Title

Business Analytics issue of Drop shipping Business

Assignment A3

Group Member
Mansoor Shahbaz (7311)

Supervisor Name

Dr. Fatima Omer

Drop Shipping:
Drop shipping a popular business model, offers entrepreneur an economical business entry in the field of
ecommerce. It offers sellers to sell supplier items without having physical inventory at their warehouse;
and can manage delivery directly from supplier websites at customer premises. (Arntz, 2024). A popular
business model which got hype in the mid 2021 after the pandemic. However, alongside its advantage,
there are several ethical considerations connected with this business model that can shape the industry
reputation and image. In this study, we delve into the spectrum of ethical issues of business analytics
pertaining to drop shipping. (Concern for Information Privacy and Online Consumer Purchasing , 2006)

Issue 1:

Brand Image & Reputation:

Drop shippers uses other brand’s product and images to be listed on their website; and can mark up high
investment in advertising due to minimal inventory cost. (Source, 2024). This involves exaggerating
product claims or offering un realistic guarantees to customer, which is ultimately leading towards
mislead and dissatisfaction. In their advertisement, they usually create hype of items and impose heavy
targeted marketing of repeated advertisement at consumer walls, ultimately resultantly into a meaningful
purchase. Every time you scroll in your feed, can mark up rapidly with the same video every time that
catches your attentions. (Ethical?, 2023). However, beside this drop shipper usually sell higher than the
subjected price originated by brand itself which is a bottleneck for customers to identify the real price of
the item. (Ethical Dropshipping: Navigating Grey Areas in Ecommerce, 2024) Certainly, drop shippers
are not consistent sellers as they are not authorized/approved by the brand itself. (Arntz, 2024) Selling
copyrighted or trademarked items without authorization infringes on the rights of creators and can lead to
significant legal consequences (Blesch, n.d.). This practice undermines intellectual property protections
and devalues the work of original creators.

Issue 2:

Customer services Challenges:

Customer service can suffer in drop shipping model, as retailers has limited control over product, service
and delivery. It usually processes order from the parent website with the details of customer to execute
the delivery (Ethical?, 2023) (Ethical Dropshipping: Navigating Grey Areas in Ecommerce, 2024). It
could certainly affect product promise delivery time and quality and can mark negative reviews on
webpage about the product and brand image. On the contrary, sellers must be the seller of record for their
products, be responsible for accepting and processing customer returns; (Vulfsons, 2021)conversely as
seller is not maintaining the inventory at their warehouse, it is affecting serious customer satisfaction
about the authenticity of product. (Is Dropshipping Legal? Guide to Running a Legit and Safe Business,
n.d.)

Issue 3:

Third-Party Data Sharing:

In a drop shipping model, customer information often passes through various third-party suppliers and
fulfillment centers. (Anderson, 2023)This can increase the risk of data mishandling or unauthorized
sharing, as it becomes difficult to maintain stringent data protection protocols across multiple parties.
(Arntz, 2024)The use of third-party platforms and plugins for drop shipping can create vulnerabilities. If
these platforms do not have robust security measures, consumer data can be at risk of breaches and
cyberattacks, which can lead to identity theft and other malicious activities. (Concern for Information
Privacy and Online Consumer Purchasing , 2006). In March, (Source, 2024) Cybernews reported on a
publicly accessible MongoDB (Chaudhary, n.d.) database linked to Saara, a US-based company that
develops Shopify plugins. The exposed database contained 25GB of data from plugins used by over
1,800 Shopify stores. (Arntz, 2024)

Utilitarianism Perspective:
The drop shipping practice of using other brands' products and images, combined with heavy advertising
and potentially misleading claims, can lead to consumer dissatisfaction and trust issues. From a utilitarian
perspective, this practice may yield short-term profits for the drop shipper but ultimately results in more
harm than good due to customer deception and damaged reputations for both drop shippers and the
original brands. However. sharing data to third party sites could raise an ethical concern of data privacy
and integrity. Utilitarianism would argue that ethical concern should minimize these risks by
implementing stricter data protection measure.

