Case Studies
The number of UK dropshipping businesses is growing year-on-year. Dropshipping is an alternative model to the traditional online store as it involves selling products using a third-party supplier to fulfil your customer orders. Although the profits vary between businesses, it can be one of the best and slightly less unusual ways to make money online; if you know what you’re doing…
But don’t worry if you don’t. Our OddsMonkey guide to dropshipping in the UK covers everything you need to get started. This guide covers the basics of dropshipping, such as:
But for those of you that are seriously thinking about starting a dropshipping UK business, we’ll also look at:
Dropshipping goes on behind the scenes. It is a form of retail – usually e-commerce – which uses a different product delivery method to the direct retailer-to-customer shipping we’re used to.
It should not be confused with other e-commerce businesses like selling on Fiverr.
With dropshipping, the retailer doesn’t hold items in stock. Instead, items remain with a third-party supplier until they’ve been bought. The customer’s order details are sent directly to the supplier who then handles packaging and shipment on the dropshipper’s behalf.
Usually, these third party suppliers are based overseas, mostly in China, where products are considerably cheaper than most places. Some of the biggest dropshipping companies include Shopify Collective, Spocket and AliExpress.
There are also some big UK based dropshipping companies that shouldn’t be ignored including Syncee, CJ Dropshipping and Avasam. The delivery times with UK dropshipping companies can be significantly reduced but the costs of items is likely to be more.
Running a dropshipping business can facilitate a ‘one man business’ being a global effort. For example, the owner of the dropshipping business could be in the UK and the supplier in China. If you would rather sell your own products directly from your hand to the buyer, you could look at setting up and selling on Etsy UK.
The list above isn’t exhaustive. These are just some of the things you’ll need to start a dropshipping business:
A niche is a specific theme or market segment that you choose to focus on or target. Your niche could determine how well your dropshipping business performs. There’s a fine line between going too niche and too wide. This is why it’s important to do customer research. You’re looking for a niche that has low competition and high search volume.
For example, a kitchenalia store will only offer things like cooking utensils and other items associated with the kitchen. If you list any and everything, you run the risk of looking like an online jumble sale and this can be confusing to site visitors. Choosing a niche will help you with your marketing efforts.
Some dropshippers choose to change their shop based on current trends. For example, looking at Google Trends data over the last 5 years, December 2023 was a peak time for the term ‘essentials hoodie’ in UK search. Many UK dropshipping businesses jumped on this as the ideal item for them to sell. They rode the wave of popularity.
However, as demand dropped and the trend ended, these dropshippers will have had to make a decision. Remain a hoodie shop, expand the brand to feature similar items, or pivot and anticipate the next hot trend.
Dropshipping seems to sit on its own, away from retail. But really, it falls under the ecommerce umbrella. That means that it needs to be given the same considerations as a ‘real’ business. Because it is one!
Setting up a business isn’t as easy as buying a website template and hitting ‘Publish’. The best businesses have a solid plan behind them. The owner knows what they want to achieve.
Gov.uk has some fantastic resources on writing a business plan for your UK dropshipping business. You could also look at selling ideas or specific content-based products on other sites. Read all about how to sell on Etsy here, as one example.
A brand isn’t just a logo, or a photograph. It’s everything that makes up your entire business: including the look, feel, experience, voice, service and name. Obviously this can evolve over time, but it makes sense to think about how you want to be seen.
Depending on your skillset or budget, your initial branding exercise can be as shallow or in depth as you like. You can approach an agency, or hire a freelancer from Fiverr or Upwork, or do it yourself. There’s lots of information available online on branding for beginners if it’s not something you’ve done before.
As a start though, here are some of the things you’ll need to think about and do:
Not only is it a legal requirement to register your business, it also helps keep your business and personal assets separate.
If you choose to operate as a Sole Trader (UK), it’s worth knowing that there is no official register of Sole Trader business names. To register a business name in the UK, you’ll either need to form a limited company or get a trade mark.
There’s some useful information in this Government guide to setting up a business.
You need somewhere to show off the items you have for sale. And an ecommerce website is probably the answer. This is possibly the most important aspect as it’s the shop window for your business and first impressions count.
