Indeed drop shipping is an amazing way to start an eCommerce business without getting bothered about your inventory or shipping. It is defined as the supply chain management method where the retailer does not keep goods in stock but instead transfers the customers orders and the shipment details to the manufacturer, another retailer or a wholesaler – who then ships the goods directly to the customer.
This simply means that drop shipping is all about listing a product for sale on your website and sending an email to your supplier to ship the item on your behalf whenever you get an order. From the outside, this business looks easy but starting a drop shipping business needs hard work and some attention at your end especially when it comes to finding the right suppliers.
Table of Content
- What is Drop Shipping?
- 1. Understand the Industry
- 2. Conduct Market Research and Feasibility Studies
- 3. Decide What Niche to Concentrate On
- 4. Know the Major Competitors in the Industry
- 5. Decide Whether to Buy a Franchise or Start from Scratch
- 6. Know the Possible Threats and Challenges You Will Face
- 7. Choose the Most Suitable Legal Entity
- 8. Choose a Catchy Business Name from the ideas Below
- 9. Discuss With an Agent to Know the Best Insurance Policies for You
- 10. Protect your Intellectual Property With Trademark, Copyrights, Patents
- 11. Get the Necessary Professional Certification
- 12. Get the Necessary Legal Documents You Need to Operate
- 13. Raise the Needed Startup Capital
- 14. Choose a Suitable Location for your Business
- 15. Hire Employees for your Technical and Manpower Needs
- 16. Write a Marketing Plan Packed With ideas & Strategies
- 17. Develop Iron-clad Competitive Strategies to Help You Win
- 18. Brainstorm Possible Ways to Retain Clients & Customers
- 19. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
What is Drop Shipping?
Drop shipping is a simple arrangement that is gaining fame and recognition globally. This arrangement has several advantages that make it unique and popular nowadays. It allows merchants to offer a lot more products for sale than what is feasible if the merchant has to inventory everything.
It goes a long way in helping merchants come to the market more quickly by removing the waiting times when the products are shipped from the distributor or manufacturer to the merchant. In this age, people don’t need to stick to one industry or niche because drop shipping has given a key to proper diversification of services. Instead, you can test new products, see how they sell and basically try to sell them without having to bring them in your inventory.
We believe there are a lot of other benefits of drop shipping, and as for downsides, there are almost none. Even though people tend to complain about orders getting mixed up, but what matters is to create a sustainable drop shipping system online that works for you and is fully automated.
19 Steps on How to Start a Drop Shipping Business in UK
1. Understand the Industry
Statistics has shown that drop shipping is steadily gaining popularity in the UK: it’s a great way of minimizing risk and cost as you don’t have to hold lots of stock, while it offers convenience and practicality for retailers. In 2016, the UK’s e-commerce industry was worth $153 billion making it a great country to start a drop shipping business.
Also in the same year, e-commerce sales in the UK grew by 16% proving that now is the time to start selling products online. When it comes to market share, individuals selling online only make up 18% of all online retailers in the UK which showcases room for new entrepreneurs to come in and increase their market share.
Note that in this industry, those with limited e-commerce or business background can slide into the industry through the low-cost drop shipping business model. The average e-commerce website in the UK converts at 3.6% on a desktop which is above average, making it more likely for an entrepreneur to sell to their audience. But you should understand that those in the UK drop shipping sector aren’t limited to their country as they can sell goods internationally with minimal shipping costs.
Reports have it that a rising number of retailers are depending on suppliers to ship online orders directly to customers, a strategy they hope will help them compete with e-commerce rivals without spending more on inventory. It also let’s retailers offer more products for sale on their websites such as multiple colours of the same sweater, without having to keep those items in stock.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
You need to know that there are a lot of reasons why a product might not have a lot of competition, like high shipping costs, supplier and manufacturing issues or poor profit margins. Look for products that have competition, as it’s a sign that there is a high demand and the business model is sustainable.
Even with the prices of products being slightly higher on drop shipping websites than on suppliers’ websites, people often ask themselves the main reason why shoppers buy the same products from drop shippers. Well, it is because no one in this modern age has the time to look for suppliers’ stores to find their needs.
