Will you be adding restricted products to your e-commerce inventory? These best practices will make sure that you avoid legal trouble and don’t lose your investment when selling restricted items online.
Most products are legal to trade online and don’t require any licensing or restrictions at all. However, some items are regulated for public safety. Alcohol, medicine, and weapons fall into this category. If you’re planning to sell these products, you have work to do!
It’s your responsibility to become a fully-compliant business with the correct documentation and processes in place for responsibly selling these items. Understanding how small business owners should approach trade when prohibited or restricted items are involved is vital.
Here’s how to use your e-commerce business to sell a line of restricted products. Get it right, and there’s a lot of money to be made in many of these niches!
What Is a Restricted or Prohibited Product?
The products that you choose to sell in your online store may be restricted or prohibited items. Restricted products can be sold under certain conditions, but prohibited items may not be sold.
- A restricted product is a controlled item that requires special processing or license verification to sell. Some marketplaces, like Amazon, will not allow sales.
Restricted merchandise can be imported and exported under certain conditions. Pharmacists, for example, need to be adequately licensed to sell prescription medications online. There are a host of safety protocols for purchases of this kind, including patient medical records and tracking.
- A prohibited product is an unsafe or illegal item that may not be sold on the open market, or penalties will result. These can include jail time, fines, and other legal action.
Prohibited merchandise cannot be imported or exported for any reason. Some merchant sites have a special prohibited list containing what products are allowed on their platform.
Best Practices for Selling Restricted Products
Selling restricted items in your e-commerce store can be a tricky business. There are many laws, regulations, and guidelines you will have to follow to avoid penalties.
It’s up to you as the small business owner to actively determine if your products are restricted or prohibited and take the right action in response. Ditch all prohibited items and focus on investing time into researching how to sell your restricted items legally to keep things above board.
Common types of restricted merchandise include:
- Alcohol: It’s legal to sell alcohol online in the U.S., but you need the right licensing to do it. Some countries have banned alcohol sales online altogether.
- Medicine: Prescription and non-prescription medications can be dangerous if unregulated, so these substances are strictly licensed and monitored.
- CBD oil: While legal, CBD oil and all related products have to be made a certain way and contain a THC level below 0.3%.
- Certain foods: Food that comes from bush meat or doesn’t have the right packaging is prohibited, and there are restrictions on food depending on where you trade. California, for example, severely restricts produce imports because of agricultural pests.
To correctly review the products you plan to sell, take the following steps. These are considered best practices, and they will keep you from ending up in court.
#1: Check Your Federal, State, and Local Laws
The first practice is to check that your product complies with the law. You will need to do this on three levels—federal, state, and local—because it can vary depending on where you are and where you intend to trade.
- Federal law: Governed by the U.S. federal government
- State law: Law that applies to the state you are in (where you will get your permits)
- Local law: Law that applies to local safety regulations in your area
Depending on the restricted products you are selling, you may have to get permission to trade in various territories and be careful not to sell in prohibited regions. Your online business will need to research and record these laws for discussion with a professional later on.
- Research the right licenses, permits, and permissions you will need.
- Find out if your e-commerce site will be in full compliance once these documents are secured.
You should also draft your terms and conditions document to outline your policies regarding the sale of these items on your website.
#2: Check Hosting and Marketplace Regulations
Before you choose the e-commerce platform for your online shop, make sure that you are allowed to sell your restricted merchandise there. Many marketplaces and store providers have a list of products you cannot sell on their platforms.
- Check the site guidelines of your chosen selling platform before building your store.
- Check the restricted items lists for the marketplaces you sell on (Amazon, eBay, Google).
You must double-check on these rules before investing in a business website or online shop that won’t work for your products. Clear guidelines will tell you exactly which products are allowed on their platform.
For example, on Yahoo Stores, we prohibit the sale of fireworks but only restrict alcohol sales. So you could create a party store that sells alcohol and be successful using our store creator, as long as you don’t list fireworks on your site.
#3: Research Restricted Goods on Competitor Sites
While you can’t sell prohibited products, you can see how your competitors are selling restricted products. There’s a real benefit to that because you get to see how they trade, position their marketing, and formulate their policy documents.
- Research how your competitors are effectively selling restricted items.
- Grab a few of their terms and conditions documents as examples.
- Make notes on their marketing process and site structure.
Total Wine is an excellent example of an online retailer that sells restricted goods well. They have created a lot of guides to educate their customers about the wine and spirits they sell. They also discuss social responsibility and have a custom terms and conditions section that outlines age restrictions and parental control protections.
#4: Seek the Advice of a Legal Professional
Once you have researched the laws and permits required for your restricted products, you should sit down and review them with a legal professional. Lawyers can offer insight on how to sell and market your products in a way that avoids liability.
- Hire a legal professional to confirm that your business is in full compliance
- Discuss what your e-commerce business can do to trade your products safely
- Have your terms and conditions document reviewed
It’s not enough to simply copy a competitor’s terms and conditions document because your small business is unique, and there will be differences. A legal professional will spell out the rules and regulations you need to abide by for your e-commerce site to be successful.
If you have a range of restricted items that you want to sell online, make sure that you use these practices to protect your company and your investment first. These products are part of doing business, and you can create amazing models that translate into big money down the line.
The key is to ensure that you are compliant with the law, your e-commerce platform, and on the same page as your competition. Get your plan reviewed by a lawyer to grow without fear of liability.
Selling restricted products online can be lucrative when you get these legal basics right.