With dropshipping, you can either list items manually or use a service to do it for you. If you choose to do it manually, you’ll need to write, add, and update your product descriptions as and when your supplier has the stock. This is time-consuming and can be difficult to keep track of. Especially if your supplier doesn’t keep their stock levels up to date or you’re using multiple suppliers.
Oberlo is an example of a service that can do it all for you and streamline your processes. It integrates Shopify with AliExpress, meaning that you can find products for your store, add them to your site, and organise shipping quickly and seamlessly.
Oberlo also offers advice on things like what products to sell and what prices to put on them. It’s up to you whether or not you take the suggestions onboard but it’s handy info to have!
Obviously, in order to sell products, you need stock. This leads us on to sourcing suppliers of products. When it comes to dropshipping, there’s three types of suppliers:
Manufacturers
| Pros | Cons |
| It’s the cheapest way to bulk buy | Minimum orders are likely to apply |
| Larger profit margin potential | You might need to hold stock and shpi the items yourself |
Wholesalers
A wholesaler is a company that buys goods in bulk from a manufacturer before marking the prices up slightly and then reselling. They usually sell the goods on in large quantities at what are still relatively low prices (especially when compared to the final retail price). Again, here are some pros and cons:
| Pros | Cons |
| Tend to operate within a niche which makes it easier to find something suitable for your business. | Most wholesalers choose to sell to retailers rather than directly to the public. |
In dropshipping terms, a retailer could be a seller on Ali Express. If you choose them as your third party supplier, they will take care of individual orders and items. This approach means you won’t have to purchase in bulk or store stock.
| Pros | Cons |
| A lower minimum order requirement (individual). | With so many options, it can be difficult to find the right seller for your business. |
| Can ship directly to customer |
While running a drop shipping business can be fun and profitable, it can also bring some challenges. Because of the way dropshipping works, there are a lot of moving parts and people involved.
The primary role of a dropshipper is communication. That’s what you’ll spend most of your time doing.
Next, we’ll look at some of the potential issues you could face and some ways to fix them:
The sooner you accept this, the sooner you’ll be able to fix any mistakes that happen. So how do you do that?
To the customer, you are the business. Therefore, when there’s a mistake at the supplier’s end, you have to take responsibility to sort it out and make it up to the customer. The best way to do this is through clear and fast communication. If the customer is kept updated with issues with their order, they’re more likely to forgive a mix up or time delay.
However, because you’re not in control of orders in terms of dispatch, etc, it’s difficult for you to know when an issue will be rectified. Hopefully, when you were researching potential suppliers, you’ll have taken notice of their customer service, including things like how long it took them to reply to your messages.
The worry here is that you’ll be left out of pocket. However, just because you have to take responsibility for mistakes doesn’t mean you should have to pay for them. A reputable supplier will usually take care of any mistake it’s made, including paying for shipping costs to return items.
Suppliers can and will run out of items. Because you’re not in control (ie buying in and holding your own stock) it can be difficult to get around this. For this reason, it’s a good idea to work with more than one supplier. That way, if there’s a problem with stock levels, you may be able to find a replacement or suitable alternative.
However, managing inventory status across multiple suppliers can be very challenging. There are some suppliers that will automatically send communications if stock levels are running low. You’ll really need to keep your eye on the ball with this one.
Knowing how much to charge for shipping is something a lot of dropshippers struggle with, especially in the early days of their business. It’s made even more complicated if you choose to use multiple suppliers. So how do you decide how much to charge? There are a few methods but one example is Flat rate shipping.
This is where you charge the same rate for a delivery, regardless of its weight or size. You could also choose to offer free shipping across all orders, which would make things easier but the cost would have to be swallowed elsewhere in your business.
International shipping also comes with its own challenges. When you ship internationally, you’ll need to think about things like the different weight and length limitations imposed for different countries, additional charges from suppliers for processing international orders, and higher costs for shipping large or heavy items.
So is it even worth it? Really, that’s up to you and what you’re comfortable offering within the margins you’re making on sales. For example, if you sell small items with higher margins, the increased market reach may mean that it makes sense for you to deal with the inconvenience and expense of offering international shipments.
Responding to customer complaints and enquiries is where a lot of your time will be eaten up. This can be extremely difficult if you’re running your dropshipping business alongside a traditional 9 to 5. Don’t underestimate how much time you’ll need to spend on customer service or the amount of work that is involved. Communication is key in dropshipping, so make sure you keep on top of things when it comes to speaking and listening to your customers.
