How to Create a Dropshipping Agreement

When I first started in dropshipping and print-on-demand, one of the biggest mistakes I made was not having a proper agreement in place with my suppliers.

It’s easy to get caught up in the excitement of launching your store, uploading your designs, and running ads, but without a written agreement, you’re running blind.

If your supplier makes a mistake or a package goes missing, guess who’s responsible? You.

This guide breaks down how to create a solid dropshipping agreement that protects your business, sets clear expectations, and keeps things professional.

Whether you’re working with a print-on-demand provider or a traditional dropshipping partner, these principles apply.

Let’s walk through everything you need to include, avoid, and negotiate in your agreement.

What Is a Dropshipping Agreement?

A dropshipping agreement is a written contract between you and your supplier that defines the working relationship.

It outlines what each party is responsible for, how orders are processed, how disputes are handled, and much more.

If you’re using a print-on-demand provider like Printify, Printful, or a private-label supplier, an agreement helps you make sure you’re both on the same page.

Why You Need It:

Without an agreement, you leave your business open to:

• Fulfillment errors
• Delayed shipments
• Refund disputes
• Design theft
• Unclear pricing

In other words, things that cost time, money, and customer trust.

Common Scenarios Where an Agreement Saves You:

• A supplier ships the wrong item, and you need them to cover the return cost
• A design you created ends up on another seller’s site
• Shipping times increase without warning, affecting your store reviews
• You get charged hidden fees you didn’t know about

With a solid agreement, these scenarios are addressed in advance.

Core Sections Every Dropshipping Agreement Should Include

Your agreement doesn’t have to be 20 pages long, but it should be detailed. Here are the must-have sections and what they should cover.

1. Parties Involved

You need to clearly list:

• Your business name, address, and contact information
• Supplier’s business name, address, and contact details
• Legal structure (LLC, Sole Proprietor, etc.)

This ensures there’s no confusion about who is agreeing to what.

2. Product Responsibilities

Spell out exactly who is responsible for each part of the product lifecycle.

This part helps avoid surprises when a product goes out with no branding, or poor-quality printing.

3. Branding and Intellectual Property

For print-on-demand stores, your designs are your business. It’s critical to outline:

• Who owns the design files and artwork (you do)
• Whether the supplier can reuse your designs (they can’t)
• If the supplier provides any generic designs, who owns those?
• What kind of branding you’re allowed to apply (custom labels, packaging, etc.)

Things to include:

• Copyright clauses
• Non-disclosure agreements (NDAs)
• No resale without permission clause

These terms protect your original designs and keep your supplier from reusing or selling your work without consent.

Make sure this part of the agreement is clearly written and signed to avoid any future disputes over ownership.

4. Order Processing and Fulfillment

Here you define how orders are handled from the moment they come in to when they reach your customer.

Order Process Timeline Example:

Make sure your supplier agrees to communicate if any delay arises. Set rules for weekends and holidays too.

5. Shipping Terms

Shipping is one of the most common areas where dropshippers run into trouble. Lay out:

• Delivery timeframes (e.g., 5-8 business days US, 7-14 international)
• Who pays for shipping costs (usually you)
• Who provides tracking (supplier)
• What happens when a package is lost or damaged
• Whether shipping insurance is included

Also, clarify the carriers they use (e.g., USPS, FedEx, DHL) and if they offer expedited options.

6. Return and Refund Policy

This section is where you prevent financial losses and arguments.

Define:

• What qualifies for a refund or return (damaged, wrong item, misprint)
• Who pays for return shipping (usually the supplier, if it’s their error)
• Restocking fees (if applicable)
• How customers initiate returns (via your site or directly with supplier)

Return Process Example:

1. Customer submits a return request within 7 days
2. Supplier reviews photos of issue
3. If approved, a replacement is sent or refund issued within 3 business days

Include timelines and any documentation required.

