Shopify Collective

So far we like the smooth experience. However, the main fears that give us jitters are:
- There is no way to contact Collective directly.
- Some suppliers do not respond to emails on time when a product query comes. This results in loss of sales.
- Returns are handled by Collective, but when we want to stop returns and give the customer a convincing response to avoid the return, it is impossible as neither the suppliers respond nor Collective.

Limited reporting. No way to rate suppliers. Documents don't show where order originated, so it causes confusion for the customer. Suppliers can break connection with no warning, even if there are transactions pending, shipping, payment, etc...I could go on but not enough time. We have over 300 suppliers in collective, and have used it since early availability. We have encountered every problem that can be imagined. I would love to talk to someone on the team and give feedback. While collective is a very valuable tool it could be improved. So if anyone wants to reach out to us I am open to a conversation.

Our primary concern with Shopify Collective is the lack of stability and fairness it creates for retailers. Vendors can remove a retailer instantly, without notice, which can immediately break live product pages, collections, and customer-facing experiences. This creates operational risk that no serious business can absorb. There should be a mandatory 48-hour removal period with a clear system notice stating that the vendor has chosen to discontinue the relationship, allowing retailers time to remove products cleanly and protect their storefront and customers.

Additionally, the margin structure on Collective is fundamentally misaligned with standard retail economics. Margins in the 10–20% range are not feasible. In traditional wholesale and dropship models, retailers operate at 30–50% margins, sometimes paired with a dropship or handling fee. Retailers are responsible for customer acquisition, marketing spend, customer service, chargebacks, returns, and brand reputation. Vendors benefit from reduced operational burden and expanded reach, yet Collective enables pricing structures that shift nearly all risk to the retailer.

Collective has undeniably made distribution easier for suppliers, but ease of operation should not come at the expense of retailer sustainability. Making fulfillment and exposure easier while simultaneously eroding retailer margins is not a viable or ethical long-term model. There should be enforced minimum margin standards (at least 30–50%) for vendors on Collective, or those vendors should not be eligible to participate.

Without protections around sudden removal and without realistic margin requirements, Collective disproportionately benefits suppliers while undermining the businesses that actually interact with and support the end customer.

The only complaint I have is that the return process is clunky. When a customer submits a return - it needs to go back to the brand (not our store). It doesn't require the brand to upload a return label immediately. Therefore I have customers contacting me for the label- and I sound awful telling them that I, as the store owner, can't upload it. Then they are left skeptical because the customer doesn't (and honestly shouldn't) have to know how we are working as a drop ship business through Collective. I think it should be set up to force a return label to be created on the spot. I have to reach out to the brand and bug them to upload the labels for my customers in most cases.

Love it! However, beware that if you add several brands you will quickly run out of media file storage and images will stop showing up. We've also been using an image compression app which helped a little but now we've hit their limit. It doesn't quite make sense that as a Shopify app, only connecting Shopify stores where the brands' images are hosted on their own site that it would affect our media limits. It seems like a huge area for improvement on Shopify to correct this. Otherwise, it's an amazing app and possibly the new wholesale procurement route - seamless and beneficial to all.

It’s easy to find suppliers that fit my brand, and the instant imports option makes bringing products into my shop effortless. Thanks to Shopify Collective, I’m able to build a store that truly reflects my standards and vision.

This app is bulky. Hard to use. I can't find products from businesses that I would like to sell. There are too many "pages" to go through to find what I am looking for. I just want to be able to find the products I want on my website and be able to negotiate margins with brands, especially if we are already working with them for a specific margin, I would like to let a brand know that.

After implementing Shopify Collective and starting real sales, a fundamental accounting and tax problem appears that Shopify does not clearly communicate, and which in practice makes this model unworkable for EU businesses.

Once you connect to a supplier:

you sell products directly to end customers,

payments are received by your store,

Shopify automatically splits the revenue based on a predefined “margin”,

but you do not receive any purchase invoices from the supplier that would document the cost of goods sold.

Key tax consequence

From a tax authority’s perspective:

a cost exists only if there is a valid invoice,

no invoice = no deductible cost.

As a result:

100% of the sales revenue is treated as taxable income,

authorities assume the goods were acquired “for free”,

income tax is calculated on the full turnover, not on the margin.

The margin in Shopify Collective is an illusion

The margin shown in Shopify Collective:

has no tax or accounting validity,

is not recognized as a cost,

is only an internal platform settlement.

In practice:

you transfer part of the revenue to the supplier,

you still pay fees, payment costs, ads, etc.,

but income tax is charged on the full sales amount.

This means the merchant ends up subsidizing each sale instead of making a profit.

High risk for EU merchants

Shopify Collective operates like dropshipping or a marketplace, but:

provides no supplier purchase invoices,

offers no self-billing mechanism,

does not issue consolidated monthly cost invoices,

shifts all tax risk onto the merchant.

Under EU tax rules:

Without a cost invoice, there is no cost of goods sold — regardless of real money flows.

Conclusion

Shopify Collective may look attractive from a technical standpoint, but:

it is not aligned with EU tax and accounting requirements,

it prevents proper income tax reporting,

it creates serious financial and compliance risk for merchants.

I strongly discourage using Shopify Collective if you operate a business in the EU and want to stay compliant and profitable.

AWFUL. Absolutely zero understanding from Shopify on how UK VAT and Tax works. Listing collective suppliers that offer 10% margin on goods, yet really there charging you 10% to sell there product! So yeah amazing business model, losing money for selling suppliers products because at the last minute they add 20% vat onto the charge to the retailer. What on earth is going on. Its disgusting that they have no solution in place for this. Sam Hampton of shopify support suggested we paid for a bulk editor like "Matrixify" or "Bulk Price Editor" that might be able to solve the issue. So shopifys are basically telling you collective in the UK is a broken model. I cannot believe they have not fixed this issue and automatically added 20% on the price to any store that is collecting tax.

In response to Shopify response -
I can confirm this issue is not resolved, you built this with USA in mind and not the UK. Its a mess. Fix it.

Love the app, it allows me to run the online store of my dreams. Could use some fixes to sorting products to import. Too many suppliers have 0 stock items listed and shifting through them is frustrating.