Part and parcel of the sales industry is customers wanting to return items. Research has found that 67% of shoppers check the returns page before making a purchase. Therefore, including a returns policy on your site is essential.
However, before you jump into writing one, you’ll need to check out the policies of each of your suppliers. Your terms will be somewhat dictated by theirs. There’s no point saying that you’ll accept returns within 30 days if your supplier will only accept items returned in 10. That doesn’t give you enough time to sort things out. Always make sure you leave enough time to accommodate the strictest supplier policy.
5 things to include in your return policy:
5 step return process:
Unfortunately, returns and refunds will probably be a large part of your dropshipping experience. So it’s a good idea to have everything in place before you open your shop. That way, you won’t be caught out.
If damage can be shown beyond reasonable doubt to have been caused either by manufacturing or shipping, the customer is well within their rights to request (and be granted) a refund or replacement. Most dropshipping suppliers won’t cover return postage for defective items.
However, you should ALWAYS compensate the customer for the return shipping fees for defective items. It’s a cost you’ll have to swallow on individual sales, but you should be able to average things out across your entire pricing system.
Related to this, it might make more sense to provide a refund or replacement item without the customer having to return the original item. This can be a great way to offer refunds as part of your policy, providing great customer service, without having to sort out deliveries.
When a customer wants to return a non-defective item, the buyer has to pay the costs of the return shipping. Therefore, if you’re willing to offer free returns on everything, you’ll definitely stand out.
How often do companies just ship out a new product without asking for the old one back? The answer is: pretty much almost never! You’ll score some major customer service points and maybe even some return custom. On top of that, the customer will get the new item much faster than if they’d had to wait for the old one to reach the supplier before the new one could be shipped back out to them.
However, this has the potential to get expensive, so please make sure this is a viable option for you and your business if it’s something you’re interested in doing.
Costs such as VAT and import and export fees depend on where items are stored and where they’re shipped from and to. For the purposes of this guide, we’ll focus on the EU and ‘third countries’. A third country is one which isn’t part of the EU and therefore doesn’t share the same economic structure.
For example, the EU has the single market and customs union. A third country business would need to fill in customs declarations when importing and exporting.
Since leaving the EU and coming to the end of the transition period of the Withdrawal Agreement, the UK is now a third country. As the owner of a dropshipping business in the UK, you’ll need to establish where goods are stored and supplied from. This will help you with VAT charges.
An importer of record is usually responsible for paying necessary import VAT upon receipt of goods.
VAT registration is usually required when you reach a certain annual turnover. Also known as the VAT threshold. The VAT threshold as of April 2024 is £90,000. A VAT identification number would also be needed if items are stored within an EU member state. This is why many UK dropshipping businesses choose to work with suppliers in China.
At the time of writing, business-to-customers sales from the UK to the EU are regarded as exports from the UK, which are zero rated. However, if selling from the EU to the UK, you’ll need to register for VAT. Make sure you do your own research first as this is a complicated area.
If you plan to accept orders from customers in EU member states, then you should be aware of the changes brought in during 2021. There have been a number of changes and some are still to be implemented but here are some of the most important:
These changes will mean that many dropshippers will need to pay import tax for the first time. Something they may have been able to avoid previously. Obviously, this can eat into profit margins. But does it mean that dropshipping is no longer worth doing?
This is just an overview of the changes. For more details, see the Gov.uk site.
There’s a few ways to enhance your chances of dropshipping success, so let’s take a look:
Make sure you’re picking an area that has growth potential. Ideally, choose something you have a passion for and knowledge of. Once you’ve chosen your niche, give it a chance.
You could try print on demand dropshipping for even more specific niches related to clothing or products like coffee mugs and phone cases.
Don’t just start adding random adding items, unless you’re looking to pivot. Otherwise, your shop will just be an Aladdin’s cave of anything.
This will be driven by your niche to a certain degree, but you need to know who you’re talking to. That way, you can make sure that you’re delivering your message in a way that will appeal to them. More importantly, you want to encourage them to visit and buy from your site instead of another that sells the same or similar products.