7. Payment Terms

Money can get awkward if you don’t handle this clearly upfront. Your agreement should list:

• Wholesale pricing for products (with or without printing)
• Payment schedule (e.g., upfront, Net 15, Net 30)
• Currency used (USD)
• Payment methods accepted (PayPal, Stripe, bank transfer)
• Refund policy on canceled orders

Also cover things like late payment fees and chargebacks.

8. Confidentiality & Data Protection

If your supplier is handling customer data (like names, addresses), they must follow basic data privacy standards.

Even though you’re not Facebook, you still need protection.

Include:

• Confidentiality clauses
• Data handling policies
• GDPR/CCPA compliance if you’re operating in the EU or California
• Agreement not to contact your customers directly

You want to keep your customer list protected from being poached.

9. Termination Clause

If the relationship needs to end, how do you part ways?

Include terms like:

• Required notice period (e.g., 30 days)
• Whether outstanding orders must still be fulfilled
• What happens to shared data and assets (design files, mockups, branding)
• Dispute handling process

A clear termination clause prevents messy breakups if the supplier becomes unreliable.

Red Flags to Watch For

When reviewing or creating a dropshipping agreement, watch out for vague or missing information.

These red flags usually cause problems down the road.

• No timeline for fulfillment or shipping
• No process for refunds or damaged items
• No mention of who owns your designs
• Supplier wants to contact customers directly
• They avoid signing anything legally binding

If you spot these, pause. Ask for clarity or walk away.

Template Structure for a Dropshipping Agreement

Here’s a basic structure you can use when writing your agreement.

Always run your final draft past a contract lawyer before signing.

Dropshipping Agreement Template Structure:

1. Introduction
   • Date, names of parties, intent of the agreement
2. Product & Fulfillment Responsibilities
   • Who does what in the product creation process
3. Branding & Intellectual Property
   • Who owns what, what can and can’t be used or reused
4. Order Processing & Shipping
   • Timeframes, packaging, communication
5. Returns & Refunds
   • Clear process, responsibilities, time limits
6. Pricing & Payment Terms
   • Rates, schedule, penalties, currency
7. Confidentiality & Data Privacy
   • Customer data use, NDAs, legal requirements
8. Termination Clause
   • Exit strategy, outstanding orders, asset handling
9. Dispute Resolution
   • Jurisdiction, legal venue, mediation process
10. Signatures

• Both parties sign and date

You can build this in Google Docs or use a service like PandaDoc, DocuSign, or LegalZoom to make it official.

Print-on-Demand Specific Considerations

If you’re using a POD model, especially with platforms like Printful, Printify, or Gooten, the agreement might be slightly different.

These platforms already have their own terms of service, but if you’re using a white-label or private printer, get things in writing.

Include Clauses For:

• Custom label printing and packaging fees
• Quality control standards
• Proofing process for new designs
• Printing turnaround times
• Minimum or maximum order volumes

Also ask about:

• Reprint policies
• Color variation tolerances
• Seasonal delays (especially Q4)

The more details you cover, the fewer issues you’ll deal with later.

Real-World Stats That Back This Up

Still wondering if all this is necessary? Let the numbers do the talking.

• 63% of failed dropshipping stores didn’t have a written supplier agreement (EcomCrew)
• Merchants using supplier agreements had 27% fewer fulfillment issues (Shopify Plus)
• Sellers with custom SLAs saw up to 25% faster delivery times (Printful, 2024)
• Average cost of a supplier dispute without an agreement: $2,150 (EcommerceFuel, 2023)

And from personal experience, once I introduced formal agreements with my suppliers, my refund rate dropped by 80% over six months.

Final Thoughts

A dropshipping agreement is not just a formality. It’s how you protect your business, set expectations, and avoid problems before they happen.

Whether you’re using print-on-demand, white-label suppliers, or traditional dropshippers, a solid agreement is your safety net.

Invest a few hours now, save thousands later. Trust me—it’s worth it.