If you're dropshipping, you've probably heard people talk about having a dropshipping agreement.
But what exactly is that? And do you really need one?
In this guide, you’ll learn exactly what a dropshipping agreement is, what to include in it, and how to create one that actually works.
We’ll even share a simple template to help you get started faster!
Let’s break it down, step by step.
What is a dropshipping agreement?
A dropshipping agreement is a written contract between two businesses: a dropshipper (you) and a dropshipping supplier.
Remember, in a dropshipping business, you don’t keep any inventory yourself.
When someone buys something from your store, you send the order to your supplier, and they ship the product directly to your customer.
Sounds simple, right?
But if you and your supplier aren’t on the same page, a lot can go wrong.
That’s where a dropshipping agreement helps to prevent issues.
It clearly explains:
- What each person is responsible for
- How orders will be handled
- When will payments be made
- What happens if there’s a return, delay, or problem
Think of it like setting the rules for a team project.
You want to make sure everyone knows what to do, when to do it, and what to expect.
A good agreement helps avoid confusion, protects your business, and makes working together easier and more professional.
It’s also helpful if you ever disagree.
With everything written down, you have something solid to refer to, so you’re not just relying on emails or phone calls.
The bottom line?
A dropshipping agreement is your safety net.
It keeps things transparent, fair, and organized for both you and your supplier.
As you grow your business, that kind of structure becomes increasingly important.
10 Elements of a dropshipping agreement
When you create a dropshipping agreement, it’s important to include the right details.
A good agreement doesn’t need to be long or full of legal jargon, but it does need to cover all the key points so everyone knows what to expect.
Let’s go through the ten most essential elements:
1. Contact information
This is the basic stuff, but it's important.
Your agreement should include the full legal names, business names (if different), phone numbers, email addresses, and physical addresses of both you and your supplier.
You need to know exactly who to contact if there’s ever an issue, like a missed shipment or payment delay. This information is also essential if you ever need legal help.
2. Products and inventory
Here’s where you list what products the supplier will provide for you to sell.
It can be a general description (like “fitness apparel”) or a detailed product list.
You should also mention how the supplier will inform you if something is out of stock or discontinued.
3. Order fulfilment process
This section explains how orders will be handled once customers buy something from your store.
- Will you email the order to your supplier?
- Will it go through an app or an automated system?
- How fast will the supplier ship the order?
- Will they send tracking info?
You’re trusting someone else to deliver your product, so this part of the agreement ensures they know exactly what to do and how fast they need to do it.
4. Shipping and handling
This part covers how the supplier will package and ship the products.
It should explain:
- Who pays for shipping
- Which carriers are used (like UPS, FedEx, DHL, etc)
- How long the shipping usually takes
- If tracking numbers are provided
Your customers will blame you if shipping is slow or unreliable, even if it’s the supplier’s fault. So make sure everything is clearly agreed upon ahead of time.
Tip: Ask your supplier if they offer blind dropshipping. This means they ship the product without their name on the package, so it looks like it came directly from your brand.
5. Pricing and payment terms
Money talk! This section covers:
- The price you pay your supplier for each product (wholesale price)
- How and when you’ll pay them (e.g., per order, weekly, monthly)
- Any extra fees—like handling, restocking, or custom packaging
- What happens if there’s a payment delay
Why is this important?
You need to know exactly how much you’ll earn on each sale, and your supplier needs to know when they’ll get paid!
6. Returns and refunds
No one loves dealing with returns, but they happen.
This section should clearly explain:
- Who handles customer returns (you or the supplier)
- Where customers should send returned items
- Who pays for return shipping
- If the supplier charges restocking fees
- When and how refunds are issued
Tip: Try to match your dropshipping return policy with your supplier’s policy so there are no surprises for your customers—or for you.
7. Branding and intellectual property
This section is all about your brand and how it’s represented.
If you’re using your own logo, product images, or branded packaging, you’ll want to spell out what’s allowed—and what’s not.