Also, a lot of shoppers don’t know what products they need until they see it. We believe that drop shipping businesses possess a unique competitive advantage as they find the products, label them in a special way and make them find their way to the consumers.
3. Decide What Niche to Concentrate On
It’s important to state that without any knowledge about the niche you choose in this business, you can’t pick up anything fishy about the quality of the products, the pricing, or anything related. This is why choosing a niche you fully understand will give you some advantages over your competitors especially if they are yet to invest the same amount of research or personal experiences. So to choose a perfect niche that suits you, follow these quick (and effective) steps:
- Know your interests and passions
You should probably know your interest and passion before now. Indeed there are going to be times where you feel like giving up and if you’re not passionate about your niche, it’ll be much easier for you to drop it.
- Research problems you (and your niche) can solve
To start and run a lucrative business, you’ll want to research problems your target audience may be feeling and come up with a solution for them.
- Know your competition
You need to find out if the niche you’re interested in over-saturated. If so, is the competition easy to beat? Better yet, is it worth beating them? You’ll often find that the niche you’re most interested in joining is the one that nearly everyone is already a part of.
- Decide whether or not your niche is profitable
You need to analyze if you will be able to get a good amount of money from your niche and a good way to find out if your niche will make or break your bank account is by checking out the top trending items (on both eBay and Amazon).
Level of Competition in the Drop Shipping Business
As a determined entrepreneur, you should not be scared of competition; it’s something you should look for. It’s not a very good idea to enter a “market” where there’s no competition, since usually those aren’t markets at all. Experts believe that the best way to determine if people are buying things is to look for people selling things.
Where there are sellers, there are buyers. But then finding a market that has no competition at all is almost impossible these days. So don’t try to re-invent the wheel or “create” a new market just because you think people would want to buy something. Don’t sell what you want to sell, start selling what people want to buy.
The market as a whole is still very competitive and that’s a good sign, which is why we believe you can claim your piece of the cake (or market share) by looking for underserved and untapped market segments around the world. Doing this, you introduce a proven product that’s selling like crazy, to potential buyers who are likely to desire it but haven’t seen the product yet.
It’s the easiest way to win big time. Have it in mind that even if there’s a lot of competition, you can still get lots of sales by making better offers than your competitors, using better sales copy and just being better at advertising and marketing than your competitors.
4. Know the Major Competitors in the Industry
- Worldwide brands
- Dropship direct
- Sunrise Wholesale
- Investory Source
- National Dropshippers
Part of what makes eCommerce work so well is that many companies in this space use a different type of supply chain management to connect consumers with the products they love. With drop shipping, the products the company sells aren’t selected and purchased beforehand, then stored in some warehouse before being sent to consumers.
Instead, an eCommerce company that uses drop shipping waits until a customer makes his or her order before even buying the requested item. We believe that one way some eCommerce companies are overcoming a few of the industry threat is by offering stellar customer service.
Amazon is a prime example of this as they make items easy to return, regardless of why the customer no longer wants them. With their $99-a-year service, customers who buy this add-on can also enjoy additional services such as free two-day shipping and access to thousands of movies, as well as some of their favourite music.
All these create an even more positive customer experience so the consumer is often willing to continue to use this eCommerce site even if they run into a snag every now and then, such as when an item is out of stock and unavailable for purchase.
Also companies in this industry, have a system that allows their suppliers to be top of the line. With them giving consumers the power to rate each one based on factors like performance and product quality, the motivation is there for these suppliers to exceed customer expectations if they want to continue to get high reviews and comments.
Statistics has it that with more and more eCommerce companies following the drop shipping model, it is likely that this particular supply model won’t be going away any time soon. This is great news for any willing entrepreneur looking to start a company, but who don’t have something to sell or a lot of money to invest.
5. Decide Whether to Buy a Franchise or Start from Scratch
We believe that purchasing a franchise is the best way to start up a drop shipping business because an existing drop shipping business will have honed its operations over time. You will have to inherit a business with streamlined and documented systems, making it very easy for you to learn the ins-and-outs of the business.
Also note that existing staff often have more of a coalface perspective than the boss, as they can provide valuable insight into how the business runs and areas that could be improved. It’s very important to state that another benefit of inheriting staff is that you don’t need to recruit and train staff.
