Dropshipping is a great opportunity to start your own small retail business, without the need to coordinate stock storage and shipping. This allows you to quickly grow your business, and to offer your products on an international scale.
When paying international suppliers and receiving payments from abroad, you’ll need to make sure you have an account that provides you with the real exchange rate and low-transparent fees - TransferWise for Business offers just that. More on that later.
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Dropshipping is a retail fulfilment method where you as a retailer doesn’t keep the goods that you sell in stock, but rather you forward the orders to third party, who then ships the products directly onto your customer.
This method differs from the standard retail method, as you’ll never own or stock your products that you sell via your online store - instead, you simply create the online shop to allow your customers to purchase, and your suppliers - known as dropshippers - will handle all of the delivery process themselves.
Dropshipping is increasingly popular for people looking to build their own business or make a little money on the side. It can be profitable, but it is not without risk. Here are some pros and cons to consider:
- You won’t need to hold inventory yourself, cutting initial costs
- No physical store needed so you can work from home
- Choose to sell a product you’re passionate about, or turn a hobby into a business
- Switch around the products you sell as you go, to evolve your business
- Get started quickly once you’ve found your niche and dropship partners
- You’ll need to choose your product carefully - some niches are crowded and very competitive
- It’s hard to protect your profit margin in dropshipping, so getting the right supplier deal matters
- Dropshipping is often sold as a dream job involving little effort or outlay, leading to many scammers who will take advantage of those looking for a quick profit
Let’s start with a quick overview of the steps you’re likely to need to take, if you want to launch a dropshipping business here in the UK. You’ll need to:
- Select your product
- Find a great supplier
- Decide where to host your business
- List your products and build a customer base
- Manage your money.
Dropshipping is a competitive market, and the profit margins can be tight. You’ll need to make sure you have a point of difference in your products, or in the service you give your customers, to stand out. You’ll also need to find a reliable supplier to allow your business to operate smoothly.
If you’re serious about building a dropshipping business, the first thing to do is to work out what you’ll sell. You need to look for unique products with a selling point beyond just a low price. Find ways to add value to your customers, and build an ongoing, trusting relationship with them.
For example, if you decide you’d love to sell home furnishings, maybe you create a blog or website about interior design, and provide your customers with engaging and useful content, as well as the opportunity to purchase the products you’re promoting. By giving something extra to your readers, you’ll keep them coming back to your site - and your shop - for more.
There are some practical considerations when deciding what to sell too. Your products will be posted to your customers, which makes extremely fragile or heavy items a risk. However, some popular categories include the following:
- Clothing and shoes
- Home accessories
As the manufacturer, another retailer or a wholesaler has a central role in the success of your business - its vital to take the time to research the supplier that works best for you. This guide gives you all you need to get started researching dropship options.
You’ll need to make sure that they are reliable, provide quality products, and provide their services at a competitive price. You’ll need to negotiate with your supplier to ensure that you get a good deal on the products that they supply, as this will be vital for your profit margins.
Once you have decided on the product that you want to sell, and you’ve found a supplier that will provide your products - you’ll need to decide where you will host your business , so you can advertise your products to your customers.
There are a number of options available, you can start from scratch and create your own site on which to sell your items. There are lots of online website builders out there to help you - which offer templates for ecommerce sites, and online retail platforms such as Shopify.
You’ve spent a lot of time and effort setting up your business and finding a supplier, so you need to be considerate about the way that you present your items. Think about:
- Product images: Do they reflect the item you want to sell? Do they look professional?
- Product descriptions: Do they accurately describe the product? Have you included accurate information, such as brand or dimensions?
- Pricing: Consider the price you charge for products carefully - you need to ensure that you are making a profit, but you also need to attract customers. Take the time to research your competition to help you decide what to charge.
Dropshipping is becoming more and more popular, with some free online training courses available, to help you make your business a success. These courses can help you with everything from how to find suppliers to tips on how to list your items.
One of the key points to remember when thinking about dropshipping is that the price you pay to a supplier or wholesaler will be per unit. This means you won’t get the discounts that some businesses secure, when buying large volumes of stock. The end result is that margins can be tight - making it crucial that you don’t incur any unnecessary expenses, such as high bank fees when paying costs, such as paying overseas suppliers.
TransferWise for Business is a great way to cut the costs of overseas payments, and protect your profits. You’ll be able to make international transfers to cover supplier costs which use the mid-market exchange rate with no markup, and charge a simple transparent fee per transaction. This can work out far cheaper than using a regular bank.
You’ll also get your own bank details for the UK, US, Australia, New Zealand and the euro area, so you can accept customer payments from these regions like a local.
So, why not join over 5 million users already using TransferWIse - and see how they can help you save money on international payments.
Checked on 19-September 2019.
This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.
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