This is how dropshipping works in the UK and how to make it profitable
Dropshipping is a great way to make money from home. Having a dropshipping business means that you don’t have to hold stock anywhere or even be at your computer all time.
Dropshipping is a great way to earn passive income without being a slave to your computer.
Like all businesses, though it does need some love; and some dedicated time put in before you see any rewards.
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What is dropshipping?
Dropshipping is when a store doesn’t keep any stock they are selling. When the store sells a product it gets it from another supplier and gets them to deliver it straight to the customer. This means the store doesn’t touch the product at all.
The biggest difference between dropshipping and a normal retail store is that no product is held by you which can be a plus when it comes to self-assessment.
How does dropshipping work?
Your customer would order from your website or online store platform. This would be sent to your supplier and they would deliver the product to the customer.
From a business side, dropshipping works by you finding a dropshipping supplier or two that can fulfill your orders and offer great customer service.
Is dropshipping legal in the UK?
Yes, dropshipping is legal in the UK. Like all shops, as long as you deliver the item you promise once the customer pays then you are like any other online store.
Does dropshipping work in the UK?
Yes, dropshipping does work here just as well as the US. If you just want to gain traction in the UK then think about where you buy products online and set up a dropshipping store. There’s nothing to say you can’t have shops across multiple platforms.
If you want to set up a business aimed at US customers then make sure you look up the legal side and find out about how you pay tax etc
Is dropshipping profitable in the UK?
Yes, dropshipping can be very profitable. Once you are set up, all you would need to do is add new products and make sure that your orders are fulfilled correctly.
You don’t buy in any stock or have it sat anywhere. No product is brought until a customer pays for an item you have advertised.
To make it profitable, like any business you need to find a good supplier. Find out how much they would charge for the product and delivery then put a mark up on that product so you make money.
Like most retail outlets your mark up is going to have to be small but the more you sell the more money you take.
Remember to factor in any online store costs and delivery costs when putting a product up for sale to make sure that you are making the most profit you can.
Can you make money dropshipping in the UK?
Yes, you can! Like all businesses though you do need to do your research and decide what your niche is going to be to gain customers.
Keep reading for our example spreadsheet on how we worked out costs and profits.
How to start dropshipping in the UK
Start by deciding which platform you want to start selling on. We found the easiest to be eBay and Shopify but do your research on both to see which one you find personally easier. There’s nothing stopping you from trying both at the same time.
If you decide to start with eBay, which is what we did, then have a look at Hustle Got Real*. It’s a great way to keep track of what products are in stock and what isn’t.
The other thing we loved about Hustle Got Real was that if you add your dropshipping products through the software, they will mark them as out of stock if and when the stock goes, so your customers aren’t buying stock that you can’t get hold of.
It also uses a traffic light system to tell you if you’ve already listed that item! You can get 30 items listed free by using our link for Hustle Got Real* here.
Read our full work through on listing your first dropshipping items with Hustle Got Real
If you decide to use Shopfiy then have a look at their app Oberlo. It’s a simple way to find products to dropship across the United Kingdom and the United States.
Using Oberlo, you can look at AliExpress and import the products that you think will work well for your store.
The other good thing about the Oberlo app is that when a customer buys a product, you can automate it through the app itself. All you have to do is check the details are correct and click order.
Benefits of Dropshipping in the UK
Dropshipping is a really easy business to start from home as it requires very little upfront capital. You can start quickly and build it as and when you can. Because you are not holding any stock yourself, your overheads are very small.
Of course, like most businesses, the more time you put in the more you will get out of it.
Here are 5 reasons why you should start dropshipping now and make money from home.
1. It’s easy to start
Don’t feel like you need loads of website experience or computer skills to get started. You really don’t!
Unlike most online stores, you don’t even have to have your website if you don’t want to. You can build your business up using just eBay, Esty or Shopfiy.
And because you don’t have the physical products yourself means that you don’t have to worry about paying to house any items, shipping costs, tracking the products ready for HMRC, worrying about returns or managing stock levels. All that is done with your supplier.
2. You can dropship from anywhere
The thing that makes drop shipping so good as that you can do it anywhere. Sat at home while watching the kids or even on a beach.
As long as you are still in communication with your customers and supplier then all is good.
3. You can sell anything
Again, because you aren’t holding products you don’t have to wait for them to sell through before you advertise more. You can sell anything that you think your audience will want, without waiting to have the capital to do it.
4. It’s easy to scale up
Like all businesses, you have to give it time to grow. When it does, it’s really easy to scale upwards. You can find a Virtual Assistant to help you add your items or to deal with any returns that you may have.
5. It’s cheap to test the products
Instead of buying in bulk then selling, dropshipping means that you can test the product on your audience without committing any money to it.
It means you can test as many products as you like and see which one’s they like the most.
Dropshipping downfalls
Like all businesses, there are pros and cons. A few of the cons we found are:
1. Low profits
Because dropshipping is easy to get into there is a lot of competition. Also, when you’re dropshipping you still have to be competitive while making money.
You can make money dropshipping but you have to sell a lot of products to make it worthwhile.
Making sure you are selling the right products on the right platform can make a huge difference to your margin though.
2. Stock issues
Unless you are using a system like Hustle Got Real its really hard to track what your supplier has in stock and what they’ve run out of, and because you don’t have the physical stock you have no real control over that.
That’s the reason we love software like Hustle Got Real as it automatically pulls the product from your shop if it’s out of stock.
3. Extra charges
These could be for delivery for example. If a customer orders multiple items from your online store but they are from different suppliers then you may have to pay delivery costs on all on the items which start racking up.
So before you start to dropship remember to look at the delivery charges and factor those into the cost when you’re selling the product.
4. No branding
Because these items aren’t just for your store you won’t have any control over branding.
How to make money dropshipping in the UK
1. Start by deciding on a platform.
We started with eBay because we liked the ease of Hustle Got Real and the fact we didn’t need to watch for out of stocks.
Once we started making a profit with an eBay store we then kept that open while building our own website to go alongside plus social media channels.
Having our own website meant that we could start to collect email addresses and have more control over what we sell.
If you’re looking for a website host or to buy a domain then look at TSO Host, who we buy ALL our domains from. You want a company that you can trust as they are going to have access to your website.
Starting with eBay:
If you do start on eBay then go for the free options first. You can sell up to 10 items for free on eBay currently with a very little fee if your items sell.
Selling on eBay = free until you sell a product.
Hustle Got Real = free for up to 30 listings.
Remember to factor in delivery costs when you are pricing your products.
Starting with an online store:
Website host = We recommend TSO Host for the first year. They offer a small package currently at $5 plus VAT a month.
Website domain = £5 upwards
2. Advertising
Regardless of what platform you use you are going to need to advertise to let people know you are open.
If you are using eBay they do offer advertising packages but we suggest just selling a few of your own personalised bits and pieces to start getting reviews and then asking everyone who buys to review you.
If you are starting with a website then make sure you have your social media channels set up. Get your friends and family to share your posts and post as much as you can. Sometimes a competition can help you bring more people in too.
3. Find the products
Again depending on what platform you are using you can start this with any supplier.
We started dropshipping through the normal retail stores for a while in till we build up our confidence to start looking abroad for our suppliers.
Remember to give each product a real inviting description and add photos if you can.
4. Stay active
Even on eBay they like their sellers to be active. Try and add at least one new product a day to show eBay that you are serious.
The more products you have though across niches can mean more sells. On some products, the competition is really high so it’s trial and error to see what works for you.
5. Keep track of costs
This is vital for all businesses but knowing that you are making a profit is important. Factor in the cost of the product at wholesale price, delivery cost and any of your outgoings too.
In the first few months we only made our money back but by pushing on we started to make a profit.
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Finding dropshipping suppliers
If you’ve decided to start your dropshipping business then you are going to need suppliers.
AliExpress is a great site as it connects you directly to manufacturers worldwide. Our only advice would be is to be careful and fully research them first. Ask questions and ask for a product example to be sent.
Remember to check how long the delivery might take too.
If this seems daunting then do what we did. Start by using the high street brands to get the hang of it.
This may seem a little immoral but it’s not illegal and it’s a great way to make sure that the product gets to the customer quickly and easily. It also means that the returns are easier too.
The downside to this is that you WILL be more expensive than the retail store as you need to put a mark-up on every item.
Using tools like Amazon Prime is a great way to save on those costs at the start.
Don’t worry about people messaging you saying that they have found the product cheaper. That was a huge worry for us but not one person in the last two years have questioned it.
Think of it this way. They were happy to pay that price when they saw it. If they do complain then you can offer them the difference or a refund. We like to offer the difference as we believe that customer service goes a long way.
Laura x
If you enjoyed this post and would like some more money making ideas from home, including ways to freelance, start a blog or even earn from your phone, then head over to my making money section here on Savings 4 Savvy Mums where you’ll find over 30 money making posts dedicated to helping you earn more from home and become more financially stable as a family. There’s also tips in my Money Saving Mums Facebook group. You could also pop over and follow my money making Pinterest boards for lots more ways you can earn money from home; Money Making Mums and Working from Home Jobs for Mums.
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