Short-Term vs. Long-Term Consequences:

Drop shippers who exaggerate product claims or engage in aggressive advertising tactics may initially see
an increase in sales and profits. Yet, when customers receive products that don’t align with advertised
promises, dissatisfaction arises. This leads to negative reviews, loss of customer trust, and potential harm
to both the drop shipper’s and the original brand’s reputation. Utilitarianism considers these long-term
negative effects, arguing that the short-lived profits for drop shippers do not outweigh the broader harm
done to consumer trust and brand reputation. For instance, Daraz reported nearly 0.55M sellers on its
platform, out of this 30% are drop shippers who run and manage their account on a short term to
maximize the profit rather than sustaining for the long term

Data Privacy and Security:

Drop shipping often involves sharing customer data with third-party suppliers and fulfillment services.
This poses risks to data privacy and security which if mishandled can lead to identity theft, fraud and
other consumer harms. Utilitarianism would advocate for implementing stronger data protection measures
to minimize these risks and maximize consumer welfare. Protecting customer data helps to build trust in
e-commerce, which contributes to greater collective well-being and consumer confidence in online
shopping. For instance, OLX has been accused of using telecommunications data, including personalized
consumer information, to sell to third-party vendors for promotional activities, leading to potential
violations of data privacy and privacy infringement.

Industry Impact:
Unethical practices in drop shipping can have a broader negative impact on the entire e-commerce
industry. A single negative consumer experience can breed distrust in online shopping, affecting not just
the unethical sellers but also reputable businesses. This effect diminishes overall consumer confidence,
potentially causing long-term harm to the e-commerce ecosystem and limiting opportunities for both new
and established businesses.
In Pakistan, the e-commerce sector is still in a phase of growth, but unethical behaviour from local sellers
such as misrepresentations, fraud, and unmet promises creates a perception that online shopping in the
country is inherently unreliable. This perception deters consumers and contributes to a negative reputation
for the industry as a whole. For example, Daraz currently has 57% negative reviews compared to 33%
positive reviews across all categories, reflecting widespread customer dissatisfaction (Site Jabbar, n.d.).
This skewed ratio of negative to positive reviews underscores the damage to consumer trust and
highlights the need for greater accountability in the market.

Instrumental Goods:
Instrumental goods are valued as a means to an end rather than for their own sake. In the context of drop
shipping, profit is a prime example of an instrumental good. Profits are essential for the sustainability of a
business, and drop shippers may view various practices (e.g., heavy advertising, data sharing) as
instrumental tools to increase sales and revenue. Consumer trust can also be considered an instrumental
good in this context: it’s necessary to retain customers and maintain a competitive edge in the e-
commerce market.
Intrinsic Goods:
Intrinsic goods are valued for their own sake and are considered inherently good. In this model, customer
well-being and data privacy should be viewed as intrinsic goods. When consumers data and privacy are
respected, and products meet expectations, it promotes a sense of security, satisfaction, and loyalty.

Rule Utilitarianism Perspective:

Rule utilitarianism suggests that actions should follow rules that, if universally applied, would maximize
overall happiness or minimize harm. This perspective offers valuable insights into improving advertising
practices, data security, and consumer trust within the drop shipping model. Here's how rule utilitarianism
applies to the ethical challenges in drop shipping:

Truthful and Transparent Advertising Practices:

If businesses universally adopted the rule, "Always use truthful and transparent advertising practices,"
it would reduce misleading advertisements, deceptive product descriptions, and inflated prices. Drop
shippers often exaggerate claims to create a sense of urgency or value, which may lead to consumer
dissatisfaction when the product fails to meet expectations.
Adhering to honest advertising would benefit both consumers and businesses in the long run.
Consumers would experience less buyer's remorse, increasing their trust in online marketplaces. For
businesses, this rule would encourage sustainable growth by building a positive reputation. Ethical
advertising strengthens customer loyalty, as consumers are more likely to return to businesses they
trust. Rule utilitarianism would argue that such transparency, if practiced universally, would improve
the overall marketplace environment, benefiting consumers, reputable businesses, and even the e-
commerce industry as a whole by fostering trust. For example, we occasionally see that e-commerce
platforms offering 50% discount on their entitled item without knowing the manufactured
recommended prices, how we would able to determine the discount percentage. Daraz has been
accused of using this malfunction activities by their drop shippers pertaining to misleading the
infographics which is counterfeit as per product quality. As per rule utilitarianism, products should be
offered symbolize to their standards and quality to eliminate trust issues of customers and to sustain
harmony between the platform and the customers.
Rights & Duties:

Intellectual Property Rights

The unauthorized use of another brand's products, images, or trademarks in drop shipping
undermines intellectual property rights. Brands invest substantial resources in developing their
products and marketing strategies; thus, drop shippers who use these assets without permission
infringe upon creators' rights. This practice is ultimately breaching the copyrights laws and also
devalue the creator own content.

