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. Instead, the seller lists and promotes the item, then passes the customer’s details on to the wholesaler or manufacturer so they can ship the order.
In this article we’ll be looking at how UK-based sellers can dropship to domestic and international customers.
Do I need my own website for dropshipping?
Some dropshippers will set up an ecommerce website, but this will often mean you need to spend more time (and money!) making sure customers can find your website and the products on it in the vast expanse of the internet.
Most dropshippers will use an online marketplace such as A popular platform Amazon or Etsy.
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).
Will I need to register for tax?
If the total amount of self-employed or miscellaneous income you get in a tax year is more than the £1,000 trading allowance then yes, you’ll need to register with HMRC and start sending tax returns.
The way you register your ecommerce dropshipping business, will affect the way you report your income, and how you pay yourself – so do a bit of research into business structures first!
Domestic versus international dropshipping
Domestic dropshipping usually means that you’re based in the same country as your customers, but there aren’t any rules which say you have to be. You might be in the UK, your customer could be in the US, and the manufacturer fulfilling the order might be based in Spain.
As with all things, there are advantages and potential disadvantages to any arrangement, so we’ll go over a few common points below.
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, helps ease common cash flow issues, 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. Some businesses find this can also make it easier 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 listings without worrying about what to do with unsold stock. Customers like to have choice and dropshipping also means you can provide them with trending items, if you like, with 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.
International dropshipping considerations
There might be other complications to think about if you’re planning on dropshipping to international customers. Additional transportation and shipping fees will eat into your profits, and customers might well end up waiting longer for delivery. Let’s take a look at some tips and advice to help.
Do some 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 overseas, 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 another country than here in the UK. So, when selling to an overseas 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 regulations in your target country
In the same way there might be differences in product demand and competition ovrseas versus the UK, there could also be country-specific regulations that you need to know about.
Customs clearance is a good example, and there will often be extra steps you’ll need to factor in when dropshipping internationally. This might require specific paperwork or packaging formats, for example. It’s well worth checking with your suppliers that they can meet these requirements.
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 elsewhere – 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 another country from the UK, you will need to research shipping carriers that service your target country(ies).
They also need to be trustworthy too. Your products have a long way to go, and you need to be sure they’re going to make it there, intact, and 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 a variety of payment options means you’re less likely to see drop-offs during the checkout process, or to issues processing transactions.
Just double-check the payment gateways you want to provide your customers are viable in the areas you want to sell in.
You work so hard to get customers to reach the checkout – you don’t want to lose them at the last hurdle by not verifying or diversifying your payment options.
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