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How to Start a Dropshipping Business in the UK

Written by, Bojana Atanasovska

Updated March, 25, 2022

Dropshipping business can be a very lucrative business model if done correctly.

Learning how to start a dropshipping business in the UK is a great idea for building a sustainable source of income in the long run and dipping into the world of entrepreneurship.

Here’s how to do that.

How To Start: A Dropshipping UK Guide

If you’re thinking about starting a dropshipping business, here’s a step-by-step guide you can follow to get started. 

Conduct product research

The first and most crucial step of starting a dropshipping business is to find a niche where you’ll be able to add value to the items you’re selling through advice and information. 

Successful businesses also need a good marketing edge. The safest bet is to opt for evergreen products. 

Once you settle on a business, you can move on to conducting research on your competition and use that information to make your business stand out and develop a solid marketing strategy.

Select a UK supplier

The key to a good dropshipping business is finding a reliable supplier that offers high-quality products and fast shipments. It’s also essential that you find out how often they update their inventory and the price point for each product.

There is some benefit to working with multiple suppliers as well. You can offer a greater variety of products to customers and have backups in case of emergencies.

Pick a marketplace

When running a dropshipping store, you need to find a reputable marketplace, with a large customer base. 

These marketplaces often work with suppliers and shipping companies (like eBay Packling) that can help automate certain aspects and help you better manage your business.

Some of the best marketplaces for dropshipping in the UK are eBay and Shopify. 

Create a shop

After you pick a marketplace where you want to develop your dropshipping business, you can sign up and create your shop front. Platforms like Etsy are great for dropshipping for beginners in the UK because they have many ready-made tools you can use.

However, you can also set up a shop on your own website and make sales with Amazon or eBay.

Customer service

Customer service is an important part of the dropshipping business in the UK. A good customer support team is not only knowledgeable and friendly but should be quick to respond to requests and be understanding of customers’ demands. 

Marketing and branding

Once your store is up and running, you can start putting in an extra effort to bring in more customers, establish a brand, and expand the business. You can try influencer or content marketing, promote your products in online communities (that are in your niche) and even try to boost sales through paid ads.

Why is dropshipping a good business idea?

Dropshipping is an excellent way to enter the world of entrepreneurship with minimal investment and low start-up costs

If you start dropshipping in the UK, you automatically eliminate the overheads and expenses of managing retail warehouses and stock inventory levels for packing orders. 

What’s more, almost everything in dropshipping can now be automated, which makes it a great choice for beginners.

What Are My Dropshipping UK Tax Obligations?

If you’re considering starting a business in the UK, online or otherwise, you need to make sure that you have a good understanding of tax laws and regulations.

There are three types of dropshipping taxes in the UK:

Income Tax

Income taxes are a percent of your annual profits. The rate varies and depends on state and local laws. They may also change over time, which is why it’s important to have an accountant to keep financial records up to date. 

VAT

VAT (value-added tax) is levied on the price of the product at each stage of its production and distribution. Sellers typically pay around 20% on every purchase for VAT purposes. Some goods and services have a lower VAT rate and things like postage stamps are generally exempt from VAT.

Customs Duty

Retailers pay Customs Duties when they ship items outside of the country their store is located in. This tax only applies to items that are excise goods or cost more than £135. Customs duty is calculated based on the item’s price and any fees associated with the purchase, such as postage, packaging, and insurance.

Is a dropshipping business legal in the UK?

Running a dropshipping business in the UK is entirely legal and there are laws in place that have to be followed. All products need to comply with consumer laws and regulations that deal with online business practices and local taxation codes.

Bottom Line 

Dropshipping is a great way to start building an online business. The good news is that learning how to start a dropshipping business in the UK  is not that complicated and most of its moving parts are automated, which makes it a great choice for both beginners and experienced entrepreneurs.

Bojana is my name and writing is my game. I am a content writer from Bitola who is always interested in the latest research in almost all areas of life. I have a Bachelor’s degree in English literature and a perfectionist character, both of which help me find the most accurate data and information available. Although I have my head stuck in studies and reports most of the time, I still have a bit of free time during which I enjoy knitting and watching classic 90’s Disney movies.