Data Privacy & Security:

Sharing customer data with external websites without the individual's consent raises significant
data privacy concerns. Customers may be unaware of how their personal information—such as
shipping addresses, phone numbers, names, and emails—could be used by these websites. For
instance, if a company selling pet products gains access to such data, it might use this information
for its own marketing campaigns if initial consent was obtained from you during transactions.
This poses challenges in ensuring that data processors secure explicit consent from every
individual whose data they submit when processing orders on behalf of customers. The lack of
comprehensive consent management compromises user autonomy and trust, highlighting the need
for robust data handling policies to prevent unauthorized use. As per abided policy by GDPR,
(EU, n.d.) if a company uses services of third-party website by sharing data of their citizen, They
are abide by law to hire a native DPO (Data Protection Officer) to ensure the privacy of
individual personal data.

Negative Rights (Rights of Original Brand Owners):

Negative rights refer to the right to non-interference, meaning that others should not infringe
upon or damage these rights. In this case, brand owners have a negative right to protect their
intellectual property, including logos, product images, and brand reputation. When drop shippers
use brand names, images, or copyrighted material without permission, they violate this negative
right by interfering with the brand’s ability to control how its products are represented. This
undermines brand trust, deceives consumers, and diminishes the brand’s value. Moreover,
Consumers have a negative right to privacy, meaning they should be free from unauthorized
sharing or misuse of their personal data. In the drop shipping model, customer data often passes
through multiple third-party systems, creating potential privacy breaches.
 Positive Rights (Rights of Consumers):
Positive rights require others to provide something or take certain actions. Here, consumers have
a positive right to receive reliable service and products that match their expectations. They should
be able to trust that the advertised product quality, delivery timeline, and return policies will be
honored. In a drop shipping setup, however, these rights are compromised because the drop
shippers often lack control over the product, delivery, and customer service processes, which can
lead to unmet expectations and dissatisfaction.

Justice:
Accountability
Accountability in data practices means that organizations should be answerable for how they
collect, use, share, and store customer information. In cases where a company shares data with
third parties, they should make this practice clear to consumers and be responsible for
safeguarding that data. When organizations fail to take accountability for data sharing, they
expose consumers to potential misuse of their information, such as unauthorized sales, profiling,
or identity theft. This breach of accountability represents an injustice because it denies consumers
control over their personal data, leaving them vulnerable to risks they did not consent to.
Transparency
Transparency, on the other hand, requires organizations to clearly communicate their data
handling policies and to obtain explicit consent when sharing information with third parties.
Transparency allows consumers to make informed decisions about the services they use. For
example, if a company shares data with other entities or uses consumer data for targeted
advertising, they should disclose these practices openly. Without transparency, consumers are
effectively kept in the dark about how their personal information might be accessed or utilized,
which is a form of injustice. It violates their autonomy and undermines their ability to safeguard
their own privacy.

Kant’s First categorical imperative

Brand Image and Intellectual Property (Universality):
The principle of universality in Kant's categorical imperative, asserts that actions are morally
right if they can be universally applied. In simpler terms, one should act only in ways that could
be accepted as a universal law. For instance, if a drop shipper misrepresents another brand’s
products by using its images and logos, they must consider the implications if this practice
 became universally accepted. Imagine if everyone operated similarly, freely using any brand's
images and content. This would lead to a chaotic market where brand identity, product quality,
and intellectual property are no longer protected, harming both consumers and businesses.
To illustrate, if a drop shipper established their own brand, they would likely oppose others using
their brand identity without permission, as it would undermine the trust and authenticity they’ve
built with their customers. By Kant’s logic, such an action cannot be moral if the drop shipper
would not want this practice applied universally to their own brand. This aligns with intellectual
property rights, which exist to prevent unauthorized use of branding and imagery.