Include things like:
- Whether the supplier can use your logo or branding materials
- Who owns the product photos and descriptions
- Whether you can use the supplier’s photos or trademarks
- Rules about using each other’s content in ads or on websites
Your brand is one of your most valuable assets. You need to protect it and ensure it’s being used correctly.
At the same time, your supplier may have its own brand guidelines.
8. Liability and risk
Here’s where things get a little more serious—but it’s still very important.
This section covers who is responsible if something goes wrong.
For example:
- What happens if a customer gets a damaged product?
- Who’s liable if a product causes injury or harm?
- What if a shipment is lost or delayed?
- Who covers legal fees if there’s a customer complaint or lawsuit?
If there’s ever a legal issue or major problem, this part helps protect your business. It defines who takes the blame and who doesn’t.
Tip: Make sure your supplier agrees to follow all safety and legal regulations for their products, especially if you’re selling in countries with strict rules (like the US or the EU).
9. Termination clause
This section explains how either you or your supplier can end the agreement.
Even if things are going well now, you need a plan in case the relationship changes or your business takes a new direction.
Include things like:
- How much notice is required (for example, “30 days in writing”)
- In what situations can the agreement be ended immediately (like fraud or non-payment)
- What happens to pending orders or unpaid invoices after termination
- If there are any penalties for ending early
A clear exit plan keeps things professional and respectful, especially if you ever decide to switch suppliers or take your business in-house.
10. Dispute resolution
Nobody wants problems, but if they do happen, it’s good to have a fair process in place.
This section explains how disputes will be handled if you and your supplier don’t agree on something.
Here’s what to include:
- What country or state’s laws will apply (called the “governing law”)
- How you’ll try to solve disputes—like negotiation, mediation, or arbitration
- Where any legal claims must be filed (such as a specific city or court)
This protects both sides. If there’s ever a serious disagreement, you’ll have a plan for how to handle it without wasting time or money.
Try to keep it simple here.
You can say something like:
If a dispute arises, both parties agree to try mediation before taking legal action.
Sample dropshipping agreement template
Now that you know what should go into a dropshipping agreement, you might be wondering: “What does one actually look like?”
Well, below is a basic sample you can use as a starting point.
It’s written in plain English and includes all the key elements we discussed.
You can copy this template, customize it for your business, and then optionally have it reviewed by a lawyer before using it officially!
Disclaimer: We are not lawyers, and this post should not be considered legal advice. You should seek appropriate counsel for your own situation.
Also, this post is directed primarily toward readers in the United States. If you are conducting business outside the United States, it is recommended you find and understand your obligations regarding disclosure.
Sample Dropshipping Agreement Template
This Dropshipping Agreement (“Agreement”) is made on [Date] between:
Retailer: [Your Full Name / Business Name]
Address: [Your Business Address]
Email: [Your Email]
Phone: [Your Phone Number]Supplier: [Supplier’s Full Name / Company Name]
Address: [Supplier’s Address]
Email: [Supplier’s Email]
Phone: [Supplier’s Phone Number]
1. Products and Inventory
The Supplier agrees to provide the Retailer with the following products for resale: [List or link to product catalog]. Supplier will notify Retailer of any changes in availability.2. Order Fulfillment
The Retailer will send orders to the Supplier via [email, app, or order system]. Supplier agrees to process and ship all orders within [X] business days and provide tracking information upon shipment.3. Shipping
Supplier is responsible for packaging and shipping products. Shipping costs will be [covered by: Supplier / Retailer / customer]. All packages will be shipped using [carrier] with tracking provided.4. Pricing and Payment
The Retailer will purchase products at the agreed wholesale prices listed in [attached price sheet]. Payments will be made via [payment method] on a [weekly/monthly/per-order] basis.5. Returns and Refunds
Returns will be handled according to the Supplier’s return policy: [Link or description]. Retailer will inform customers of the same return conditions.6. Branding and Intellectual Property
Each party retains ownership of its own branding, logos, and intellectual property. Retailer may use the Supplier’s product images with permission for marketing purposes.7. Liability and Risk
Supplier is responsible for product quality and compliance with safety regulations. Each party agrees to indemnify and hold the other harmless in the case of third-party claims.8. Termination
Either party may terminate this Agreement with [30] days written notice. Any outstanding payments and orders must still be fulfilled or resolved.9. Dispute Resolution
Any disputes shall first be resolved through friendly negotiation. If no solution is reached, both parties agree to resolve the dispute through [mediation/arbitration] under the laws of [State/Country].10. Agreement Acceptance
By signing below, both parties agree to the terms listed above.Retailer Signature: ______________________ Date: ___________
Supplier Signature: ______________________ Date: ___________
Note: This is just a basic template. Every business is different, so customize it based on your needs.