It will indeed save you previous time, money and energy that you can focus elsewhere in the business. Ensure that you identify early on if there are any staff morale issues that need addressing, or if staff are resistant to new ownership and the changes this might bring.
You can try talking to the staff and find out if they are happy in their roles, if there is anything that would help them do their jobs better, and what concerns they might have about a new owner coming in. If you show your staff that you’re interested in them and open to discussion, it will go a long way to show that you’re happy to have them, particularly if they have strong loyalty to the previous owner
6. Know the Possible Threats and Challenges You Will Face
Starting a drop shipping business has its own threats and challenges. Many people patronize these shops because of convenience, which is why you should strive to avoid any threat or rather take care of them immediately they surface.
- Differentiating yourself from competing drop shipping business
- Naming your drop shipping
- Securing the permits needed in your state to operate a service business
- Buying a platform to run your Drop shipping
- Purchasing a domain name from a domain registrar
- Developing incentives for people to join your drop shipping business
7. Choose the Most Suitable Legal Entity
This business should be worth your time and money if you do it right and diligently. We believe there are a lot of people who didn’t spend thousands of dollars to get to the point where they earn a lot. That is why we recommend investing time rather than money in the beginning, and getting to learn all the strategies for traffic, products and suppliers instead of paying someone for it. You will also need to choose a suitable legal entity for your drop shipping website, and you can choose from these two main alternatives:
- Sole trader
Have it in mind that this is the simplest legal entity to implement but it has no personal liability protection.
- Limited company (Ltd)
This legal entity offers you increased protection of your personal assets. Do not forget to request a VAT number and get your finances in order once money starts flowing in. When your turnover is over £85,000 you’ll have to apply to be VAT registered. You only need to collect sales tax if the country you operate from collects sales tax and if the order is placed by someone living in your country.
8. Choose a Catchy Business Name from the ideas Below
- First Chance
- Second Image
- Online Boutique
- Simply Drop shipping
- Denim Clothes
- Sunshine Drop
- Whale circle
- Drop shipping Nation
- Value Village
- Drop shipping World
- Clothes for Kids
- Cottage Drop shipping
- Crayons Children
- Diva online store
- World Treasures
- Vast shop
- Unity Drop shipping Centre
- Finders Keepers Drop shipping
- Vikings Store
- Lifelong Drop shipping
- Uncle Treasure Drop shipping
- New designs
- Life Drop shipping
- Beyond reach Closet
- Plus Size
- Awesome Parlour
- Green Light
- Sand Dollars
9. Discuss With an Agent to Know the Best Insurance Policies for You
Online businesses, especially one that handles customers’ orders face a lot of risks and challenges. In this business, you need a tailored e-commerce insurance solution built around your activities. Note that your goal should be to reduce risk by making your site as safe as possible.
We believe that no focused entrepreneur will want to bring a bad name to his/her business. The internet is not a zero sum game when we’re talking about theft and scams. Your client loses and you lose. A commodity gets stolen and it could all be over. Can your company withstand a multimillion dollar lawsuit? So you need;
- Internet liability insurance
- General liability Business insurance
- Advertising agency insurance
- Creative insurance
- Copywriters insurance
- Business equipment insurance
- Business interruption insurance
- Business buildings insurance
- Business contents insurance
- Professional indemnity insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
Intellectual property rights are a business asset, and are often the most important business asset. We believe that any business presently trading or considering trading on the internet needs to check what intellectual property rights it owns and make sure that it is fully protected.
Also, have it in mind that this intellectual output and the protection of it is known as intellectual property, a collective term for different types of asset including copyright, trademarks, patents, design rights and others. These assets are intangible, but can be very valuable since they enjoy legal protection.
When starting an eCommerce business, first check if any of your potential online business names are available as a domain name. The name of your online business should match your domain name as closely as possible otherwise customers will fail to find you when searching online. You can search for and register your domain name at web hosting companies such as 123 Reg, Go Daddy, Names.co.uk and Nominet, which is the official registry for .uk domain names.
Type in your proposed business name to see if it’s available. If the name is already taken, the domain register website will suggest variants. Offensive/sensitive names are not allowed, as are any names that suggest you have links to external companies or government bodies when this is not the case.
