Shopify Collective

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.

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.

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.

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.

Some integrations missing, but definitely makes dropshipping easy.

Really bothers me that I cannot delete some variants that do not fit my store - eg if an item comes in 20 colors I need to stock all 20 even though only 3 are right for me.

It would be great if you could figure out a way to let different currencies collaborate. Canada has a very limited amount of suppliers compared to other world regions and I feel like we are missing out extensively on great partnership potentials through such an easy way to collaborate.

Additionally, it would be nice if suppliers had to give a reason before removing you. I have had a couple just randomly delete and it really leaves you scrambling. In these instances I can't even pinpoint why it happened either and its good to be able to get feedback.

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.

Ich war mal sehr zufrieden mit der App. Bei den ersten beiden Shops gab es keine Probleme, jetzt beim dritten Shop, wird immer angezeigt Shopify Payments müssen angeschlossen sein. Doch der Witz daran ist, diese sind alle aktiviert und das Auszahlungskonto verbunden. Diesen letzten Punkt gibt die App nicht frei, obwohl es aktiv ist. Sehr ärgerlich.

Its great but do something about chargebacks