Also, some suppliers will have their own dropshipping agreement templates. For example, you can find the one from CJdropshipping here.
3 Tips for creating a better dropshipping agreement
Now that you’ve seen what goes into a dropshipping agreement and even looked at a sample, let’s make it even better.
Here are three tips to help you create a dropshipping agreement that actually works for you:
1. Keep it simple, but cover the essentials
You don’t need a 20-page contract full of legal jargon.
In fact, the best agreements are easy to read and understand.
That said, it does need to cover all the basics—things like pricing, shipping, returns, and responsibilities.
If something goes wrong, you want a clear, written record of what was agreed.
This way, there is no confusion and no finger-pointing.
So, use short paragraphs, clear language, and bullet points where possible. Consider it as writing for your future self, and make it easy to reference later.
2. Update the agreement as you grow
Your business isn’t going to stay the same forever, and your agreement shouldn’t either.
As you add more products, change suppliers, or scale up, make sure your contract reflects those changes.
Outdated agreements can lead to missed expectations, lost money, and unhappy customers.
So, remind yourself to review your agreement every six months (or anytime your business changes). It takes ten minutes and can save you a ton of stress.
3. Get legal help (if you can)
You don’t need to hire a big law firm, but even a quick review from a freelance lawyer can make a big difference.
They’ll catch things you might miss and help ensure your agreement is legally solid, especially if you’re dealing with international suppliers or high-risk products.
A few small changes can turn a “good enough” agreement into a bulletproof one. And if you ever do face a dispute, you’ll be glad you got it right.
Do you actually need a dropshipping agreement?
Let’s be honest, if you’re just starting with dropshipping, a full-blown legal agreement might not be your top priority.
And that’s okay.
In the early stages, you’re still figuring out the basics:
- Are your products actually selling?
- Are you making a profit after ads and fees?
- Do your suppliers even deliver on time?
At this point, adding a formal agreement can sometimes feel like busywork.
It’s one more thing to research, write, and worry about—when your focus should really be on testing, learning, and building a system that actually works.
So, do you need a dropshipping agreement from day one?
Probably not.
But here’s the deal: once you’ve found a supplier you want to stick with, and your business is growing, that’s when an agreement starts to make a lot more sense.
Think of it this way:
- No sales yet? Focus on your store, your offer, and your margins.
- Are you making consistent sales and profits? Now it’s time to put your foundation in place, and a dropshipping agreement is part of that.
You don’t need to overcomplicate the early days, but don’t ignore the paperwork forever.
When the time is right, it’s worth doing properly.
Conclusion
By now, you should have a clear understanding of a dropshipping agreement, why it matters, and what to include if you decide to create one.
But remember—you don’t need to do everything at once.
Don't feel pressured to write a full contract today if you’re still testing your first products and determining whether your store is profitable.
Focus on learning, improving your offer, and getting real sales.
That’s where the real growth happens.
Have a great rest of your day!
Want to learn more about dropshipping?
Ready to move your dropshipping store to the next level? Check out the articles below:
- Dropshipping Fulfillment: An Easy Guide to Fulfilling Orders
- How Do You Pay a Dropshipping Supplier for Their Products?
- How to Connect a Dropshipping Supplier to Your Store (2025)
Plus, don’t forget to check out our in-depth guide on how to start dropshipping here!
