Dropshipping in the UK is one of the most cost-effective and easiest businesses to start. Under dropshipping, you sell the product and the manufacturer sends it directly to the customer. Put another way: you don’t need any experience, technical expertise or investments to start a UK dropshipping business.
In this guide to dropshipping in the UK, you’ll learn how the business works, whether it’s legal in the country, whether you can make a profit from UK dropshipping and how to start the business. You’ll also get a list of the best suppliers for dropshipping in the UK.
What is dropshipping and how does it work in the UK?
The first thing to understand about dropshipping in the UK is how the business works in the country. In the dropshipping business model, you don’t have to stock the inventory or handle the delivery of products. These tasks are outsourced to suppliers. All you’ve got to do is make the sale.
Here is an example of UK dropshipping: Let’s say that you have a website where you showcase women’s bags and accessories. A customer buys a handbag for £40 from you. As soon as the transaction is complete, you head to the manufacturer’s website and buy the handbag for £35.
The product is then directly shipped to the customer who bought it from you. In this sale, you make a profit of £5 without having to manufacture or ship the product. Your profits will increase as more customers start buying from you.
What are the benefits of dropshipping in the UK?
You need capital to start most businesses. You’ll have to either dig into your savings, borrow money from banks or find venture capitalists willing to invest in your business. One of the biggest advantages of dropshipping in the UK is that you don’t have to make substantial investments.
You don’t have to invest in manufacturing the product or handle its shipping charges. Since you only place the order after getting paid by the customer, the business carries a low risk.
Is dropshipping legal in the UK?
Yes, dropshipping in the UK is legal. But since there are regional regulations, those getting into UK dropshipping should be aware of the following requirements:
- All products should be legal
- You can’t sell weapons or ammo to anyone
- Inappropriate products should not be sold to underage customers
- You should abide by all the business rules of the UK
- Your business should also follow the special consumer laws of the country
- Your business should meet UK’s tax obligations
- You shouldn’t sell products on the eBay Verified Rights Owner (VeRO) Program
Can you make a profit from dropshipping in the UK?
Dropshipping in the UK is a highly profitable business for several reasons. To begin with, while e-commerce was always rising, the pandemic has accelerated its growth. Total e-commerce sales touched £693 billion in the UK, according to Statista.
Several sectors have found online customers for the first time and it’s unlikely that they will go back to buying from physical stores. This translates to increased customer demand across product categories.
The second factor that could make your UK dropshipping business profitable is that there is low competition in certain sectors. Low competition with high demand is the recipe for success in any business.
Finally, you can find several local suppliers for dropshipping in the UK. This means that your products can be shipped on time, which will encourage your customers to repeatedly buy from you.
What are my dropshipping tax obligations in the UK?
There are three kinds of taxes that anyone dropshipping in the UK should be aware of. These are income tax, VAT and customs duty.
You’ll have to pay a percentage of the profit generated from your UK dropshipping business as income tax. Income tax is calculated on the annual profit you make.
Around 20 per cent of every sale should be collected from the customers and regularly remitted to the UK government as VAT. It’s charged on dropshipping goods sent from outside the country to Great Britain or from outside the UK and the EU to Northern Ireland.
Customs duty is charged when suppliers from outside the UK ship the goods. You have to pay this tax if the products are excise goods or if they exceed £135 in cost.
How to start dropshipping in the UK
You can start a successful UK dropshipping business using the following steps:
Do product research
Start by going to suppliers’ websites and discovering trending products or those sold by others in UK dropshipping. After that, you can discover under-serviced sectors and widen your range.
Choose a UK supplier
With price, product range and fast shipment as the criteria, select reliable suppliers for dropshipping in the UK. Choosing multiple suppliers is always better than depending on one.
Advertise your store
The platform where you list your products should have an automated marketing tool to market your store. You can choose from either the free or paid marketing options to increase visibility.
Fulfil customer orders
Every time you get an order, you should immediately enter its details on the supplier’s website. If there are too many orders, you can opt for a virtual assistant or use automatic order fulfilment.
Focus on customer service
Increased customer satisfaction means more business from existing customers and little need for marketing. Make sure that you respond to queries and messages on time and use a system to collate all customer interactions.
The UK's best dropshipping suppliers
These are the most reliable suppliers for dropshipping in the UK:
- Amazon UK
- Etsy UK
- Wayfair UK
- AliExpress UK
- Costway UK
- Banggood UK
- CJ Dropshipping UK
- eBay UK
- AW Dropship
- Go Dropship
Athlete: Helping to grow your business
Athlete is the Shopify app for Etsy syncing. You can ship orders from either Shopify or Etsy and the other will be instantly updated. Your orders from Etsy will be integrated into Shopify within 21 seconds (and often much quicker).
Athlete also handles upgraded shipping, personalisation notes and tax liabilities. The dashboard will give you a full view of your orders and their status. This means that you can process orders efficiently, increase customer satisfaction and begin to grow your UK dropshipping business.