Reversibility
Reversibility treats others as you wish to be treated. In the context of data and intellectual
property, reversibility suggests that if a drop shipper wouldn't want their own data used without
consent, they should refrain from using another brand’s data, images, or products without
permission. If third-party websites misused the drop shipper’s data, altered their product images,
or manipulated their brand image, it would likely feel unjust and unethical to them. Thus,
according to the reversibility principle, misusing another brand’s intellectual property is equally
unacceptable.
This perspective emphasizes respect for others intellectual property, underscoring the
responsibility to protect brand image and reputation. Kantian ethics, through universality and
reversibility, suggest that ethical drop shipping should respect the original brands’ rights,
avoiding misleading practices and unauthorized use of branding elements to foster a fairer
marketplace.

The Second Formulation of Kant’s Categorical Imperative

When drop shippers use other brands’ products and images without permission, they are
effectively using the creators as mere means to profit. The original creators' work, time, and
investment are exploited for the drop shipper’s gain, with little or no benefit or acknowledgment
to the creator. This violates the Second Formulation because it disregards the intrinsic worth of
the creators and their right to be treated as ends in themselves, deserving of recognition and
compensation for their intellectual property. Sharing customer data without consent further
exemplifies treating individuals as means rather than ends. When customer information is passed
on to third parties without explicit approval, it shows a lack of respect for their autonomy and
personal rights. This practice benefits the business but disregards the dignity and privacy of the
consumers.

Customer Privacy Violation

When customer data is shared with third parties without consent, drop shippers are similarly
treating individuals merely as means. Customers are reduced to data points leveraged for business
transactions, without regard for their personal rights or autonomy. In Kantian ethics, respect for
autonomy is crucial; customers should have the right to control who has access to their personal
information, ensuring their dignity and privacy are upheld. This lack of consent disregards their
intrinsic value as individuals and fails to recognize their right to make informed decisions
regarding their data.
Without customer approval, such data-sharing practices show a lack of respect for the consumer’s
autonomy and individual privacy. The business may benefit from data-driven insights or
profitable partnerships with third parties, but this disregards the consumer's personal rights and
compromises their trust in the brand. Violating privacy can lead to negative consequences for
consumers, including unwanted marketing, exploitation, or even identity theft if the data is
mishandled.

Violation of information & Communication privacy:

Pursuant to above all issues, information privacy of individual customer is violation at high
extend. For instances, in heavily targeted marketing campaigns, customer browsing data may be
exploited for retargeting and personalization marketing. This is truly an invasion of information
privacy as customer data is transforming to third party sites without their consent for
bombardment of marketing campaigns.
Furthermore, limitation of customer services regardless of what drop shippers offers to do,
exaggerating issue of communication privacy. Poor service and fulfillment may prompt
customers to seek more direct communication, during which additional personal information
might be collected and shared across vendors. Furthermore, customers may not have full control
over their information due to the lack of inventory control and direct customer handling.
Distributive Justice:

Distributive justice is an ethical principle centered on fair distribution of benefits, responsibilities, and
burdens. In this case, it posits that the original brand, as the rightful owner of the intellectual property,
should receive a fair share of the profits generated through its assets. However, when drop shippers
leverage brand assets without consent, the distribution of benefits is skewed. The drop shipper reaps
financial rewards from increased sales due to the brand's recognizable and trusted image, while the
original brand receives no reward for its contribution.
Distributive justice emphasizes fairness in compensation and rewards, arguing that creators deserve
recognition and financial compensation for their contributions. If the system permits drop shippers to
exploit brand images and products without repercussions, it perpetuates an unfair practice where one
party disproportionately benefits at the expense of another.

Compensatory Justice:
When drop shippers use another brand's images and products without authorization, they exploit the
brand’s intellectual property for their own gain. This not only misleads consumers but also reduces the
brand's control over how its products are represented. Under compensatory justice, the harmed brand
deserves compensation for this misuse because the drop shipper’s actions directly impact its potential
earnings and damage its market reputation. Courts might order the drop shipper to compensate the brand
for any financial loss and brand dilution caused by unauthorized use. Moreover, In the drop shipping
model, brands often face the challenge of maintaining transparency and consistent pricing. Drop shippers
sometimes sell items at higher-than-retail prices, confusing consumers about the product’s true value and
affecting the original brand’s pricing strategy. Compensatory justice here would advocate that the brand
be compensated for any potential losses caused by price manipulation, as consumers who are overcharged
might hold negative associations with the brand.