You should also be vigilant and careful when trying to come up with a solution at this point; it’s better to change your business name than try to fit it awkwardly into an available domain name. We suggest you focus on getting a website address ending in .com and .co.uk.
11. Get the Necessary Professional Certification
- Certified Drop shipping Expert
- WBI Certified™ Suppliers
12. Get the Necessary Legal Documents You Need to Operate
Just like any retail business, you’re subject to certain laws and regulations when selling goods and services online in the United Kingdom. These include:
- The Consumer Rights Act 2015
Note that this law became law on October 1 2015, replacing The Sale of Goods Act 1979 and The Supply of Goods and Services Act 1982. It lays down conditions that goods sold must meet; for instance, they must be as described, of satisfactory quality, to an agreed price, and be fit for purpose.
Note that if the goods do not meet these conditions, the buyer should have the right to a refund. Have it in mind that it applies to both online and offline purchases, making sure that work must be carried out to a standard or price agreed beforehand and that the professional has a duty of care towards you and your property.
- The Consumer Contracts Regulations
This particular one refers to the numerous legal responsibilities that a seller must provide about a business such as:
- Information about the seller (business address and contact details)
- An accurate description of goods and services including prices and VAT
- Payment details
- Delivery costs and arrangements, and exchange details
- Cancellation rights and relevant time limits
- Costs of returning an item
The Data Protection Act 1998
This act was designed to protect personal data stored on computers and laptops etc., into an organized system where it is safe.
- The Electronic Commerce Regulations 2002
Note that this one established the legal rules that online retailers must comply with when dealing with consumers in the EU. Retailers must provide information when conducting business via electronic means, such as:
- Technical steps of placing an order
- Terms and conditions under which a contract is made
- Prices must be clear and state if tax is included
- The company’s registration number and location of registration
- The name of the service provider, email address and geographic address
As with starting any business, it’s very important that you register your new online business with HM Revenue & Customs to make sure you’re paying the correct amount of tax and National Insurance.
13. Raise the Needed Startup Capital
Have it in mind that you can start a Drop Shipping business without any startup capital (money). You only need to have an attractive website and good suppliers to be successful in this business. But you still will be needing funds in this to launch a standard Drop shipping website, and trust me it can be challenging raising capital to launch a business idea. Your idea must be workable and promising for you to be able to secure finance from financial institutions or from angel investors. Ways to get funding may include;
- Personal savings
- Business loans
- Social investment
- Credit cards
14. Choose a Suitable Location for your Business
In case your drop shipping business needs a storefront, choose an attractive location in your city’s business district. Choose tasteful, conservative furnishings; hire friendly and engaging staff members who can set new drop shipping clients at ease.
But most times you really won’t need a business location but a storage facility. Locate one big enough for a considerable inventory and with a staging area in the back room in which to get merchandise priced and ready for resale. Placing your shop in an area with considerable traffic will help generate customers.
15. Hire Employees for your Technical and Manpower Needs
Once you have researched the industry and selected the products, suppliers and ideas you have when it comes to your drop shipping passion, it’s time to register with the best site out there – Shopify – and make most of your drop shipping business. We’ve outlined the basic steps to start up this business and they include….
- Register With Shopify
The very first step is to visit Shopify and get started with your 14-day free trial. Note that all you need to do is fill in the form and click the ‘Start your free trial’ tab, filling up the store name and entering your basic contact info.
- Purchase Your Web Domain
This is the stage where you purchase your web domain for your drop shipping store. Instead of waiting, it’s best if you secure your domain and pick a nice name for your shop that is not too long and one that has mainly words (and numbers) – and not dashes or any signs.
Indeed buying a domain name is easy and can be done through Shopify. All you need to do is visit the Shopify website, go to the sidebar and click on ‘Online Store’ and then ‘Domains’ and ‘Buy New Domain’. Also if you are considering a domain name or don’t know if it’s taken, you can check available domains at GoDaddy.com to make sure before you buy yours.
