Are you looking to become a successful UK dropshipper? After the phenomenal results across the US, dropshippers everywhere are looking for new markets where they can replicate their success. It is now becoming clear that the UK is the perfect place to start as a region with low competition and high demand.
According to Statista, the United Kingdom has one of the leading e-commerce markets in Europe. In 2019, UK eCommerce sales achieved over 693 billion British pounds worth of sales.
With the help of the right tools, we too can capitalize on the great opportunity the UK eCommerce scene has to offer. As long as we have top-notch products, reliable suppliers, and accessible selling channels, we’ll achieve high profits in no time.
Therefore, this article will serve as the ultimate guide to Dropshipping in the UK. We’ll learn the basics of dropshipping in the region, including its legality, profitability, automation, shipment, and a lot more.
What Is Dropshipping And How Does It Work In The UK?
Before we proceed to the specifics of UK dropshipping, let us first understand the basic concepts of dropshipping and how it works in the region.
Dropshipping is an order fulfillment method that doesn’t require us to maintain a physical inventory or manage the delivery of products. Instead, we can outsource these tasks to third-party suppliers.
To illustrate, suppose our dropshipping store has cell phone cases for sale. Then, one of our UK customers visits our website and purchases an item for £20. Once the purchase is complete, we head over to our supplier’s website, purchase the item for £15 and have it shipped directly to the customer.
The result? Our customers receive their brand new phone case, while we walk away with an easy profit of £5. Repeat the process enough times, and there is no limit to how much you can make.
The uniqueness of this model offers a significant benefit: because we purchase the item only after getting paid, dropshipping in the UK turns out to be a low-risk business model requiring little working capital to get started.
Is Dropshipping Legal In The UK?
Dropshipping is definitely legal in the UK. However, since the region imposes its own set of regulations, dropshippers must adhere to the following standards:
- Keep product offerings legal
- Abide by UK’s business rules
- Fulfill UK Tax obligations
First, we must refrain from selling products on the eBay VeRO Database as they are Intellectual Property protected products on all platforms. Failing to comply with these rules could result in copyright violations and suspension of our online stores.
Additionally, we must ensure that inappropriate products are not available for the underage audience. To better understand product age restrictions, go over the ACS Advice on Preventing Underage Sales.
On a related note, we should not sell weapons or ammo to audiences of any age.
Moreover, we must abide by the UK’s special consumer laws. Here is a quick guide on the Competition and Consumer Laws for Business: OFT911 to know how you compete, how to treat your customers, and how to sell for your dropshipping business. Then, we must also follow the UK’s Online and Distance Selling rules which govern our dropshipping transactions.
Finally, while running our dropshipping business, we must keep up with our tax obligations. We shall cover the various taxes in the UK for online sellers later in this article.
All in all, the UK’s laws of dropshipping aren’t too complicated to follow because our suppliers and selling channels often take care of them for us. Additionally, with plenty of suppliers and millions of products on the market, we need not worry about finding legal products to sell.
Is Dropshipping Profitable In The UK?
Now that we know the legality of UK dropshipping, let’s take a closer look at why it is such a profitable and worthwhile investment.
Dropshipping in the UK is profitable for the following reasons:
- High consumer demand
- Low dropshipping competition
- Many local suppliers
According to Statista, the demand for online products in the UK is constantly increasing. From 2016 to 2017, e-business sales increased by £80 billion. In 2019, the online shopping industry achieved total sales of £693 billion, making the UK the frontrunner in eCommerce in Europe.
Besides high consumer demand, there is also low competition in the UK dropshipping industry compared to the US. Like in any business, the combination of high demand and low competition significantly increases the opportunity for high profits.
Additionally, UK dropshipping supports a vast selection of local suppliers that fulfill domestic orders, and through this, we can deliver items quickly. When customers receive their parcels on time, it will result in better customer satisfaction and higher profits for our business.
What Are My UK Dropshipping Tax Obligations?
As a dropshipper in the UK, you must bear in mind to pay appropriate taxes for your online business. While it’s best to speak with a local accountant to understand what and how you’ll pay these taxes, in general, there are three types of UK dropshipping taxes:
- Income Tax
- Customs Duty
1. Income Tax
An Income Tax comprises a percentage of the annual dropshipping profits you must pay, depending on the regulations of where you live. Different countries have their respective appropriations on income taxes, so you must know these rules when entering the online shopping industry.
Another type of tax that we must be aware of is VAT. Typically, we charge this tax to customers at about 20% of every purchase. After collecting VAT from customers, we must remit it to the UK government at the prescribed intervals.