Ethics of care:

In this case, drop shipper exploit the intellectual property and rights of a patent brand, disregarding the
original creator’s rights and efforts. From the ethics of care perspective, this disregard undermines the
respect and recognition that original creators deserve. Rather than treating creators as partners whose
work contributes to the broader e-commerce ecosystem, drop shippers treat them as mere tools for profit.
An ethics of care approach would advocate for drop shippers to seek consent and offer fair compensation
to creators, showing genuine respect for their work and establishing cooperative, ethical relationships.
In the drop-shipping model, sharing customer data with third-party platforms and suppliers often occurs
without the customer's knowledge or explicit consent. An ethics of care approach would regard this as a
serious breach of trust, highlighting the duty of businesses to protect customer privacy and handle their
data responsibly. Businesses would need to prioritize safeguarding customer information as an expression
of respect and care for their well-being, minimizing exposure to data breaches or unauthorized sharing.
Under this ethical framework, drop shippers would limit data sharing to only what is essential, with
explicit customer consent, and implement robust security measures to protect this sensitive information.

Downstream Customers

Trust and Satisfaction Issues:

Trust and satisfaction issues arise when consumers purchase from drop shippers, primarily due to
concerns about product authenticity, quality, and service delivery. Drop shippers generally do not
have direct control over inventory or fulfillment, relying instead on third-party suppliers or
fulfillment centers. This lack of oversight can lead to delays, incorrect shipments, or subpar
product quality, as the products are often not inspected before reaching the customer.
For instance, when a customer orders a product expecting a specific brand or quality but receives
something different, it can lead to dissatisfaction and frustration. Additionally, customers may
experience longer delivery times than promised, especially when fulfillment is outsourced to
international suppliers with varying shipping speeds. This often results in negative reviews,
which can tarnish the reputation of both the drop shipper and, by extension, the original brand.

Upstream Customers

Data Sharing and Security Risks:

Data sharing and security risks are significant challenges in the drop shipping business model,
primarily because of the involvement of multiple third parties across the supply chain. In drop
shipping, the retailer (the drop shipper) acts as an intermediary between the customer and the
supplier. However, as they typically don’t hold inventory themselves, customer data such as
personal information, shipping details, and payment information is often passed along to third-
party fulfillment centers or suppliers who actually process and ship the order.

Cybersecurity Challenges

Increased Vulnerability to Data Breaches:

The use of third-party platforms and plugins for drop shipping can create cybersecurity
vulnerabilities. If these platforms lack adequate security measures, consumer data is at risk of
 breaches and cyberattacks. For example, the Cybernews report regarding a publicly accessible
MongoDB database linked to Saara, a company that develops Shopify plugins, illustrates how
sensitive consumer information can be exposed. The database leak involved 25GB of data from
over 1,800 Shopify stores, demonstrating the potential scale of data exposure that can occur in the
drop shipping model.

Privacy Paradox and Inconsistent privacy standards:

Different suppliers may have varying standards for data privacy and protection. This
inconsistency can complicate efforts to ensure that consumer data is handled appropriately and
securely across the entire supply chain. The Privacy Paradox in this issue lies in the tension
between consumers' privacy concerns and their actual behavior of purchasing from drop shipping
businesses despite the increased risk of data mishandling. Even though consumers may be aware
or wary of third-party data-sharing risks like the exposure of data across multiple suppliers and
fulfillment centers many still choose to shop online from such platforms. This willingness to
engage with services that may not guarantee full privacy protection reflects the Privacy Paradox
in action.

Information Ethics & AI:

The use of other brands products and images without authorization raises serious questions about ethical
conduct in information usage. Drop shippers often engage in misleading advertising practices,
exaggerating product claims to attract customers. This manipulation of information can damage both the
drop shipper's and the original brand's reputations. According to information ethics, businesses have a
responsibility to represent products honestly and respect intellectual property rights, which includes
obtaining necessary permissions before using images or branding from established companies.