- Arrange your Email Forwarding
After buying and verifying your domain, the next step is to set up your email forwarding for your store. To do that, you should go to ‘Online Store’ > ‘Domains’ > ‘Manage Domains’ tab. There you can select the web domain you just bought and you will be redirected to a page that has the heading ‘Email Forwarding’. This page basically means that if your customer or supplier emails you at email@example.com, the email will be automatically forwarded to another email address (which you use regularly).
- Decide on a Theme for Your Shopify Store
It’s important that you choose a theme for your Shopify store. In case you didn’t know, Shopify has a collection of beautiful themes that are desktop and mobile compatible. All you need is to navigate from ‘Online Store’ to the ‘Themes’ tab and ‘Visit Theme Store’ after that.
Then, you will be relocated to Shopify’s theme store and be able to choose a theme for your online store. Note that all of the themes are great, but ensure that you choose one that is simple and visually pleasing. Once you choose it, just click on ‘Install Theme’ and then ‘Customize Theme’ to suit your niche and products.
- The Must-Have Pages for Drop shipping
You need to know that there are key pages you need for successful drop shipping and they include:
- About Us
- Product Page
- Contact Us
Add Your Products and Brand Collections
At this stage you can start adding your products and brand collections. To add your first product, you need to go to ‘Online Store’ and then navigate to the ‘Products’ tab. Once you are there, you need to click on the ‘Add Product’ button and add the details about your first product.
We advise that you organize your product based on Product Type, Vendor, Collections and Tags – and add a price (that can also be compared to your competitors’ prices with the handy Shopify feature located right next to setting your price). Immediately you add your first product, you can duplicate and edit instead of starting similar products from scratch. This can save you time and make product adding easier.
- Decide on Your Shopify Plan
Let’s assume your 14-day Shopify trial will be over in a few days once you start adding products and playing around with your store, the time will come to pick your Shopify plan and see how it goes. As an entrepreneur willing to achieve results, you have to get ready to get in the game and will be able to choose a Shopify plan that best works for your drop shipping website, the amount of products that you have and all the details that are there on Shopify’s page.
- Service process
Ideally, there is a 3-way supply chain when it comes to drop shipping. Even though this is a fancy term, a supply chain refers to all of the subjects in the drop shipping cycle. This includes:
This is the individual or business that creates the product and do not sell it directly to the public but sell in bulk to wholesalers and suppliers.
These are individuals or businesses that buy products in bulk from manufacturers, mark them up slightly and sell them to retailers like you for resale to the public. Working with wholesalers/suppliers is essential in drop shipping because they are able to ship the products and let you earn on the price difference.
These are individuals like you (assuming that you are interested in launching a drop shipping store) with websites and ones who basically sell the products they got from wholesalers.
Now that you know the supply chain of a Drop Shipping venture, it is time to start searching for the right suppliers. Here are very successful steps of getting and noting good suppliers…
- Contact The Manufacturer
We believe that the best way to negotiate a deal is without doubt to contact the manufacturer and make the most on the products you want to sell. If you know the products you are going to sell, you should call the manufacturer and ask for a list of the distributors, and then contact these distributors (wholesalers) to see if they dropship and inquire about setting up an account.
- Make use of Your Competition or Attend Trade Shows
If your are finding it hard to land a concrete reliable supplier, remember that you can always order from your competitors that you think are drop shipping. Or you can attend trade shows as a great way to connect with all the key manufacturers or wholesalers in a specific niche.
- Check out the directories
There are supplier directories you need to check out with thousands of products and a lot of suppliers selling them. Below are some of the most popular destinations:
- Leverage Google
If you decide to look for suppliers using Google, note that it will take a lot of time and expertise as wholesalers are terrible at marketing and promotion and usually not among the top search results for ‘wholesale suppliers for product X’. But you can try and find a nice wholesaler. It is important to use a lot of filters and never judge by the website.
Having a reliable supplier is the catalyst that will push your business to the top. You have to be weary of fraudsters who are just eager to dupe people of their hard earned money. Note that a good supplier must have the following attributes…
- A good supplier must have expert staff and industry focus
- Offers dedicated support
- Invest in technology
- Can take orders via email
- Centrally located
- Organized and efficient
16. Write a Marketing Plan Packed With ideas & Strategies
Staring and running a business is the beginning of a new adventure: you’re going to work on attracting visitors to your store so they can later become customers. This isn’t necessarily easy, but it’s worth doing, and it’s worth taking the time to do it right. Ways to market your drop shipping business may include….
