Dropshipping in the UK, does it work? A first-hand account from one of the Job Asylum guest contributors.
I’ve owned and operated a dropshipping business for over three years and have experienced the highs and the lows that come with operating a small scale e-commerce business.
My business has a trading agreement with one sole reputable UK supplier and my website generates a number of sales each month which supplements my income from my full-time career but is some way off being an amount that you could live from month to month.
Whilst my website grows marginally each business quarter, I am in no way anywhere close to quitting the proverbial “grind” which many YouTube commentators speak of.
Having seen many alleged entrepreneurs and “gurus” on YouTube talk about how easy dropshipping is, I was both amused and concerned. I decided to put together this article to give a real account of what it’s like to run a dropshipping business in the UK when you don’t come from an e-commerce and digital marketing background.
As the owner of a dropshipping business, you do not hold stock of the items which you sell. Instead, a supplier or third party sends the items directly to your customers on your behalf. The difference between the cost price of the product and the price you sell for is the profit you make.
Are dropshipping businesses profitable?
Dropshipping businesses are profitable in the exact same way any other online e-commerce business is profitable. Dropshipping is simply the method of getting products from your supplier direct to your customers. It is the work that goes into developing your business and brand as a whole that will determine your success.
Dropshipping in the UK, is it legal?
Yes, dropshipping is legal in the UK. Selected suppliers and online marketplaces operate the dropshipping model where products are sent directly to your customer with the relevant order documentation coming to you.
Is dropshipping a waste of time?
Dropshipping is not a waste of time and can be lucrative when done right. However, we must not lose sight that dropshipping is merely the method of supplying the products. As the business owner, you are still responsible for delivering or overseeing the marketing, promotion, administration and customer services of the business. These are the important factors that will determine the success of your business.
Starting with Dropshipping
I see a lot of people online preaching about using aliexpress, oberlo or other online marketplaces as a dropshipping platform. Personally, I don’t think this is a good idea for several reasons which I’ll get into shortly.
I chose to start my UK based dropshipping business by using UK wholesalers who offer a dropshipping service. I’m not saying aliexpress or oberlo won’t work for you, I’m sure there are examples of people out there making money using them, but the points which I’ll go into below put me off using them.
Sourcing products for Dropshipping: Online marketplaces vs Wholesalers
When I set up my own UK dropshipping business these are some of the pros and cons I found when considering where to source my products from.
PRO – Could set up as a sole trader
PRO – Cheaper products with an opportunity to make a better profit margin
PRO – Easier to source from multiple vendors
PRO – Easy to use web platforms
CON – Lead time to get items delivered to UK customers was longer than I felt customers would be prepared to wait.
CON – No exclusivity on the products – anyone is able to dropship with the suppliers on there
CON – Often unbranded products and I felt consumers would choose to put faith in brands they know or could learn to trust
CON – A lot of suppliers based in China which could be more difficult to resolve issues with versus UK suppliers
Wholesalers / Manufacturers
PRO – Access to market-tested products from established brands
PRO – Can get products to customers within 1-3 days
PRO – Easier to contact to resolve order issues
PRO – More exclusive with who they deal with
CON – Will likely only deal with limited registered businesses
CON – Products cost more
CON – Can demand you don’t sell on eBay or Amazon
CON – Some don’t have easy to use web platforms for ordering
For me, the most important point of those above is that wholesalers and manufacturers will likely want you to be a limited registered business. Deciding to become a legally registered business isn’t a decision that should be taken lightly and brings with it legal obligations as well as associated fees and a need to have an accountant file your tax returns.
One of the appeals to the online dropshipping marketplaces is just how easy it is to get set up, find products and see prices. This isn’t something you’ll find when identifying UK wholesalers and opening an account with them. From my own personal experience these are the best sources to find UK wholesalers:
Finding the right wholesaler who sells the right products and offers dropshipping can be a lengthy process but it can be done.
There’s more to building a business than finding products
Whether it’s getting access to a wholesalers price list or searching online marketplaces, products can come at fantastic prices where if successful in selling you can make strong profit margins. When browsing products it is easy to get carried away with yourself and imagine yourself selling thousands of these products at a good markup.
But there is more to running a successful e-commerce operation than just selecting a range of good products. There is plenty to consider when creating a business. It’s far more than just dropping a handful of products from an online marketplace onto a Shopify website. Sure you might be able to sell some products to friends, family and mutual friends on the back of your new Facebook page. But long term, is this going to be a success?
Build a brand – don’t just sell products
My advice to anyone looking at starting a dropshipping website would be to think about the types of products they want to sell. You should find your own little niche and then research it before committing. Try and build yourself a website that becomes renowned for selling a certain something and then set yourself a goal to become an authority in that area.
You don’t want to build a website with a random collection of products that have no obvious connection. Your website will look like a virtual jumble sale and you’ll struggle to build any kind of brand loyalty and likely struggle with your SEO goals.
What you should learn before starting dropshipping
Before launching my own website I already knew some things about business and “traditional” marketing strategies, but I needed to go away and learn about e-commerce and digital marketing to at least a satisfactory level.
I have then continued to grow my knowledge over the last three years. Here are the things I think you should learn before starting dropshipping:
E-Commerce – understand how platforms such as WooCommerce or Shopify work and how you can leverage their features to sell products
SEO – As a bare minimum, you should learn the basics of SEO and how you can get your website ranked high on search engines to generate organic traffic.
Social media advertising – if this is something you are considering doing, read up on the topic first. Advertising on social media isn’t just a matter of writing “SALE”, you need to target the right people and create compelling adverts that make people click on them
Basic graphic design – sure you could outsource the original build of your website but as time goes on you’re going to need to know how to resize and crop images and know what a transparent background on a png file is. Tools like Canva can be a great starting point.
How to track performance – learn how to set up Google Analytics and Google Search Console to give you up to date data on your website’s performance. Learn how your chosen e-commerce platforms sales dashboard works to track your sales performance and drive informed business decisions.
Does dropshipping work in the UK?
Yes – but it’s not quick, it’s not easy and it’s highly competitive. Just because you’ve built a website and populated some products doesn’t mean thousands of people will rush to it and make a purchase. Sufficient efforts need to be made to make your website visible so that people can find it, and it needs to give users a reason to purchase from you instead of a larger competitor.
Dropshipping is not a get rich quick scheme. To make it work you will need to invest a lot of time, and that is probably the most important message.
My website after three years generates enough net profit to cover some of my smaller bills each month. To get to this level alone I have had to go away and learn so many things and commit many hours to develop the website and the brand.