You can do this in a few different ways, including: optimising your content for search engines (SEO), running paid ads, targeting potential customers via social routes, and beefing up your content offering.
This is one of the best ways you can add value to your dropshipping business. ‘Content is King’, so they say. And the term ‘content’ covers everything from blogs posts to video clips. A good online content strategy will boost your site’s visibility meaning more eyes on your business and hopefully more sales!
Think outside the box a bit too, when it comes to content. Instead of just copying and pasting an item’s photographs and details from the supplier’s site, why not create original content?
Produce an unboxing video, film yourself giving a review, use the product in the real world, do a Q&A vid, the possibilities are endless!
As long as your content is useful to the visitor and relevant to their needs, it’ll have a positive impact on your business.
Think about the different places your content can be used, too. If you have longish videos onsite, you could repackage these to be suitable for social platforms.
Speaking of social platforms, how are you going to use them to find new customers? Return custom is fantastic, but not a given and you need to find a way to attract fresh meat / people who haven’t previously made a purchase from you.
An active social strategy and overall outreach plan is something you should be aiming to produce, but there’s no magic number of posts so don’t just make noise for the sake of it. Again, this is linked to identifying your target audience and then finding the best way to talk to them. Asking social followers to share your posts is a good way to get more eyes on your content. And it’s free!
However, organic can only get you so far with the mysterious algorithms. As part of your outreach plan, you should look at paid adverts and sponsored posts on social media. Cross-channel marketing and (re)targeting often requires the use of cookies. Cookies are small files which are dropped onto a user’s computer or mobile when they visit your site to record and store information related to that visit and any interactions they make.
With the storing and using of personal data comes great responsibility. Please look into GDPR (General Data Protection Regulations) and make sure you stick to the guidelines. If you’re outside of the EU, check your local data protection laws. Find more info on GDPR in the UK here.
Al text: picture of a green hand with a thumbs up and a red hand with a thumbs down
Low Start up Costs
No Stock Management
Good Product Range
Flexible Location
Scalable
No Control Over Orders
Low Profit
Shipping Delays
Stock Problems
Yes, dropshipping is legal. It’s just a method of outsourcing order fulfilment to a third party supplier, using a supply chain to manage packaging and shipping.
There are a few areas of legal understanding you’ll need so you can stay protected. Things like:
Spend time researching everything that goes into a dropshipping business so that you know what to expect beforehand. If you just jump straight in, you’re likely to run into any number of problems.
Once you have researched enough into creating a business and have a functioning, profitable dropshipping company, you could further supplement your income by setting up a workshop to make money through online tuition, or even potentially make money on Patreon as a content creator.
In the UK, you’ll need to register as a sole trader or limited company.
According to Google Trends, searches for dropshipping peaked at the end of 2022 but make no mistake, it’s still very much alive and kicking.
In fact, in the Reddit r/dropship group, there’s over 300,000 members. It would be worth having a look through that group to see what members have to say about dropshipping. You should get real answers as it’s a community type forum that avoids letting business involved in gaining customers.
Another way to check is via social media. There’s plenty of Instagram influencers that participate in affiliate marketing to make some extra money.
Ultimately, you’re best placed to decide the answer to the question “is dropshipping worth it?”. The worth of something depends on what you want out of it. If you’re looking for a way to get rich quickly, dropshipping most likely isn’t the answer. Unless you nail your product choice, marketing, and sales.
Instead, it takes a lot of hard work. The more time, effort, research, working capital, and good customer service you can put in, the better. And the higher your chance of success is.
We know doing dropshipping as a side hustle or full time might sound low risk but there’s quite a bit of hard work involved in getting it right. This can be quite time consuming.
If you’re looking for something a little less taxing but with income potential, you might consider selling on Fiverr, making money on Twitch or making money from refer a friend schemes.
There’s one other side hustle that is lesser known and can be extremely rewarding when done correctly……Matched Betting. This involves using promotions offered by money and turning them into real cash. The OddsMonkey ‘What is matched betting’ guide will reveal all and show you how to make a guaranteed tax-free income.
OddsMonkey has put together a plethora of information on how to make money from side hustles if you’re interested.
*DISCLAIMER: We’re legally required to state that there is no guarantee of specific results each month. The amount of money that you earn can vary dependant on the time and effort that you commit each month.
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