Dropshipping is a popular business model where the business does not physically keep any products in stock. Rather, when an order is placed by a customer, the business will send an order to a third-party supplier who will then ship the product to the customer.
Not being required to carry any physical stock means that having a dropshipping business is an excellent and enjoyable way to earn a living, especially since you can conduct your business from the comfort of your own home.
So, how does dropshipping work and what are the most common questions around this business model? This article will discuss everything you need to know!
Is dropshipping legal in the UK?
Of course, you will need to make sure that the goods you are selling in your dropshipping business are legally permitted to be sold within the UK and you will need to comply with the UK’s relevant competition, consumer and data protection rules.
As long as you are committed to running your dropshipping business in an honest and customer-focused way, you should have no problem with complying with the above laws.
How can I start my own dropshipping business?
There are a few steps involved in starting a dropshipping business and it is impossible to be up and running overnight.
Firstly, you will need to decide on what you plan on selling – it is advisable to concentrate on one kind of product that you know a lot about, rather than selling a wide range of goods.
Once you have identified what you plan on selling, you will need to find suppliers, which can be time-consuming but worth it in the end if you can establish a good working relationship.
Another factor you will need to consider for a UK-based dropshipping business is the lead time for products.
If you plan on working with a supplier that is based in China or elsewhere, delivery of products can take anywhere from 20 days to 2 months and you will need to pay extra if you want the goods expedited.
Next, you need to register your business and then decide where you will sell your items. There are many platforms out there for drop shippers but it is a good idea to find your favorite one and one that you enjoy interfacing with as you will be spending a lot of time on this site in the future.
Finally, be prepared to work hard at your dropshipping business and remember that what you put in will reward you in the end!
Can I make a lot of money from dropshipping?
As with everything in life, as long as you work hard enough at it and are passionate about what you do, chances are (with a bit of luck) that you should be successful.
When it comes to dropshipping, the sky really is the limit and how much money you make will depend on how hard you are willing to work.
If you have decided to go into dropshipping on a full-time basis and are prepared to work at it several hours per day, your earnings could be quite lucrative.
Many people who have been successful at dropshipping state that your customers need to be your number one priority if you want your revenue to be high.
This means answering customer questions and comments in a timely and professional way and understanding that your customer is king.
Your next priority is ensuring that the products you sell are of the highest possible quality and this may involve researching the supplier extensively before making a commitment.
Do I need to register my dropshipping business in the UK?
Yes, you will need to register your dropshipping business in the UK.
As per UK law, any business in which you earn an income must be registered with Companies House.
Fortunately, however, registering your dropshipping is fairly easy and straightforward and it is nothing to worry about.
You can register your dropshipping business as one of the following business types:
When you are ready to register your dropshipping business, simply complete the registration process with HM Revenue and Customs and you are ready to start making money!
Is it difficult for British dropshipping businesses to find suppliers?
This is a common question, especially since Brexit has been completed.
Finding good and reliable suppliers for your dropshipping business is essential to the success of your company.
If you are not sure where to begin, you can start by conducting a simple internet search on companies that offer dropshipping services.
Once you have earmarked a few suppliers you feel would be a good match for your business, you will need to make contact with them and establish a working relationship.
This is one of the most important elements to your dropshipping business and we recommend taking your time and ensuring that both you and your supplier are happy.
Will I need to pay any tax on my UK dropshipping business?
Yes, you will need to pay tax on your UK dropshipping business so that you are compliant with the law.
You could be liable to pay the following kinds of taxes on a registered dropshipping business:
- Customs Duty
- Income Tax
- VAT on goods
- Sales Tax
If you are unsure how to go about paying these taxes or you need further information on how much you would owe, we recommend having a look at the government’s official website, which explains everything quite clearly.