Dropshipping is an increasingly popular type of business model, or ‘order fulfilment method’, where retailers sell goods to customers without actually owning or handling any physical inventory.
Dropshippers generate income (and hopefully, profit) from products that have been produced, stored, and normally shipped by a third party.
A popular dropship platform is Amazon. Sellers list items and when a sale happens, they then notify a third party who sends the goods onto the buyer. The third-party shipping carrier retains a portion of the sale price, and the seller keeps the rest (minus platform fees).
Dropshipping can also be done through a business’s own website or any other ecommerce platform (e.g. Shopify).
The dropship model can be structured in different ways, and can be set up to service both domestic and international customers – UK retailers dropshipping goods to customers in the US, for instance.
Domestic versus international dropshipping
As the names suggest, domestic dropshipping only covers one domestic area, while international dropshipping covers audiences in different countries.
The benefits of international dropshipping
There are many reasons why business owners choose to sell products through the international dropship model, including:
- Lower upfront costs: To launch an online store open to global buyers, dropshipping means you don’t have to invest in stock first or worry about storing and managing inventory. This keeps startup costs down, minimises overheads, and lowers the risks associated with investment.
- Tap into global markets: Thanks to lower setup costs, the dropship business model also makes it easier to access more customers around the world. This can also help make it easier for the business to scale further down the line.
- Product diversity: Not having to buy, store and manage inventory means you can afford to be more flexible and experimental with the products you choose to sell. If a product doesn’t sell, you can simply remove it from your site and not have fret about unsold stock. Customers like to have choice and dropshipping also means you can provide them with trending items, if you like, at far less risk to your business.
- More customers, more sales, more profit: With access to audiences wide and far, lower investment costs and lower overheads, the potential for profit-making can be greater.
Of course, when dropshipping to international customers – from the UK to the US, for example – there are some extra layers of complexity that you’ll need to consider.
Additional transportation costs, higher shipping fees and longer turnaround times are all factors to bear in mind, as well as more elaborate logistics.
Dropshipping to the US from the UK
So, you’re interested in running a UK-based international dropshipping business that sells products to US customers – here’s what you need to do to startup and scale successfully:
Do some US market research
Picking the right products is pivotal to any UK retailer’s success, dropship and non-dropship business models included. As a UK business looking to dropship to the US, your market research should look a little different to those staying domestic.
Demand for particular products and specific market competition can be completely different in the States than here in the UK. So, when selling to a US audience, it’s essential to focus your research and analysis on where your target customers are based. You might even decide to test things out on the market first.
Research US regulations
In the same way there might be differences in product demand and competition in the US versus the UK, there could also be US-specific regulations that you need to know about.
Customs clearance is a good example of extra steps you’ll need to factor in when dropshipping internationally. This might require specific paperwork or packaging formats, for example.
It’s also worth checking there are no restrictions on the types of goods and services you supply. Being legal in the UK doesn’t necessarily mean it’s permitted in the US – looking at you Kinder Eggs!
Source suppliers strategically
Any dropship business should invest time in researching suppliers or wholesalers that sell the products they want to provide at a high standard.
Where international dropshipping is concerned, quality product isn’t the only consideration – you also need to research the supplier or wholesale company thoroughly to ensure that they are reputable and reliable when it comes to logistics and legalities.
Poor suppliers will only reflect badly on your business and the products you sell, deterring customers and limiting revenue.
Choose reputable shipping carriers
It goes without saying that in order to dropship to the US from the UK, you will need to research shipping carriers that service your target geographical location(s).
They also need to be trustworthy too. Your products have got a long way to go, and you need to be sure they’re going to make it there, intact, on time. Read plenty of reviews and do your homework before agreeing to partner with any shipping company.
Keep your customer in mind too – they aren’t going to be best pleased if your delivery times are too long and your shipping costs are too high.
Configure the right payment gateways
The benefits of offering customers multiple ways to pay are well documented. Providing payment options means you’re less likely to see drop-offs during the checkout process or transaction issues.
When selecting the payment gateways you want to provide to your customers, make sure you double-check that it is viable in the areas you want to sell in.
You work so hard to get customers to reach the checkout that you don’t want to deter them at the last hurdle by not verifying or diversifying your payment options.
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