the single price for goods, a charge that is payable in relation to sending the goods from the supplier to the other person. Second, the condition: if the person does not include that sending charge in the single price, and the person knows at the time of the representation the minimum amount of the charge that must be paid by the other person, the person must not make the representation unless they also specify that minimum amount. So a store may leave delivery out of the first price. Where it knows, when it shows the price, the least the buyer must pay for delivery, it must show that minimum too.

How the store charges is its own decision. business.gov.au puts the choice this way: decide how you're going to charge customers for shipping. The most common options are free shipping, flat rates, tiered rates, and exact cost. Tiered shipping is a mix of free and flat rate shipping: a flat rate for cheaper orders, and free shipping for orders over a certain amount.

What to tell buyers before they order

business.gov.au's line for a store: your online store should tell customers what to expect, and the delivery information should be easy to find, including details like:

• shipping costs
• expected delivery times
• how customers can contact you if there's a problem with their order
• when you'll refund or replace a customer order, with the note that these rules need to align with the Australian Consumer Law

The same page keeps the customer's order in view: when you sell products online, you need to ship those products to customers, and to make sure your online business is successful, your order deliveries should be quick, reliable and affordable.

Delivery times

There are times when the store knows a delay is coming. business.gov.au: there might be times when you know deliveries will be delayed, for example during busy online shopping periods, so be upfront about timeframes so customers can decide when to order from you. And the duty that follows if the delay turns into a failure to supply: if you can't supply a product the customer has paid for in a reasonable time, you must provide a solution, which may include a refund or replacement.

Where the store knows of a delay outside its control, the ACCC asks for clear and accurate information to consumers about stock or service availability, what solutions the business will provide if it cannot supply the product or service on time, and the likely timing of production and delivery, or service supply. The ACCC adds that businesses should be proactive in updating customers about any delays that arise after they have bought a product, and about the steps the business is taking to help customers.

Holding stock or dropshipping

Some businesses sell products they hold in stock; others sell first and buy afterwards. The ACCC's description of the second model: some businesses offer products that they don't have in stock and instead act more as a middle person, with agreements with other suppliers to provide the stock to fulfil the orders their customers make. This is called dropshipping. The model can mean lower prices because the business has lower costs, but the ACCC says it can also cause problems for consumers because the business they are buying from doesn't have direct control over the stock.

The GST side of the comparison turns on where the goods are when they are sold. The ATO defines drop shipping as sales of goods located overseas at the time of sale, and sent directly to your customers in Australia from an overseas source such as manufacturers, wholesalers or warehouses, and says that an Australian GST registered supplier who drop ships will have to account for GST on its sale of low value imported goods.

When delivery goes wrong

The ACCC draws the line at taking money the business cannot honour: it is against the law for a business to take payment for products or services when they know they won't be able to supply them. Under the Australian Consumer Law, businesses must not accept payment for products or services if: they don't intend to supply the product or service; they intend to supply different products or services from those promised; or they know, or should know, that they won't be able to supply the products or services by the promised date, or within a reasonable time.

Where a business can't supply a product or service that a consumer has paid for, on time or within a reasonable time, the ACCC says the business must provide a solution. business.gov.au's version of the same duty adds the form it may take: if you can't supply a product the customer has paid for in a reasonable time, you must provide a solution, which may include a refund or replacement.