In the UK, VAT is charged on dropshipping items sent from outside the UK to Great Britain or goods from outside the UK and the EU to Northern Ireland. However, there is an exception to this rule because goods that are gifts costing £39 or less are not subjected to VAT.
Technically, customers can pay the VAT to the delivery company at the time of delivery or pick up of a parcel. However, to avoid inconvenience to our customers, we should collect the VAT at the time of sale.
3. Customs Duty
The last type of UK dropshipping tax we will tackle is the Customs Duty. We pay the Customs Duties when suppliers outside the UK ship the products. Note that this tax is applicable when the items are excise goods or cost more than £135.
Customs Duty is charged both on the price of the items and other fees that come with the purchase, which include postage, packaging, and insurance.
If you want to understand the obligations from shipments outside the UK, here are the Tax and Customs for Goods Sent from Abroad.
Should I Start A Company In The UK?
After learning about UK dropshipping tax obligations, the next step is to understand whether we need to register a company in the region.
One of the primary considerations when beginning a UK company is whether you live there or not. We recommend registering a company when you live in the UK and managing a local dropshipping store.
If you reside in the UK and decide to register your company, you can start as a:
- Sole trader
- Limited company
However, when you’re in the dropshipping business, beginning as a sole trader or a limited company is your best choice.
As a sole trader, it is easier to run and manage your business in terms of finances. Since your company has a less complicated structure, accounting is straightforward.
On the other hand, better tax relief is available to limited companies with significant profits. Additionally, such a structure provides better protection from litigations since your assets are separate from the company’s.
So what about dropshippers who live outside the UK?
In that case, you should consult with an accountant whether it is advisable to register a company in the UK or not. You must also speak with your accountant about registering a UK company and paying taxes/VAT.
Do I Need To Register For UK VAT?
Now, after deciding to register a company in the UK, the next thing to accomplish is the VAT Registration of your business.
But wait, do you need to register for UK VAT? Well, registering for UK VAT depends on some factors.
When you are UK-based, you need to register for VAT with HM Revenue and Customs (HMRC) when your VAT taxable turnover exceeds £85,000 in the past 12 months.
However, if you are not in the UK but are selling to the UK market, you need to register for VAT when you ship your first parcel to the region, with no minimum purchase.
How To Start Dropshipping In The UK
At this point, let us discuss the step-by-step guide on how to start a UK dropshipping business. Here are the processes we need to undertake:
- Step 1: Conduct product research
- Step 2: Select a UK supplier
- Step 3: Choose your selling channel
- Step 4: List your products
- Step 5: Market your store
- Step 6: Fulfill your orders
- Step 7: Customer service
Let’s begin exploring each step, starting from the beginning.
1. Conduct Product Research
Finding the right products to sell is the first and most crucial step when jumpstarting a UK Dropshipping business. We ensure that the items we’re selling are according to the market’s preferences and needs.
Remember that no matter how attractive our products appear, offering the wrong items will not translate into sales and profits.
We have two primary means of conducting product research, and these are:
- Search for product trends on supplier websites
- Look for what other stores are selling
To identify the top-caliber items, we can search for product trends in the UK supplier pages. By doing so, we can find out the best-selling items that customers usually purchase. In turn, we can try offering these items in our dropshipping stores and start gaining significant sales.
Additionally, we can bolster our store’s offering by replicating the success of other stores.
If we’re running a UK Shopify dropshipping store, we can search for other UK Shopify stores via Google. Then, we can utilize the Koala Inspector to discover what products those stores are selling to achieve more sales.
Those of us managing an eBay dropshipping business can identify the best products to sell by researching market trends and measuring their performance on eBay.
To do so, we can copy the names of new or trending products from the supplier’s page. Afterward, we can search for them on eBay to see the number of sellers gaining profits from marketing them.
2. Select a UK Supplier
After finding the best products to dropship, the next step is to find the most reliable UK suppliers to source items for your online store. Consider suppliers that offer competitive prices, fast shipment, and diverse niches.
For best results, experienced dropshippers advise working with multiple suppliers. It allows us to offer a greater variety of products and the peace of mind of having a backup plan when something goes wrong.
Additionally, we have a wide selection of dependable UK suppliers that we will discuss later in this article.
3. Choose Your Selling Channel
When running a dropshipping store, it’s not only important to work with a reliable supplier, but also, we must be able to sell our products in a thriving channel.
A selling channel is an avenue to offer our products to the market. In the UK dropshipping arena, AutoDS offers comprehensive support and automation for dropshipping on the following selling avenues:
- eBay UK
- Shopify UK
On eBay UK, the existing massive organic traffic helps us pull a greater audience into our dropshipping stores. Conversely, Shopify UK allows us to customize our online stores fully and has no selling limits.
