Dropshipping can be a cheap and relatively easy way to start a business in the UK. It’s a retail sales model where you make the sale and the manufacturer or supplier mails out the goods directly to the customer.
You don’t hold stock and your overheads are low. But on the flip side, profit margins can be tight and you have little control over presentation and delivery. Dropshippers often work with multiple suppliers so it can also be complicated to manage all of those relationships and the bureaucracy around importing and shipping from different countries.
Dropshipping UK – how to succeed
1. Find a niche
To succeed in dropshipping in the UK you need to have a marketing edge. If your only edge is low price you won’t last long. Successful drop shippers add value. For example, if you are already established as the ‘go to’ place for sci-fi movie reviews, then adding a shop with movie-related goods could be a smart move. People will buy from you because they already value the quality of your reviews; they will assume that your selection of gifts will be similarly informed.
You can also start a value-added business around a product range where you are able to add value through information, advice, or smart curation. As the dropshipping UK industry develops it’s also possible to have unique products designed for individual orders through services like Printful.
2. Do product research
You want to identify products that are growing in popularity. You can check trends globally and locally using the Google Trends tool. Look for product terms that are rising in popularity wherever you are selling. Amazon product research is also useful – using the ‘best sellers by category’ lists, drill down into niche products to identify hidden gems. Dropshipping platforms like Spocket also help you to identify winning products and similar products through their research tools.
When you get a short list, check out how competitors are selling. Is there much-added value? Is there scope to curate or envelope the products around advice and know-how? Those are the sweet spots to look out for.
3. Create your shop front
However, you can also set up drop-shipped sales by adding a shop function to a standard website or even making sales directly from Facebook or platforms like eBay and Amazon. You can build your own stylish and functional dropshipping website using a simple website builder like Wix.
4. Find your dropshipping suppliers
There are a number of established marketplaces and tools for dropshipping suppliers. Those are a good place to start, especially if you are new to dropshipping.
If you have a Shopify site you can use their Oberlo app which includes verified suppliers and links to marketplaces like Aliexpress.
Spocket is a more flexible dropshipping supply platform, which you can add to any type of website, including Shopify and Wix. It lists thousands of premium US or EU products and is committed to fast delivery. You can order product samples with no upfront fees before making an order.
If you’re searching for dropshipping UK suppliers, Avasam connects sellers with UK-based dropshipping suppliers. All suppliers are verfied. The platform automates processes and connects to sales channels including Shopify, BigCommerce, Amazon, and eBay.
Directories like Worldwide Brands and Wholesale Central also pre-screen suppliers, although you may need to pay a subscription fee to use those services.
If you are targeting a particular niche then Google is your friend. Search and see if there are any specialist drop shippers in your space. It can also be worth contacting manufacturers directly either to see if they would consider providing a dropshipping service or if they can provide you with their top suppliers who could provide that service.
You will want to agree to clear terms with your dropshipping partner and make sure that you have an agreement in place that includes all of your expectations, including payment format and terms.
4. Market, market, market
Dropshipping success often depends on creative marketing. It starts with really understanding your target customer and knowing where they hang out online.
Create a customer persona of your ideal customer. Give it a name – eg. Sarah – a location, age, and family. Think about where they get their entertainment and news, what their hopes and dreams are as well as their fears. You can develop the customer persona as you get to know real-life customers. The more accurate this ideal customer is the better you will be able to reach your target audience through effective marketing.
The persona will give you clues on how to present your products. What type of imagery is most appealing to Sarah? What words would you use to describe her – fun, fashionable, flirty? Or perhaps she is athletic, intellectual, and discerning? Fun Sarah might prefer live-action type images, while discerning Sarah will want everything to be tasteful and top quality.
Influencer marketing can be particularly powerful for lifestyle and fashion-related goods. Contact influencers directly or through influencer agencies. The average fee for influencers on Instagram is $10 per 1000 followers, it’s slightly more on YouTube and less on TikTok. Other useful approaches include Facebook advertising and sponsorship of niche Facebook groups.
Good marketing needs to be about building repeat customers as well. You can build loyalty and repeat sales by inviting customers to sign up for special offers and updates on new products using an email marketing tool like GetResponse.
6. Test the service
Your reputation is on the line with any back-office drop shipper. You also carry the can for poor-quality goods and requests for refunds. So check out the reliability of the supplier with some test orders. Things to check include: the ease and speed of the ordering process, delivery time, packaging, and presentation. You can request samples with no upfront fees on Spocket before making an order. Other platforms and suppliers may also offer this on request.
7. Focus on customer service
As far as the customer is concerned they are doing business with you. That’s good news as this is another space where you can stand out from your competitors. Put yourself in the customers’ shoes and consider how you can improve their retail experience with you. An easy win is to make sure that you have detailed product information, pictures, and buyer reviews where possible.
See if you can work with suppliers to include some element of your own branding in the package. Spocket for example enables you to get your brand into the box with your own branded invoice.
Reviews are critical to customer trust and sales these days. If you’re using one of the main sales platforms like Shopify, then a review function is built-in. If selling through your own website, then it is well worth thinking about adding an independent review function through a service like Trustpilot or Feefo.
You can also provide FAQs and if at all possible be available to deal with customer questions and respond promptly to any problems. In a competitive retail marketplace, if you look after customers you make coming back to your online shop an easy decision for them.
Dropshipping UK is not an easy way to make big profits, but you can increase your odds by targeted marketing, branding for a clear niche, and providing fabulous customer service.
Remember: you will have to do the usual business setup as well. See our guide 7 simple steps to setting up your business today.
Is dropshipping legal in the UK?
Yes, dropshipping is completely legal in the UK and in most other countries. In legal terms, dropshipping is no different from any other eCommerce business.
Dropshipping businesses have the general legal responsibilities of any online trader. If you are based in the UK then that includes the responsibility to register for tax with the Inland Revenue as an individual or sole trader. If your business is a Limited Company then you will need to register to report Corporation Tax.
If your revenue exceeds £85,000 per year then you will also need to register for VAT (value-added tax) and to ensure that VAT is added to your prices. If you make sales outside of the UK and use suppliers outside of the UK, for example in China, then VAT regulations can get complicated and you may need expert advice.
Customs duty of 2.5% is payable on goods entering the UK from overseas that have a value of more than £135. Higher customs tax rates apply to goods that cost more than £630.
Data Protection legislation also applies. Make sure that your business understands and respects customer privacy and that you are compliant with the GDPR. Here is a handy GDPR checklist for small businesses.
Your dropshipping UK business is also subject to the Consumer Rights Act 2015. What that means is that you need to accurately describe the goods that are being sold and they need to be of a satisfactory quality. The goods need to be ‘fit for purpose’, for example, if you are promoting non-stick cookware and eggs stick to it then it doesn’t fit the expected purpose and the buyer will have the right to a refund or replacement.
Similarly, the definition of ‘satisfactory quality’ includes: appearance, durability, safety, and that it is free from minor defects. Obviously, the expected standard will be higher for luxury goods than bargain-basement options. Consumers should be offered a full refund if goods are not up to scratch within 30 days of delivery. After that, you can offer them a repair or replacement in the first instance.
Distance selling regulations also apply in the UK. Those give consumers the right to change their mind about a purchase within 14 days of the item being delivered. They do not have to give a reason. This can be a particular issue for drop shippers as you are liable to give the customer a refund and you also have to pay the costs of returning the goods to the supplier.
Those regulations are all very good reasons for taking great care over your choice of suppliers. If they are sloppy or low grade you will be wholly liable.
Can dropshipping be successful in the UK?
There are plenty of examples of dropshipping success in the UK. You can look at case studies here or check out the Reddit dropshipping sub-Reddit where practicing dropshippers share their experiences and successes.
However, some reports suggest that only 10% of new drop shippers will succeed. In many ways that’s not surprising as dropshipping is known as a relatively cheap and easy way to start a business. That’s not entirely untrue, but it also takes time, research, planning, creativity and patience to translate your dropshipping ideas into a successful business. Follow the tips in this article and you will be much more likely to succeed.
How can I find UK dropshipping suppliers?
There are some advantages to working with suppliers based in the UK. Communications will be easier, delivery times and costs will be much speedier, and if there are any problems with products it will be more straightforward and cheaper to manage returns. The big drop shipping platforms like Spocket will clearly show which suppliers are UK based. Avasam includes only UK-based suppliers. And of course, you can contact UK-based suppliers in your niche directly.