SEO stands for “Search Engine Optimization” and is the process of getting traffic from a search engine like Google to your store. There are a lot of components to SEO, which includes:
- Define keywords you want to rank through keyword research.
- Optimization of your pages for your chosen keywords.
- Build backlinks to your store.
You need to understand that if your website is ranked higher on search engines, people will be more likely to click on it, and your website will receive traffic you didn’t have to pay for. SEO is like free advertising for your website, just by being in the right place at the right time. Note that these tasks aren’t necessarily easy to achieve, but they are not difficult either.
We believe that the easy part is actually conducting keyword research and optimizing your site’s pages, while the hard part is competing against other websites trying to rank for the same keywords when your website is new and has little built up authority. Have it in mind that Backlinks are very crucial because if they come from quality sources they can help you to build your website’s authority.
- Facebook Ads
Statistics has shown that Facebook is the largest social network in the world, with 1.71 billion monthly active users. That makes it a great place to advertise your company. Experts believe that what makes Facebook’s advertising system so different than the rest is that it works based on “contextual data,” not on “query-based data”.
“Query-based” advertising is when people type a search term (i.e. a query) into Google and are shown a relevant advertisement, followed by the search results. The largest and well known query-based advertising company is Google AdWords. The downside to Google AdWords is its high price point, which has risen in recent years.
“Contextual data” advertising simply means you can choose who you want your advertisements to target based on context. Facebook is one of the most popular contextual data advertising services because you can get very specific with your targets. The key to effective Facebook advertising is finding the right audience to target.
- Use relevant, persuasive and actionable text
- Use a relevant and striking image
- Use a clear Call to Action (CTA)
Content marketing is simply a strategic marketing approach focused on creating and distributing valuable, relevant, and consistent content to attract and retain a clearly-defined audience to drive profitable customer action. Note that content marketing strategically adds value to each step of a customer’s interaction with your brand which guides them through a sales funnel.
The very first step to making content marketing work for your store is to create a buyer’s journey, and buyer personas. Both will give you the structure you need to then develop the content.
17. Develop Iron-clad Competitive Strategies to Help You Win
Indeed business is like a game of chess and every move counts and to beat the competition you will need everyone’s collective effort. Promoting your business or winning competitors is not just a task for the marketing department or top management; it’s everyone’s responsibility. So as the leader of your business, it’s very important you enlist the support of the whole organization once you’ve agreed on the strategies to adopt in dealing with your competition.
- Excite your customers
- Offer something off the board
- Define your brand and make your site inspiring
- Choose a competitive advantage
18. Brainstorm Possible Ways to Retain Clients & Customers
We believe that the very best way to attract customers is by making use of the marketing techniques mentioned above: basically, a matter of conscious branding, meticulous communication, and deliberate Search Engine Optimization. Retaining customers involves a combination of honest descriptions, fair pricing, and open communication.
Any successful entrepreneur in this line of business is always vigilant not to run into instances of scams and fraud, so presenting yourself as an honest and fair seller can help set you apart among the competition. Other things to consider may include;
- Choose the right tools
- Make it simple
- Protect their ideas and interest
- Wow your customers
- Follow them up
- Provide some personalization
19. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
No doubt, the online shopping industry is a highly competitive one, and while running a web-based venture can be extremely profitable, it needs a lot of hard work and a helping hand to ensure profitability. Effective item descriptions and relentless marketing help make sure that buyers are attracted to your store while honest communication and quick shipping makes sure that they trust your services and return to your store.
- Choose a Name
You don’t have to overthink it, but don’t overlook it either. We suggest you choose the right name for your brand, a name that can help your customers identify you easily.
- Build a Tagline
Your tagline should summarize your business’ unique value proposition.
- Create a Logo
Your logo will be a visual or graphic representation of your brand and should be designed with care.
- Decide on Your Colour Pallet
Picking a colour pallet will help all aspects of your brand look consistent, including your website, products and product packaging. Note that the colours you choose will play into how your website feels to your customers.