Misleading Advertising and Exaggeration of Claims:

Drop shippers often engage in misleading advertising practices to attract customers. By using
unauthorized images and product claims, they can create false impressions of the product's
quality, functionality, or value. This practice includes exaggerating product features or offering
unrealistic guarantees that the product may not deliver on. Misleading advertising can lead to
consumer dissatisfaction, negative reviews, and ultimately a loss of trust in both the drop shipper
and the original brand. Consumers may feel deceived when the product they receive does not
meet the exaggerated claims made in the advertisements, leading to a tarnished reputation for all
 parties involved Violation of Intellectual Property Rights law protects the creations of
individuals and businesses, including trademarks, patents, and copyrights. When drop shippers
use another brand's images or products without authorization, they are infringing on the brand’s
intellectual property rights. This not only leads to potential legal action but also damages the
original creator’s ability to profit from their work. In the digital age, where visual content is
easily shared and repurposed, respecting IP rights has become an essential ethical responsibility
for businesses. By using someone else's brand identity or product images without permission,
drop shippers diminish the original creator's control over their brand and potentially devalue their
intellectual property
Damage to Brand Reputation:
When a drop shipper uses unauthorized images or misrepresents a product, it can damage the
reputation of both the drop shipper and the original brand. The consumer may associate the
negative experience with the original brand, even though they did not have control over the sale
or advertising. This creates a situation where the brand’s reputation is unfairly compromised due
to the unethical actions of a third-party seller. This not only harms the original brand but also
damages the trust consumers place in e-commerce platforms as a whole.
Al Responsibility in Information Usage:
From an information ethics perspective, businesses have a responsibility to handle information
(including images, product details, and branding) responsibly and transparently. This involves
obtaining the necessary permissions to use someone else’s intellectual property. Information
should be presented in a way that accurately represents the product and its capabilities, without
distortion or embellishment. By adhering to these ethical principles, businesses can build
consumer trust, promote fair competition, and ensure that they are respecting the rights of other
creators

How privacy affect people & Businesses?

Pursuant to above listed issues, we are now moving to analyze the effect of violating privacy both on
businesses and on people.

Impact of Privacy on People

Trust and Security:
When sharing personal information online. When people feel that their data is protected, they are
more likely to engage with brands and make purchases. Conversely, breaches of privacy can lead
to mistrust, anxiety, and a reluctance to share information.
 Control and Autonomy:
Privacy gives individuals control over their personal information, allowing them to decide what
to share and with whom. When privacy is compromised, people may feel vulnerable and lose
control over their personal data, which can lead to feelings of exploitation or manipulation.

Brand Reputation and Customer Trust:

Privacy practices directly impact a company’s reputation. When customers trust that a business
protects their data, they are more likely to remain loyal. Privacy breaches, on the other hand, can
damage a company’s reputation, leading to customer dissatisfaction and lost sales.

Competitive Advantage:
Companies that prioritize privacy and data protection can use it as a competitive advantage. Many
consumers today prefer doing business with companies that are transparent about their data
practices, especially in sectors like healthcare, finance, and e-commerce.

Q2. Expand your discussion and relate it to the Pakistani market. How is it relevant for us?
Any local examples? Policies or lack thereof? Incidents? What are the implications?

In Pakistan Daraz & Aliexpress are popular ecommerce platforms with many vendors using them as a
drop shipping business. While they provide easy access to international market and a variety of products.
There are several issues with drop shipping on these platforms affects consumer, brand image and overall
trust in online shopping
Quality Control:
Due to nature of drop shipping business on Daraz and Aliexpress, sellers on these platforms often have
less control over product and services. A common complaint on platforms like Daraz is that customers
receive products that differ significantly from those shown online. This could include issues like color
discrepancies, size mismatches, or entirely different items being delivered. Such experiences harm both
the platform's reputation and the credibility of the seller.. This often results in subpar or counterfeit items
reaching customers, especially when listing well-known brands without authorization. For instance,
many customers on Daraz reported they usually received items that are different from the one’s listed
online on their platform. Hence, this is also affecting the platform credibility. (Nazan Habib, 2022)

Inadequate Customer Service and After-Sales Support

For many drop-shipping vendors on Daraz and AliExpress, after-sales support is minimal, as they are not
directly responsible for product quality or returns. Sellers often fail to respond to customer inquiries or
complaints promptly, exacerbating the problem. Since the customer may not be able to directly contact
the overseas supplier, they rely on Daraz or AliExpress for support. But if the platform’s support team is
also unresponsive or unhelpful, it creates a negative shopping experience for the customer. For example,
Reviews on Daraz often mention poor responsiveness from sellers or the platform’s support team,
leaving customers to deal with defective or incorrect items on their own. (Madni, n.d.)

Misleading Advertising and Pricing Discrepancies

Sellers on both platforms often employ aggressive marketing tactics, including exaggerated product
claims, misleading discounts, or inflated prices compared to the original product’s value. To lure
consumers, many dropshipping vendors use aggressive pricing tactics. For example, they may list
products as being "50% off" without clearly showing the original price, making it difficult for customers
to judge whether they're truly getting a good deal. In some cases, prices may be inflated before a sale,
making the discount seem more significant than it actually is.are. (Zia, 2016)

Data Privacy and Security Concerns

On AliExpress, particularly, customer information is shared with international suppliers and fulfillment
centers. The involvement of multiple third parties in the drop-shipping model can increase the risk of data
mishandling or unauthorized sharing, especially when customer data flows through less secure channels.
(Rashid, n.d.) Example: Data breaches or unauthorized sharing of data by overseas suppliers on
AliExpress can put consumers at risk, particularly if these vendors lack strict data protection measures
(Anderson, 2023).
Lack of Transparency:
Consumers often don’t have visibility into how their personal information is used or shared with
suppliers, leading to concerns about privacy violations. For example, if a supplier uses insecure data
storage or improperly shares customer details with unauthorized parties, it can result in identity theft or
financial fraud. Moreover, In Pakistan we don’t have the high end regulatory bodies from the government
to caste a case against organization who are misleading or transferring individual information to third
party vendors without the consent of individual.
Implications:
Vendor Certification and Verification
PTA could mandate that all vendors operating on local e-commerce platforms (like Daraz)
undergo a registration and certification process, ensuring they adhere to local consumer
protection laws. Vendors should be required to provide proof of product quality or brand
authenticity.

Product Quality Standards:

Regulators can set minimum quality standards for products sold on e-commerce platforms. This
would include guidelines on accurate product descriptions, including size, color, and material,
and require periodic audits of top-selling items.

Mandatory Return/Refund Policies:

PTA could enforce mandatory return/refund policies for sellers, ensuring that consumers are not
left stuck with faulty or counterfeit items. This would help guarantee that consumers have
recourse if the product received does not match the listing.

Customer Service Infrastructure:

PTA should encourage platforms to establish local customer support teams in Pakistan, offering
services in Urdu and English. This could reduce the burden on international call centers and
improve consumer satisfaction.

Regulation of Online Advertising:

PTA and the Competition Commission of Pakistan (CCP) should collaborate to enforce strict
advertising standards. This could include guidelines on discount transparency, ensuring that
sellers must display both the original price and the discounted price clearly. Sellers should also be
prohibited from making false or exaggerated claims about their products.

Regular Audits for Third-Party Vendors:

PTA could require e-commerce platforms to conduct annual security audits on third-party
suppliers, ensuring they comply with strict data protection protocols. Any vendor found violating
data protection regulations should face penalties or be removed from the platform.
Clear Privacy Policies:
E-commerce platforms should be required to publish clear and easily accessible privacy policies
that explain how personal data is stored, shared, and protected. These policies should be written
in both English and Urdu to ensure accessibility.

Consumer Awareness Campaigns:

PTA could also run awareness campaigns to educate Pakistani consumers about their rights under
consumer protection laws and how to safeguard their data when shopping online.
Bibliography
Anderson, T. (2023, Nov 19). Blue Host. Retrieved from Is Dropshipping Legal? Expert Insights to Keep
You Safe: https://www.bluehost.com/blog/is-dropshipping-legal/
Arntz, P. (2024, July 8). Malwarebytes Lab. Retrieved from Malwarebytes Lab:
https://www.malwarebytes.com/blog/news/2024/07/shopify-says-stolen-customer-data-was-
taken-in-third-party-breach
Authority, P. (2023). PTA Annual Report 2023. Lahore. Retrieved from www.pta.gov.pk
Blesch, W. (n.d.). Privacy Policy for Dropshipping. Retrieved from Terms Feed:
https://www.termsfeed.com/blog/dropshipping-privacy-policy/
Chaudhary, A. (n.d.). Medium. Retrieved from Dropshipping Business in Pakistan: A Detailed Guide:
https://medium.com/@aishalums/dropshipping-business-in-pakistan-a-detailed-guide-
483f6cb593ac
Concern for Information Privacy and Online Consumer Purchasing . (2006, June 23). Retrieved from
Aisel: https://aisel.aisnet.org/jais/vol7/iss6/1/
DS, A. (n.d.). AUTO DS. Retrieved from https://www.autods.com/blog/product-finding/dropship-security-
products/
Ethical Dropshipping: Navigating Grey Areas in Ecommerce. (2024, July 12). Retrieved from AppScenic:
https://appscenic.com/blog/ethical-dropshipping-navigating-grey-areas-in-ecommerce/
Ethical?, I. D. (2023). Is Dropshipping Ethical? Retrieved from https://www.buildassetsonline.com/is-
dropshipping-ethical/.
EU, G. (n.d.). GDPR. Retrieved from GDPR: https://gdpr.eu/
France, E. C. (2024, Nov 5). Dropshipping : our advice before purchasing. Retrieved from Europe:
https://www.europe-consommateurs.eu/en/shopping-internet/e-commerce-and-dropshipping.html
Hoffman, D. (n.d.). Research Gate. Retrieved from Building Consumer Trust Online:
https://www.researchgate.net/publication/220427207_Building_Consumer_Trust_Online
Is Dropshipping Legal? Guide to Running a Legit and Safe Business. (n.d.). Retrieved from AmzScout:
https://amzscout.net/blog/is-dropshipping-legal/
jessica.tyler. (2022, May 5). William Commerce. Retrieved from Cyber security is a big threat for
ecommerce in 2022 – how you can mitigate the risks: https://www.williamscommerce.com/cyber-
security-threat-for-ecommerce-2022/
Kim, D. J. (2010). An investigation of the effect of online consumer trust on expectation, satisfaction, and
post-expectation. Retrieved from Research Gate:
https://www.researchgate.net/publication/226518817_An_investigation_of_the_effect_of_online_
consumer_trust_on_expectation_satisfaction_and_post-expectation
Madni, D. A. (n.d.). Impact of Online Advertisements on Online Buying Behavior: A Case Study of Daraz.
Retrieved from JDSS: https://ojs.jdss.org.pk/journal/article/view/917
Markaz. (2024, August 15). Retrieved from Markaz: https://www.markaz.app/blog-post/dropshipping-
legal-requirements-in-pakistan
Nazan Habib, S. H. (2022, July 11). Journal of Development and Social Sciences. Retrieved from JDSS:
www.jds.org.pk
NOOR, F. H. (2024, March 17). Slide Share. Retrieved from Scribd Company:
https://www.slideshare.net/slideshow/drop-shipping-in-the-qcommerce-era-pakk/266828307
Patterns for Consumer Trust in Electronic Commerce. (2003). Retrieved from Research Gate:
https://www.researchgate.net/publication/221034468_Patterns_for_Consumer_Trust_in_Electroni
c_Commerce
Rashid, A. (n.d.). CUNY Academic Works. Retrieved from Logistics Service Quality and Product
Satisfaction in E-Commerce
Site Jabbar. (n.d.). Retrieved from Daraz Reviews: https://www.sitejabber.com/reviews/daraz.pk
Source, I. (2024, March 21). Evaluating Ethical and Unethical Dropshipping Practices. Retrieved from
Source, Inventory: https://www.inventorysource.com/evaluating-ethical-and-unethical-
dropshipping-practices/
Vulfsons, E. (2021, May 5). Hackernoon. Retrieved from https://hackernoon.com/cybersecurity-
measures-to-secure-dropshipping-automation-2d2u35h8
Zia, N. U. (2016, July). The Role of Advertising on Consumer Buying Decision in Pakistan. Retrieved
from Researchgate:
https://www.researchgate.net/publication/314491021_The_Role_of_Advertising_on_Consumer_
Buying_Decision_in_Pakistan