4. List Your Products
Before marketing the products to shoppers, we must first import them from our supplier pages to our selling platforms.
Manually listing dropshipping items requires detailed data entry work, which consumes precious time. To spare ourselves from this tiresome work, we can automate the import process with the help of automation software. In this way, we can spend more time expanding our dropshipping career instead.
Import automation is One of AutoDS’ strongest features allowing us to list products individually or in bulk using just a few clicks.
5. Market Your Store
There are free and paid marketing features on eBay that we can utilize. For free marketing, eBay’s site has organic traffic, which means that millions of people visit the site regularly.
Moreover, eBay’s paid marketing features include the Promoted Listings Standard and the Promoted Listings Advanced. In the former option, eBay places our ads throughout its network, and we only pay if we gain sales from our ads. While for the latter choice, we compete for the top spot on eBay search results and pay a fee each time someone clicks our ads.
To help bring your eBay products to the top, follow our detailed step-by-step eBay PPC guide for US stores, which works similarly for eBay UK users.
Unlike eBay, Shopify stores require active marketing strategies to attract customers. While active marketing often requires a larger budget, we can also rely on the Top 5 Low Budget Marketing Tricks To Market Your Shopify Stores that help lower our costs.
Nevertheless, Launching Your First Facebook Ad For Your Shopify Dropshipping Products is the most proven way to bring more audiences into your store.
Finally, here are the 10 Influencer Marketing Platforms for Finding and Partnering with Internet Influencers which can significantly help increase traffic to our UK dropshipping store.
6. Fulfill Your Orders
Now that our products are live in our UK dropshipping stores, we should prepare to fulfill customer orders promptly and efficiently.
Each time a customer buys a product from our store, we enter their order and shipping details on our supplier’s website. If orders begin to pile up, we can hire a virtual assistant to help ease the workload by fulfilling orders for us.
Better yet, we can add automatic order fulfillment to fulfill our orders automatically as soon as they come in. Not only that but tracking information will also update automatically. This way, our UK customers will get their packages at a blazing fast speed and we’ll save time that we can invest in growing our UK business.
7. Customer Service
One of the essential factors that gain customers’ loyalty to our dropshipping stores is outstanding customer service.
Extending excellent customer support to shoppers can help establish a good reputation in the e-business industry. Satisfied customers are more likely to repurchase from our stores and recommend our stores to other people.
AutoDS has an excellent eBay Customer Support Management System that keeps all customer messages in one place, helping address customer concerns more efficiently. At the same time, Shopify customer support is readily available on the main Shopify dashboard.
Who Are The Best UK Dropshipping Suppliers?
Working with the most reliable suppliers is essential if we want our dropshipping business to thrive. Therefore, we’ll want to pick out only the best to source products for our store.
For example, Amazon UK, AliExpress UK, and CJDropshipping UK are top-notch UK dropshipping suppliers. These suppliers offer a vast selection of trending products, enabling us to provide the same variety to customers.
Also, items on these platforms usually have competitive prices. Finally, these suppliers provide fast and convenient domestic shipping arrangements on many of their available products.
However, Amazon, AliExpress, and CJDropshipping are not the only suppliers at our disposal. Here is the complete list of top UK dropshipping suppliers that you should consider:
- Amazon UK
- AliExpress UK
- Banggood UK
- Wayfair UK
- Costway UK
- VidaXL UK
- CJDropshipping UK
- eBay UK
- Go Dropship
- AW Dropship
Explore more on what each of these Top 11 UK Dropshipping Suppliers For Your Business can offer, and start working with them.
For best results, take advantage of AutoDS’ automation features available on its list of supported UK dropshipping suppliers.
How To Improve Shipping Times From Outside The UK
Since not all UK suppliers ship from domestic warehouses, we’ll sometimes need to rely on international shipping, which can slow things down significantly. Therefore, it behooves us to work diligently and find ways to speed up the international shipping process.
One way to get faster shipping from international suppliers is to choose items from closer geographical locations, such as the EU or Russia, instead of China or the US. It goes without saying that the closer a package is, the faster our suppliers will ship it to our UK clients.
Here is an example of a trending item from the AliExpress dropshipping center that ships from Spain to the UK in just one week:
We are now familiar with the basics of UK dropshipping. From starting an e-commerce business to fulfilling our customers’ orders.
Bear in mind that dropshipping in the UK is convenient and easy as long as we adhere to the rules and understand how the processes work.
The next step that we need to take is to start finding the best items to list in our online stores and gain profits in no time.
Finally, become an expert in dropshipping by mastering its basics and identifying the trending products to sell with these articles: