Sooner or later anyone who’s thinking about launching a business faces an issue that causes severe headache – taxes! In this particular article, we are going to talk about value added tax (VAT).
What is VAT?
Value added tax, or VAT, is a type of tax that is levied on the value of goods or services added at each stage of production, distribution, or sale to the end customer (consumer). Also known as the goods and services tax in some countries, it’s a consumption tax that is paid by the final consumer who ‘consumes’ products and services, but in practice, VAT is paid at each stage of the supply chain.
Sounds too complicated? Let me explain it in simple terms.
How does VAT work?
Let’s imagine a supply chain that consists of three stages: a farmer who grows apples, a food-manufacturing plant that makes apple juice, and a retail store that sells the juice to end customers. Now let’s get to numbers.
For simplicity, let’s suppose the farmer only puts his own efforts into growing apples. He doesn’t buy anything from other businesses. In this case, he has no expenses and his added value equals the price at which he sells the apples to the plant. So, if he sells the apples for $100, the VAT is applied to this sum.
If the value added tax rate is 20%, the farmer will have to pay $20 to the government. But he doesn’t want to lose money and includes this sum into his final price which increases to $120.
The food-manufacturing plant buys the apples from the farmer and pays him $100 + $20 that goes to the government. The plant makes apple juice and wants to earn $200 as profit (added value). In this case, the plant will have to pay $40 as VAT.
But the plant has already paid $20 to the farmer, so it sells the juice for $360: the cost of apples ($100) + the farmer’s VAT ($20) + the profit ($200) + the plant’s VAT ($40). In this case, $40 goes to the government, while $20 goes to the plant as compensation for the farmer’s VAT.
Next, the retail store pays $360 for the juice and wants to make a profit of $400. But it has to pay $80 to the government as VAT and wants compensation for the plant’s VAT. So, it sells the juice to an end customer for a total of $840: the cost of juice ($300) + the plant’s VAT ($60) + the store’s profit ($400) + the store’s VAT ($80).
As for the end buyer, he or she pays $840 for all the juice bottles including $140 as VAT, but he or she cannot get this sum back.
So, as a result, the customer doesn’t pay the money to the government. Instead, the businesses in the chain do it. But the end consumer pays the tax to businesses so that they could hand the money to the government. The VAT that the customer must pay equals $140. It is the sum of the VAT the businesses have already paid to the government: $20 + $40 + $80 = $140.
But what about dropshipping? Do you have to pay value added tax? In most cases, you do.
When you purchase a product from a supplier, the price already contains VAT he/she pays to its government. So you don’t have to worry about it. But you must also collect VAT from your customers to compensate for your expenses and hand the tax to the government.
The AliDropship plugin lets you include taxes in the total price of your products. You can set the tax name and rate, apply it to the price alone or to the cost of shipping as well, and even bind the settings to countries, regions, or cities. Here you can learn more about tax settings in the AliDropship plugin.
Let’s take a look at tax systems in the most popular countries for dropshipping – the UK, the US, and the EU.
Disclaimer: The content of this article is provided for informational purposes only and should not be regarded as legal advice on any subject matter. We strongly recommend consulting a professional tax advisor before taking any action.
Value added tax in the United Kingdom
After the UK left the European Union, its tax regulations changed. Here’s what you need to know.
If you want to sell products in the UK from overseas, you have two options. You can either use an online marketplace or sell goods from your own website.
And since this is the case for dropshipping, you have to register your business for VAT in HMRC (Her Majesty’s Revenue and Customs). You can do it online or by post. After that, you’ll get a 9-digit VAT number.
If the cost of the consignment of goods doesn’t exceed £135, VAT is calculated based on the price at which you sell products to customers. If the cost exceeds £135, VAT is calculated at the point where the products cross the border.
The standard VAT rate in the UK equals 20%. But for some categories of goods, the government applies the reduced rate (5%). Some product categories are VAT-free. To see the full list of VAT rates in the UK, follow this link.
You can also read our article on dropshipping in the UK to learn about other taxes and customs regulations in the kingdom.
Sales tax in the United States
First of all, the government of the United States doesn’t collect value added tax. Instead, end customers pay sales tax.
It’s a consumption tax imposed on goods and services sold within a state’s jurisdiction. While VAT is collected at each stage of production, sales tax is collected only at the final stage (consumption). Still, from a retailer’s point of view, sales tax is basically the same as VAT.
The problem here is that the federal government doesn’t collect sales taxes. It is the responsibility of the states. As a result, sales tax rates are different in each state, and so are the rules (to some extent).
For example, California has the highest sales tax rate equaling 7.25%, while Delaware imposes no sales taxes at all. You can see all sales tax rates by state here.
Previously, a business didn’t have to pay sales taxes unless it ‘had a nexus’ in the given state. To have a nexus means to have a physical presence in a state: to own a brick-and-mortar store, a warehouse, etc. However, after the new Supreme Court ruling (South Dakota vs. Wayfair, Inc.), this requirement is no longer in force.
In simple terms, it means the following. Previously, if your business didn’t have a large enough presence in a given state and a customer from this state purchased something from you, you didn’t have to pay the sales tax. The same goes for businesses registered outside the US.
But now, according to the new ruling, it doesn’t matter whether you have or have not a nexus in a given state – you do have to pay the sales tax anyway.
Nevertheless, to collect sales taxes, your business must be large enough: to have annual sales not less than $100,000 or make not less than 200 separate transactions in a given state per year.
It means that if your dropshipping store receives less than 200 transactions from this particular state and makes not more than $100,000 from this particular state, you don’t have to pay the sales tax to the government of this state.
But if your business exceeds this limit, you will have to register your business with the given state’s tax authority. Unfortunately, each state has its own requirements, so it’s impossible to give a general recommendation here. Just visit the corresponding state’s website to learn the details.
Value added tax in the European Union
Goods imported into the EU countries with a value of up to €10-22 (depending on the country) are exempt from import VAT. But if their value exceeds this limit, import VAT must be charged.
If your business is located outside the EU, the responsibility to pay VAT lies on the importer of record. Usually, it is the end customer. The problem here is that the customer must pay the tax when he or she receives the parcel. It often becomes a very unpleasant surprise and can lead to more refunds.
To solve this issue, one can register for VAT in the country where the products cross the EU border. It’ll make you the importer of goods liable for collecting and paying VAT. In this case, the consumer will pay the full price (including import VAT) at the checkout. Or you could just warn customers that they will be charged with VAT.
But different EU countries have different VAT rates (from 17% to 21%), while some countries exclude mail orders from this exemption. What if you sell goods to an EU country different from your country of registration?
But it works only if the sales generated in the given import country do not exceed the threshold of this country. These thresholds vary from one EU country to another:
If you exceed the threshold, you will have to register for VAT in that country and charge its own VAT rate instead of domestic VAT. VAT rates differ depending on the country as well:
From July 1, 2021, these rules will change. EU and non-EU businesses importing goods with a value up to €150 will be able to join the Import One Stop Shop (IOSS) Scheme. It will let you declare and pay VAT in a single monthly VAT return.
You must collect the tax when accepting the payment for the goods (i.e. at the checkout). Then you pay it to the country where you registered your business for the Import IOSS.
Otherwise, the customs broker will collect VAT.
If the imported consignment of goods has a value exceeding the €150 threshold, import VAT is paid to the customs. It may also require a regular VAT registration in the country of importation.
The government will replace the old VAT thresholds with a new uniformed threshold. Small businesses registered in an EU country and selling less than €10,000 of goods to other EU countries, will be able to charge domestic VAT. Otherwise, they will charge the VAT rate of the country of import.
As you can see, the tax system of the EU is probably the most complicated because each country has its own rules and tax rates. So, consulting a tax advisor is a must here.
Every day we get hundreds of questions from absolutely different categories of people. Can you guess who the most common askers are? Happy new owners of dropshipping stores have more questions than anyone else! Often they ask questions related to dropshipping management operations.
It’s an absolutely normal situation if you don’t know how to run your brand new business. Don’t worry, you will learn it all in due time. And as for now, we’re always here to guide you.
1. What should I do day to day to manage my store?
It may sound obvious, but you need to actually run your dropshipping business every day if you want it to be successful.
It’s not enough to simply own a store without doing anything to it. Take a look at the success story of Alex – during the first month of his newly opened store operation, Alex did nothing to manage the operations. As you can guess, the results weren’t satisfying at all. Everything changed as soon as Alex started paying attention to the business, and now things are going more than well.
So, as an owner of a dropshipping business, you need to:
Manage orders and payments, inventory, and track delivery
Well, this is the essence of the dropshipping business model, right? You don’t have to think about warehouse management and shipping issues (and it saves you tons of money!), but still, there are certain dropshipping management operations in this field you should take care of.
You have nothing to worry about, though, if you have the AliDropship plugin already installed. In terms of business operations, it does the majority of necessary tasks, so the only thing you actually need to deal with is customer support.
Communicate with your customers via email and other means
Communication and interaction is probably the only thing that can’t be automated in this business field.
People value personal attitude, and it becomes exceptionally important when it comes to eCommerce.
Just think about it: someone decides to buy a product from you without seeing this item first; basically, this person trusts you with their money, and, to be honest, takes a risk.
Don’t leave them confused and uncertain! Help them, guide them through the store and the shopping process, encourage them to make a purchase, and thank them for their decision.
This is how you will turn their random purchase into a very personal and pleasant customer experience. This is how you will create additional value for your store, and this is how you will carefully build an audience of loyal and engaged customers.
Drive traffic to your online store
People can’t locate your store easily, you know.
The competition is astonishing, and the Internet is huge.
This is the challenge that can and must be taken. All you need to do is pay attention to your promotional efforts. If you don’t know where to begin, take a look at our Marketing Tips blog section.
Search and import new products for your store
The day to day operations of dropshippers always include frequent product researches.
It is important to do it regularly – this is how you will keep your existing customers enthusiastic about new offers they didn’t see before. Also, don’t forget about trends and fashion – technologies and interests change quickly, and it is vital to go with the flow. Nobody likes outdated and boring items!
Edit the content of your pages to make the store look neat and professional
Mostly, it refers to single product pages – when you import new products from AliExpress, the titles and descriptions you get are not perfect at all. This is why it is necessary to take some time and edit everything that doesn’t look good.
Also, don’t forget about search engine optimization – keep it in mind when you’re editing the pages’ content. You won’t see immediate results, but in the long run, these efforts will give your more benefits than you can imagine.
2. What are the costs of running and managing a dropshipping store?
Oh, no one can tell you how much dropshipping management operations will cost you.
Let’s think of all the possible costs you might have in this business:
Hosting payment – sorry, you just can’t go without it.
First orders payment – you need to order an item on AliExpress to get it delivered to your customer. So, at the beginning of your dropshipping journey you will spend your money first to get later paid by your customer.
Marketing activities – everything is up to you here. Maybe you will launch a full-scale campaign that will cost you hundreds of dollars, and maybe you will simply install some promotional plugin like Social Rabbit.
As you can see, it’s impossible to predict the amount of your expenses. No one defines it but you!
3. What should I do when I receive an order?
Step one: get excited.
Step two: go to the Orders section and click the “Place order automatically” button.
The AliDropship plugin will visit AliExpress and create an order for you automatically. It will select necessary product variations, add items to your shopping cart and fill in your customer’s shipping details on the checkout page. You will just need to click confirm button to complete a purchase.
Alternatively, you can place the order manually by clicking the “Place order manually” button.
Step three: celebrate!
4. Will the cost of an item on AliExpress be deducted from my PayPal account?
AliExpress doesn’t support PayPal as a payment method which is why you can’t use your PayPal account to pay for purchases on AliExpress.com.
In other words, the cost of an item won’t be deducted from your PayPal account. Instead, while placing an order on AliExpress, you can use one of the payment methods supported by the platform. The most commonly used ones are Visa and MasterCard credit cards, as well as Visa, Maestro, and American Express debit cards.
5. Does the plugin import the shipping costs or do I have to add shipping options to my products?
The AliDropship Plugin doesn’t import items’ shipping costs.
We highly recommend offering your customers a free shipping service by taking advantage of the free/low-cost shipping offered by many AliExpress sellers. However, the Plugin has a special section where you can enable or disable different shipping options.
You can add up to four different shipping options (including free shipping) to any or all products.
6. Are the customers able to create an account on my website?
Yes, your clients can get the option to create a personal account on your website.
This account gives your customers the opportunity to store their contact and shipping details, check the list of products they purchased, and track the status of any order.
7. Will the customer receive a tracking number? How can our customers track their orders?
The plugin will automatically collect this tracking data and add it to your order details.
Please note: you need to be logged in to your AliExpress account and your AliDropship orders section to activate this tracking auto-filling option.
8. How can I know if the package was delivered to the customer?
If there’s a tracking number available, you can easily track the package delivery.
With this tracking ID provided by the AliExpress supplier, you can check if the customer received an item.
9. My customer didn’t receive the order. What should I do?
First of all, stay calm and don’t panic.
Unfortunately, this happens. And it’s another part of your regular dropshipping management operations.
Maybe something went wrong within the postal service, or the customer provided a wrong address, or a seller is shady (did you choose the seller carefully?). You’ll figure it out later, but right now it’s not the first priority.
Whatever happened, it can all be fixed. Your behavior and personal attitude will help a lot to solve this issue.
We recommend talking to the seller first. Go on AliExpress, open the “My Orders” page, select the faulty order and write a private message to the seller. The seller should respond quickly and offer different solutions to fix it. The reputation of the sellers is rather exposed and they are willing to do anything to maintain their feedback rating.
So, if your customer is not satisfied with a product and asks you for a refund, you should dispute the purchase with the AliExpress seller.
If you are selling inexpensive products, your AliExpress suppliers usually refund you quickly and don’t ask you to return the items. They don’t want to waste their energy on managing disputes and receiving returns for relatively low-value items. You can read about it more in our interview with an actual AliExpress seller.
As a result, you can give a full or partial refund to your customer through PayPal without asking them to return the product. This is why we recommend that you don’t spend all your earned money at once – keep a small fund just to be safe.
If there are more questions related to dropshipping management operations we haven’t covered, feel free to leave them in the comments section below. We hope the answers will help you start a successful dropshipping business.
When you decide to start a business and build a completely new online store, your first priority is to pick a business niche for your venture. But how do you do it? And what if your initial choice turns out to be a mistake? Today we’re going to talk about how to find a niche or change it afterwards.
What is a niche?
A niche is a part of a broader market that businesses occupy. In simple terms, instead of offering all product or service types, a company focuses on a narrower range, thus specializing in a specific field, or a niche market.
And here’s a niche market definition: it’s a segment of a broader market that features unique demands and preferences that can be different from that of the broader market. Pet products, fitness equipment, toys – these are examples of product niches.
Businesses (especially small businesses) often focus on specific niches instead of trying to occupy larger markets. Narrow niches are more clear from different points of view. Business owners have a clearer idea of what kind of products customers need, better know how to target the audience or how to reach customers with content marketing, etc.
A specific niche is the key to success, and it usually has a number of advantages over general stores. However, it doesn’t mean that just any random niche will guarantee success. Entrepreneurs all over the globe come up with thousands of business ideas, but not all of them get worldwide attention. To find a good niche, one needs a proper market analysis, and a bit of luck won’t hurt either.
How to find a profitable business niche?
Here I’m going to talk about how to find your niche for a dropshipping business, but many of these tips will suit traditional ecommerce as well.
Use Google Trends
In ecommerce and digital marketing, any Internet user is a potential customer. Therefore, you can apply everything you know (or can learn) about internet users to your target audience. One of the easiest ways to pick your business niche is to check Google Trends to see what people search for in Google.
This tool won’t show you exactly how many queries people make, but it reflects how the relative number of queries changes over time. So, you can tell whether the interest is rising or falling.
Here, for example, you can see the results for the search term “camping” for the United States over a period of more than 15 years. We can conclude that the interest is stable (even has been rising a little bit) but seasonal.
Of course, one search term is not enough to define a profitable niche, but that’s a start.
Another way to find a business niche is to check other ecommerce stores and platforms (first of all Amazon). Your goal here is to find niche products that show high demand. To understand if a product belongs to a niche with high potential:
check the number of purchases on the platform;
look at the product’s score/rating;
read customer reviews.
If you’re going to launch a dropshipping store that sells goods from AliExpress, I also recommend checking the number of products within a potential niche. If there are many product types, the niche may be worth trying. But if not, you won’t be able to offer a large enough range of goods.
Also, make sure there are reliable suppliers with a high feedback score who’ve been on the platform for at least a couple of years.
If you want to dropship goods from AliExpress, make sure you build your website with the AliDropship plugin. This solution was designed specifically for dropshipping from AliExpress and has numerous add-ons that will make your online store even more profitable.
Use social media
Social media has long become advertising and retail platforms for both large and small businesses. It’s also another source of information for an entrepreneur looking for a business niche.
Facebook, Instagram, and Pinterest are probably the most important networks to check. On Facebook, you should look for social groups dedicated to certain interests. On Instagram and Pinterest, you’re looking for popular image categories and hashtags to understand what users are interested in.
How to evaluate a business niche?
These are the criteria that can indicate that a niche has potential:
The goods in the niche solve real problems
Usually, people don’t buy things they don’t need. However, a product that solves a real problem is a different story. If a niche offers many such goods, it definitely has potential.
The goods trigger an emotional response
Alternatively, a product may be useless but evoke strong emotions. Cute clothes and toys, hilarious coffee cups, beautiful jewelry – we buy such products not because we need them but because we like them!
It’s easy to identify your target audience
One of the benefits of building a niche store is that you don’t have to market your goods to everyone. Instead, you can focus on specific demographics. And if it’s easy to tell who your customers are, what they like, how to reach them, how much they’re used to spend, etc., it means you’ve found a good business niche.
You like this niche
Yes, you want to make money with your small business, but it doesn’t mean you should do something you hate. Besides, when you advertise and sell something you know really well, something you like, you can easily tell if a product is really useful or good and become a good adviser for your clients.
4 reasons to think about changing your business niche
Even after thorough research, you may find that things aren’t going smoothly and your business niche doesn’t bring as much profit as you expected. Sometimes entrepreneurs change the niche for other reasons.
In any case, you don’t always have to start over. There are ways to change your business niche even after you’ve launched an online store. But first, let’s find out when you really need to change it.
#1 Sales drop
If you start losing money, it’s an obvious sign that something’s wrong. However, one must be careful here because sales drop can be the result of different factors. The problem may lie in other fields such as promotion mistakes, wrong marketing strategy or seasonal demand fluctuations. That’s why if your sales drop, you’d better not jump to conclusions.
#2 Same efforts bring worse results
If what used to work a year ago is now working poorer, it clearly indicates that the market has changed. To keep doing the same thing and expect different results is madness. Nevertheless, many companies hold on to the methods that became traditional. ‘We always did it like this, and we’ll keep doing it like this!’
That’ll lead you to nowhere.
#3 You see opportunities
If you see something with a potential for growth, which you didn’t see when you started the business, it could be your chance for improvement. However, before doing something, conduct a proper analysis to make sure it wasn’t your imagination.
#4 You don’t feel satisfied
Also, don’t ignore your personal feelings. In online business like dropshipping, a lot depends on passion. If you don’t feel inspired anymore, maybe it’s time to make changes?
Again, it doesn’t necessarily mean you definitely need to change your niche. Maybe, you’re just tired and need a vacation. Or you’re going through a hard period of your life. But giving it a thought won’t hurt.
How to make adjustments to your business niche
Generally speaking, changing the niche is not a good idea because everything in your dropshipping store should correspond to it. The store’s name and design are defined by what kind of products you sell. However, there are more or less harmless ways to change a niche.
When a business focuses on a niche, promoting it becomes relatively easy. But at the same time, you miss other opportunities.
One of our stores used to sell paintings. It’s not like people didn’t buy stuff like this, but after the initial success, the growth stopped. The team tried different things, but nothing helped.
Then a manager noticed that a few customers asked about other art objects such as statues and decorative dishware. These categories were never presented in the store, but the team thought – if some customers expected to find something like this here, why not offer it?
During the next few weeks, the team created a number of additional categories, found and imported new products. Some of them didn’t sell well, but statues were a success.
Now the shop sells paintings and statues, and we want to try yet another category.
As you can see, we didn’t actually change the niche by switching to something else. Instead, we broadened it by including other closely related categories of products.
The opposite way to improve your dropshipping business is to narrow the niche. You do it for the same reason as to why you avoid general stores in the first place, but this time you go even further.
Another shop we own used to sell cute clothing. We had various models with lovely and funny prints, but the managers noticed some models sold well while others were never in demand.
After a thorough analysis, the team found out that people actively buy clothing with owls. Therefore, we decided to start adding even more stuff with owl prints. This way, our potential customers got more choice of what they really wanted, which resulted in sales rise.
Thus, the store became more focused on ‘owl clothes’ rather than ‘cute clothes’ in general.
3. Getting beyond your niche
A business niche is defined by people, and it’s not strict. What seems like a clear category of products can be easily expanded if you look at it from a different perspective. In other words, in certain situations, you might want to expand beyond the original niche and combine it with a related niche.
One of our stores was originally devoted to anime merchandise such as clothing, accessories, figurines and other stuff for fans. But to reach a greater audience and increase sales, the team decided to add Harajuku fashion clothing.
Of course, these two niches are related, but they’re not the same. Still, those who were interested in anime and Japanese culture in general gladly accepted the new products.
4. Pricing, delivery, etc.
Sometimes, it’s not the products you want to change, but another important aspect of your business. Prices are a good example.
The original idea for one of our shops was to offer low-cost items. But eventually, the managers decided to cut all the prices to only $5. As a result, we had to remove all products that were more expensive and add new goods to replace them.
The niche didn’t really change as the theme was still the same, but we had to focus on a limited range of products for a slightly different audience.
The same can happen if you decide to switch to the subscription business model, for example.
5. Complete rebranding
In a desperate situation when nothing works, you may want to completely change your store’s specialization.
Obviously, such a radical solution is a huge risk, and it’s not always possible. The store’s brand and domain name is the biggest problem as they usually reflect its content. So, if you suddenly change the niche, the name may look really weird. But if the name is vague enough, it may work.
There’s a store in our collection that used to sell accessories of all kinds including those designed for fans of popular movies and video games. Geek accessories, so to speak.
Promoting the shop was really hard, but the geek things sold really well. After a while, the team decided to completely rebrand it and start selling only geek stuff. Fortunately, the name wasn’t a problem and the decision proved right in the long term.
While finding a profitable business niche is very important, one should also take into account their own passion and interests. Our experience shows that starting a dropshipping store is much easier when you do something you sincerely enjoy.
People all over the world are increasingly wondering how to get started with dropshipping. So, today, we are sharing the step-by-step dropshipping success story of our own team. Here is the real-life experience that helps us create the best solutions for dropshipping store owners!
The AliDropship team has a huge experience in dropshipping business. We are creating and promoting lots of our own successful dropshipping stores that are available for purchase as Established businesses and Premium stores. Our team has done a lot of work and has gained solid practical knowledge over years, and it’s time to share our experience with a wide audience! We want you to use our practical tips and recommendations on how to dropship as we are sure it will help you create a profitable dropshipping store.
We started the dropshipping business in 2015. As of today, we have 50+ stores. At the end of February 2021, our monthly revenue was $900,000. Here you will find the 30 steps we took to achieve this impressive result in dropshipping.
How to get started with dropshipping business: Our experience
Ecommerce field is thriving. The growth of social media, mobile shopping, digital payments, artificial intelligence, big data, and personalized experiences are changing this business.
In particular, the dropshipping business grows really fast globally. It has huge potential because it is easy to start and run. People with any education and skills can do it. This is why we decided to give it a try and see what we can achieve.
Step 1. Dropshipping business research
How to start dropshipping? We started our journey with an analysis.
Can we run a dropshipping business?
Who will be our suppliers?
Will we find customers?
What do we need to launch this online business?
What technologies do we need to learn?
These questions are crucial. Without answering them, it is impossible to understand where to go next. You will need to do detailed research. As a result, you should get a clear view of your goals, opportunities, and challenges.
Step 2. Learning from competitors
This is tricky because not all ecommerce store owners openly say they are dropshippers. Still, any online store is a source of knowledge and can help you learn dropshipping tricks and strategies. Understanding how the store is designed and advertised can help beginners a lot.
We were inspired by the experience of Zappos. This is the biggest shoe and clothing webstore on the globe with great profit margins. It was an ordinary dropshipping store at first, but in 10 years Amazon bought Zappos for $1.2 billion.
This type of information helped us a lot. It is important to rely on it when you have no experience yourself.
Step 3. Understanding the legal part of dropshipping: registering a company
Most businesses should be registered. For dropshipping business, this is not always necessary. It all depends on the country where you run this business, although technically it doesn’t really matter where to start dropshipping. As a beginner, you can start a business with no registration.
We learned it when we talked to AliExpress sellers. We wanted them to be our dropshipping suppliers. They don’t mind if you are a private individual and not a business.
As a rule, buyers also don’t ask about it. But it is important that you provide them with money back guarantee and free shipping worldwide. These options should be offered by your suppliers, so check if they can do it.
Step 4. Understanding the legal part: dropshipping taxes
Taxes are a vital part of every business. Dropshipping taxes exist in the form of customs fees. Customs fees are added to the cost of the item, and it is a buyer’s responsibility to pay them.
Customs fees are different in every country across the globe. This is why you need to notify your buyers about it. Ask them to check what the customs fees in their own country are. Your potential customers must be aware of the local laws and regulations, and they must pay customs fees if necessary.
Step 5. Choosing dropshipping suppliers
To create a dropshipping store, you need to find products to sell and their descriptions somewhere. But these products and their sellers should be really special. It is important that they meet some criteria.
The sellers, for example, should be ready and glad to work with you. They should deliver items to any place in the world. Also, they should agree to deliver orders without putting their own promotional materials in the packages.
In addition, it is really important to choose the right niche. It means a lot to the success of your dropshipping store.
We have a lot of webstores, and all of them sell different products. Every niche for these stores was chosen with the same algorithm. It is a special mechanism we have developed ourselves when we started selling online.
Step 6. Understanding own interests
It is much easier to run a dropshipping store if you are deeply interested in it. So, we recommend that you think about your passions first.
When you have deep knowledge of your niche, you provide better customer service. Besides, if you like and understand your niche, you can pick the best items for your store. You can provide these products with top quality descriptions.
Your clients feel that you are passionate about your ecommerce business, so they trust you. Also, they know that they can get professional and detailed consultations.
Step 7. Defining the target audience
Who are your potential customers?
It is important to know your target audience. This is how you will promote and advertise your store more effectively.
It doesn’t matter what countries they are from. Dropshipping has a global reach, so you are not limited by a region. Instead, you need to know what they are interested in, and how you can attract them to your store.
When we choose a niche, we always go on AliExpress to check its potential. It means that we look at the number of products offered on the platform, the reputation of suppliers, and buyers’ feedback.
It is necessary to understand if we can find enough offers from this niche. These offers should meet some criteria (a big number of orders, positive feedback on the quality, good reviews about the seller, etc.). After all, we need to fill a store with lots of items, and we need to update our product range from time to time because it keeps our target audience interested.
Step 10. Checking the marketing potential
Can we promote this niche on social networks? Can we do something for its search engine optimization? Is the niche good for paid ads?
It is necessary to answer these questions when you choose a niche. If it has good potential for promotion, you will be able to attract more customers and earn more.
When you create a store, it is important to make it convenient for your customers. We did our research and understood we can make something great.
This is how we developed the AliDropship plugin. It can help you create and run a fully functioning and professionally looking webstore.
Step 11. Buying a domain name
We use the GoDaddy service to buy a domain name. Choosing the name, we prefer something short and easy to remember. Besides, ideally, domain names should be identical to company names. Alternatively, you can include the most important keyword in the domain name. It will make it much easier for you to promote the store.
Step 12. Choosing a content management system (CMS)
There exist numerous content management systems. Simply speaking, a CMS is a solution that helps you create and manage content online.
When you develop a dropshipping store, it is really important to choose the right CMS (ecommerce platform). It should be functional, easy to understand, and easy to manage.
That’s why we prefer to work with WordPress. It is perfect for dropshipping stores because it is easy to run. Also, it is really functional and convenient for business.
You can also make it even more functional if you install plugins with additional features. The AliDropship plugin is a good example of such a tool. It was created by dropshippers and for dropshippers, so it has all the features you need to get started with dropshipping.
Step 13. Choosing a hosting solution
This is the necessary part of creating your dropshipping business. Web hosting is the service that you use to publish your webstores online and make it visible for Internet users. If you don’t want to do it all yourself, you can ask for professional help with hosting.
Step 14. Creating the store design
When the website itself is ready, you don’t have to do much with it. As soon as you install the AliDropship plugin, all the main things will be done automatically.
It is especially important for design. A webstore design means a lot for business success, but it can be tricky. People who have no experience in developing sites often have a lot of questions about making a good store design.
With the plugin, you can choose one of several themes available, and use it for your dropshipping store. All of them look nice and professional. Therefore, you can be sure that your store visitors will enjoy being on your site.
Step 15. Importing products
Later in this article, you will learn how to check product ideas and choose the right products.
The plugin allows you to import items from AliExpress automatically. You need to set the search parameters, and the plugin will do all the rest. So, you don’t need to spend hours on AliExpress to choose and import items to your store. You only need to spend several minutes and do a few clicks.
Step 16. Integrating multiple payment options
Your goal is to sell something to your store visitors. It should be convenient for them to make a payment. Remember that you sell your products to people all over the world!
That’s why you need to include several payment options. For example, our plugin accepts payments made through PayPal and major credit card processors.
How we do dropshipping
How does dropshipping work?
The most common questions we get are related to management and organizational issues. They may seem challenging for beginners. This is why it is so important to cover them.
Generally, you need to check if you like the product description, its photos, and reviews from previous buyers. Also, it might be useful to order a couple of items for yourself. This is how you can check if you want to add them to your store.
Step 18. Choosing suppliers
Suppliers mean so much for the success of your store! AliExpress is different from major dropshipping platforms. The latter typically ask you to pay a fee to view suppliers’ contacts and their offers. However, on AliExpress, you can access all the necessary data for free.
So, AliExpress is a great place to search for dropshipping suppliers because you can see detailed statistics on every seller. This is really useful because you can check the feedback and performance of any seller you like. Also, it is really easy to contact sellers. When you communicate with them, you can understand if they will be good partners for you.
Step 19. Placing orders
When somebody buys something from your store, you need to give all the information to your supplier. The AliDropship plugin does it automatically.
It notifies the seller about the ordered product, its quantity, and the buyer’s address. It is all done by the plugin, so you won’t mix up anything. Besides, it is really useful when you have a lot of orders.
Step 20. Working with troubled orders
Sometimes it happens that our customers are mistaken. They provide incorrect names, surnames, and even postal addresses.
Sometimes they change their mind.
Some of them may ask for returns and refunds.
Sometimes they can’t track the package and say it is lost.
This is our job to be really polite and patient. We are all humans, and anything can happen.
That’s why we do our best to negotiate and offer several possible solutions. And of course, we have to contact the sellers and note them about the problems we have. It is necessary to provide top-level customer support if you want your business to grow and thrive.
Step 21. Preventing fraud
Internet fraud gets more and more widespread. We are always polite to our customers, but we are really attentive to their behavior.
If a customer tries to pay from several different credit cards, it is suspicious.
If all these attempts fail, it is suspicious.
When a customer uses a credit card that is different from his own name and country, it is suspicious.
If we have any doubts, we typically ask the buyer to send us an ID form. Also, we wait a couple of days before processing the order. If it is a fraud, the payment system will recognize it, and the order will be canceled.
In general, we recommend that you follow the instructions of your payment system provider. They have their own sets of rules for such cases, so learn them and stay safe.
How we promote dropshipping stores
Step 22. Working with SEO
Search engine optimization is really important in the dropshipping business. If you do it right, you can achieve great long-term results.
You need to think about SEO when you choose a dropshipping niche. You should also consider it when you choose the domain name, and when you write texts for the store. The more you work on it, the more visitors will find your store in Google search results.
This process takes a lot of time and effort, of course. But you can make it automated if you like. To do that, read our research and review of the Social Rabbit plugin that automatically makes promotional posts for your webstore in any social networks you choose.
Step 24. Learning about paid ads
To promote your store the fastest way, you can also use paid advertising like Google Ads and Facebook ads. If you use your money wisely, even more Internet users will learn about your store. We used paid ads to promote dropshipping stores, and the results are really impressive.
Step 25. Dealing with clients
We have already mentioned we try to stay patient and tolerant in every situation. But apart from that, we also do a lot to enhance our clients’ experience.
When we analyze what our customers like and want, we can use the knowledge wisely. We can add new products from time to time to keep the buyers satisfied. Also, we monitor the market trends. This is how we learn that some new products appeared on the market.
Remember that it is necessary to advertise these products. If you add something new, make sure your store visitors and social media subscribers learn about it.
How we expand our dropshipping business
The business should grow. If you stop working on your store, it will gradually wither. This is why our work never stops.
Step 27. Improving customer experience
You can do a lot to increase your customers’ engagement and motivate them to return to your store.
Make sure it is easy for them to navigate your store. Check if it is easy to make a payment. Don’t forget to include all the information on shipping costs and other delivery terms and conditions.
Also, always be honest about the delivery time. Remember that you need to notify every new client about it. People don’t mind waiting for their order, but they need to know the correct information.
Step 28. Adding new products
We already mentioned that it is really important to keep your store offer up-to-date. If you add new items regularly, your clients are interested in visiting your store again and again.
The bigger your product range, the bigger the average check. It means you can also add the products that are related to your niche, and your customers will also be interested in buying not just one but several products at once.
But we recommend following a specific concept when choosing new products. Always remember what the general idea of your store is, and don’t get distracted. It is especially important if you promote your site as a niche store.
Step 29. Creating new stores
When you launch your first dropshipping store, you don’t know much about management and promotion. But as soon as you get enough experience, you understand it is not really difficult to run such a store. It means you can use your knowledge to create more and more stores in other niches.
Remember that your ecommerce store is an asset. If you run it wisely, you can sell it for a good profit. We learned it from the experience of our client Alex who manages several dropshipping stores at once and sells some of them from time to time.
Step 30. Exploring
There is so much to learn! New business ideas, new niches, new traffic sources, new promotional methods, and many more.
Business and technology evolve every day, so you have a whole world to explore. Always look for something new, and don’t be afraid to try and test different things. This is the engine that drives you and your successful business.
These are the 30 steps that we took to get our impressive business results. We started from zero, and less than in 2 years we achieved the average monthly profit of $97,000. By 2021, the revenue of our dropshipping stores got to $900,000.
How to get started dropshipping using our experience?
We are excited to offer you 4 ways of becoming a dropshipping business owner!
Create a dropshipping store by yourself
Thanks to the AliDropship plugin we created as practicing dropshippers for our fellow entrepreneurs, you can launch a dropshipping store yourself even if you don’t have a technical background or any experience in website development. Installing the plugin even on the simplest WordPress site, you’ll get a fully functional dropshipping store that can accept incoming orders, transmit them to your AliExpress suppliers, and process your buyers’ payments! To see how you can launch your dropshipping business this way, simply read this article.
Order a custom store from our skilled team
If you want, you can safely delegate us all the technical tasks associated with a dropshipping store creation. Upon your request, we’ll make a unique custom dropshipping store and consider your individual preferences of its design, name, niche, product range, etc. As a result, as soon as we complete the development part, you’ll get a perfectly optimized dropshipping store ready to be put into operation immediately. Kindly read more about this offer here!
Get an exact copy of a store with a proven potential
If you don’t want to create a dropshipping store by your own effort, and don’t want to wait until we develop an individual custom version for you, there’s a simple and elegant solution!
Check out these Premium dropshipping stores: you can buy an exact copy of any one of them, and put this copied website into operation immediately, without waiting and wasting your time. Plus, with these stores, you won’t even be wondering whether your business will be successful: as you get a full replica of a well-performing store, you can be sure of its money-making potential. What’s more, you can even get the same marketing materials we used ourselves to promote these stores: check out the details here!
Buy an established business with a proven track record
If you like the idea of buying a ready business, but want it to be unique rather than copied one, check out the Established stores! They are also created, managed, and promoted by our skilled team, and they are only put on sale after they truly prove to be generating healthy profits.
Every store goes with detailed performance data, so you can view the stats and make a well-informed decision before purchasing an established store. In fact, by doing this, you’re safely investing in a highly profitable business that is ready to drive sales from day one. Just take a look at the details if you’d love to become an owner!
We hope our experience will motivate and inspire you to start your own dropshipping business in any way that is more convenient to you. If you have any questions, feel free to leave them in the comments section below. We wish you the best of luck on this road to success!
Are you looking for ways to get a quick sales surge for your online store? Have you ever heard about an impulse purchase? Well, today we are going to tell you how to make the most of your ecommerce business using knowledge of customer psychology only.
What’s the main aspect of any ecommerce business? Right, it’s your profit! Otherwise why have you started it?
So, are you satisfied with your online store revenues? Or do you have a good income, but you want more to make a fortune with your business? If so, there is a perfect solution for you – try to trigger impulse purchases!
What is an impulse purchase?
First of all, in order to discuss the benefits of impulse purchases, let’s take a look at the impulse buying definition.
An impulse purchase is a customers’ trend to buy something without prior planning.
So have you ever decided to purchase a tiny thing when just surfing an online store, even if you were not going to do this? This is, actually, the way an impulse purchase works.
In fact, impulse buying is the main engine of sales if speaking about online stores. But how much can you gain from impulse shopping if running an ecommerce business? Let’s figure it out!
How can impulse purchases influence your business performance?
We have found out what an impulse purchase is. So now you understand that you are able to get extra sales in your online stores if you follow this approach. But, indeed, can you earn a lot using this trick?
In fact, if you focus on impulse purchase generation when considering the product range for your online store, you’re highly likely to get a lot higher income than usual. According to a recent survey of 2,000 respondents, Americans spend $182.98 monthly on impulse buys. And that’s 18% more than what they spent before the pandemic!
Sounds impressive, doesn’t it?
Based on the above-mentioned facts, we can say for sure that impulsive shopping is a blessing to you and your ecommerce business!
However, in order to make the most of impulse buying, you need to know what impulse products are, how to organize your category pages in the right way to make your online store visitors add as many impulse products to their shopping list as possible, etc.
So, here’s our action list for how to trigger impulse sales online!
How to generate an impulse purchase in your online store: product choice
First, you should understand what kinds of products suit impulse purchases more.
However, there is no easy answer to this question because buying behaviors can differ very much. Impulse buyers tend to choose various impulse products. Seriously, people from different parts of the world have various interests, life concepts, needs, and what’s most important – different levels of income.
For example, if we are speaking about a young shopper with an average income, pretty socks are going to be a promising impulse product.
Well, $1.34 is not such a large sum for a person with median earnings to think a lot about, right? The most important thing is that a product looks very pretty, and that’s why it goes straight to the shopping cart even though it’s not essential.
If we are talking about a population group with high income, then the impulse products will be absolutely different. For example, with the rise of robot vacuum cleaners’ popularity, you can offer such a vacuum cleaner at a relatively low price. And this is going to be a great solution to encourage impulse purchasing when you deal with this audience segment.
So what does this mean? In fact, if you want to succeed in your business, you have to define your target audience carefully. Well, get a profile on your potential customer. After that, you will be able to bet on some impulse products.
However, we suppose you didn’t open this article to read typical advice on running an ecommerce business, right? That’s why we have examined the theory of impulse purchases and now we are ready to provide you with a set of recommendations on how to generate impulse sales.
Tips on increasing your online store revenues through stimulating impulse purchases
Make sure your online store makes spontaneous purchases possible
First of all, you need to create an environment that is going to encourage your customers to make an impulse purchase in your online store. It’s all about a theme for your store.
Meanwhile, if you buy a theme from AliDropship, you get free customer support, free updates, and a wide range of customization options. What’s more, pay attention that all the AliDropship themes were designed to comply with your dropshipping business.
Beyond this, when focusing on impulse purchases, it’s AliDropship Plugin that can help you much. With this dropshipping tool, you’re able to create perfect product pages that will serve as one more way to encourage your website visitors to purchase from you.
Try to focus on products with a low initial price
We have already pointed out that it’s essential for your business to define your target audience. Definitely, if your potential customers have higher income, you can use impulse products that are a bit more expensive. But still, it’s a lot easier for your business to make a fortune on low-cost impulse products!
By the way, if you think that it’s difficult to make lots of money on inexpensive items, you’re totally wrong. As a rule, different tiny things have incredibly low initial prices.
However, when you add this kind of products to your online store, in most cases you’re able to get a double or triple margin price. Some products can let you get even a 1000% margin. Great profit, isn’t it?
Consider where to place impulse products
You should understand that it’s crucial to put impulse products at the right places on your website. If you don’t pay enough attention to this, your website visitors are highly likely to miss these products.
However, if they are in sight, and the offer is quite tempting, you will have all chances to sell a huge number of these items.
Where to place impulse products in an online store?
Near the most popular and desired items
On single product pages of related products
Closer to shopping cart and checkout
Remember that impulse products have to be eye-catching on your website!
Give discounts and start promo campaigns
We recommend that you try to provide your potential customers with discounts on impulse products. As a rule, discounts are good enough at encouraging customers to purchase even expensive goods from your online store.
But in fact, this approach can help you when selling impulse products as well.
Moreover, try to make additional proposals: are you eager to buy a T-shirt? Get a discount on shorts as well!
It’s also a good idea to use FOMO (fear of missing out) to lure impulse shoppers to buy something from you. FOMO is able to tell your potential customers that the product is extremely popular among your purchasers, but the number of items is limited.
In sum, FOMO is one of the perfect tools for convincing your website visitors to make unplanned purchases from your website.
Moreover, AliDropship is glad to present to you the Urgency add-on. It includes a set of features (social proof icons, trust badges at checkout). Primarily, it aims at making your potential customers think that the products in your store are flying off the shelves.
Don’t forget to use additional dropshipping tools that are essential for increasing your customers’ engagement. For example, feel free to use the Countdown Timer Plugin. It’s going to inform your potential customers that the offer is limited in time.
As you can see, this is not challenging to start making money on impulsive buying right now. So if you follow, at least, some of these recommendations, you are extremely likely to boost your online store revenues substantially.
Enjoying the benefits of impulse purchases: final thoughts
There is no doubt that lots and lots of people make impulse purchases every day. The statistics tell us that impulse spending constitutes a significant part of all money spent on ecommerce.
So if you’re an online store owner, no matter if you use the dropshipping business model or not, pay attention to impulse purchases. This is really a must-have for you since it’s a chance for you to make a fortune on them.
However, if you want to succeed with impulse purchases in your online store, you should know how to use them in the right way. So, follow the tips from AliDropship and greatly increase your chances of success!
As you can see, providing opportunities and stimuli to make an impulse purchase is very important for ecommerce businesses. Haven’t you started your business yet? Then, today AliDropship is glad to offer you 3 newcomer-friendly OPTIONS to start your dropshipping business ASAP: Custom stores and Premium dropshipping stores! Don’t lose an opportunity to get a money-making venture right now!
The AliDropship plugin is undoubtedly one of the best ecommerce tools for dropshipping. But after launching a business, one may need a number of additional solutions. Presenting AliDropship’s secret bundles that combine our services, add-ons, and products.
With AliDropship’s solutions, one can create a semi-automated dropshipping business and profit from the booming industry. Moreover, if you order a Custom Store, you will get a professionally made website according to your own vision.
You can also choose from a variety of add-ons and services to offer your customers a better shopping experience, make your work easier, and ultimately increase your profit. However, it may be difficult to tell which of them will suit your particular business.
That’s why our team has gathered some of the add-ons and services into bundles. In this article, I’m going to tell you about these bundles and who can benefit from purchasing them.
This bundle will suit those who have purchased a Basic or Advanced Custom Store. It’ll also suit those who want to adjust their online business to getting passive income.
The bundle contains simple ecommerce tools for dropshipping that don’t require deep knowledge. At the same time, they’re designed to automate some of your work and increase your store’s revenue.
The Social Rabbit plugin will help you with social media promotion. The Product Bundle and Upsell add-ons will raise the average order value of your store, while Urgency and Reviews Page will increase the site’s conversion rate.
The New Store Bundle is a perfect solution for getting started without getting too much into advanced marketing techniques.
This bundle will suit those who decided to purchase one of AliDropship’s Premium Stores. These ready-made stores are copies of our own dropshipping websites. When you buy a Premium Store, you get a full copy of its design, site structure, and product inventory.
The benefit here is that all these elements were tested by our team. But it’s not just the site and product selection that made these stores successful.
By purchasing the Start-And-Sell Pack, you get the same ecommerce tools for dropshipping that our team uses.
The Social Rabbit plugin will provide seamless social media promotion. You will need SEO Image Optimizer for improving the site’s loading speed when you decide to enrich your initial offer with new goods. Gift Box, Bulk Discounts, and Purchase Upsell will help you get more sales from each customer. And the My Suppliers add-on will help you keep track of all your suppliers, which is very important when you buy a copy of an already functioning ecommerce store.
I also recommend buying our Add-on Installation service if you don’t want to set up these tools on your own. Besides, if you pick one of these secret bundles, you’ll get a 30% discount!
What you get: 3 page likes ads + 10 engaging posts + detailed guide
Most dropshippers drive traffic to their sites from social media and particularly from Facebook. After all, it’s the most popular social network in the world. But advertising your brand is difficult without a large number of followers.
People decide whether they can trust small businesses based on how many followers they have on social media. Besides, you can convert many followers into buyers. So, attracting followers is an important task for a dropshipping business.
Facebook Followers Booster is a service that lets you create Facebook campaigns aimed at generating likes and attracting followers. By purchasing this service, you get 3 followers generating ads, 10 engagement posts, and a step-by-step guide on how to launch such campaigns.
The service will suit any type of dropshipping store that relies on social media advertising. We provide the materials in four languages: English, French, German, and Spanish.
What you get: Mailchimp integration and pop-up setup + pop-up designs + sales-provoking coupons + attractive emails + sign-up form setup + step-by-step guide
Price: $149 / $189 / $249 (You save 15%)
This service combo will suit those who want to use lead generation in their marketing strategies. While standard ads end with a purchase, lead generation lets you collect customers’ contact information even if they didn’t buy anything. So, later you can reach them with email marketing and offer new products or new discounts.
By combining standard advertising with email marketing, one can substantially raise their revenue.
After you order the Email Marketing & Pop-Up Combo, our team will integrate your Mailchimp account with your dropshipping store as well as install a lead generation pop-up and a sign-up form on your site. You will also get a pack of pop-up designs, a coupon design, a number of promo emails to start advertising, and a number of reusable email templates.
The combo comes in three packages – Standard, Extended, and Premium.
This set of ecommerce tools for dropshipping will suit business owners who want to automate their marketing campaigns as much as possible. If you own a Basic or Advanced Custom Store or have built your own website with the AliDropship plugin, this bundle is for you.
The Google Merchant and Facebook Business add-on will make advertising on these platforms smooth and hassle-free. With the Social Rabbit plugin, you will be able to manage your social media marketing on Facebook, Instagram, Twitter, and Pinterest. The Split Test add-on will let you test products, product pages, and ads. You will also get Gift Box as a bonus.
But keep in mind that this set of ecommerce tools for dropshipping is designed for advanced users who know how to set up advertising campaigns.
Clients who purchase only the AliDropship plugin often want to make their sites prettier or improve their functionality. However, using third-party solutions can break your site. That’s why our team made this bundle!
The set contains tools that will advance your initial dropshipping store to a higher level. With the Product Bundle, Urgency, and Purchase Upsell add-ons, you will be able to sell more goods to each customer. AliShipping will let you import all shipping options available for this particular product from AliExpress. Recent Sales Pop-Up and SEO Image Optimizer will improve your site’s trustworthiness and performance.
So, if you feel like adding more functional elements to your site, this set is just what you need!
What you get: An advertising campaign aimed at your previous site visitors.
If you own a dropshipping business and have been driving traffic to your site for at least a month, it’s time to start a retargeting campaign. Although most site visitors never purchase anything, one can bring them back and turn them into buyers with retargeting. And that’s what you get by purchasing this service.
Our team will pick 10 of your best-selling products, create 10 image ads and a promo coupon, and design a retargeting campaign. After that, we will provide you with a step-by-step guide on how to launch and run this campaign on Facebook and Instagram.
As a result, your business will get profit from the warm audience who have visited your site before.
By now, you have probably noticed that some of the bundles offered above won’t suit those who have purchased an Ultimate Custom Store. Those sets contain the Social Rabbit plugin while the Ultimate package already includes this plugin. But why should you pay twice for the same product?
That’s why the team made this 7 in 1 set. If you own an Ultimate Custom Store but require more ecommerce tools, this bundle is for you. You get a number of add-ons designed for raising your business’ conversion rate and 2 tools for advertising.
If standard Custom Store packages are not enough for you, the Supreme Package is just what you need. You will get more pre-edited products, more social media accounts, advanced site optimization, a number of pre-installed add-ons, and even marketing materials.
The Supreme Package will suit entrepreneurs who want to operate in niches that feature a wide range of products. For example, customers won’t trust a fashion store unless it has hundreds of clothes. The Supreme Package was designed for niches like this: fashion, sports, fishing, toys, etc.
Your store will be better optimized to cope with a large product range. Besides, it comes with cool marketing tools which will automate 90% of your work. That’s why it is ideal for beginners: you will need to put little marketing effort to promote your business.
Whether you have only the AliDropship plugin, or own a Custom Store, or have purchased one of our Premium Stores, these ecommerce tools for dropshipping will enhance your business capabilities and offer your customers a better shopping experience.
Well, the words are not enough to describe all the benefits of dropshipping, but we can name and explain at least 10 of them. Here you are!
1. You take almost no risk
Fear is the reason why many people avoid starting their own business.
Of course, everybody understands the benefits of being self-employed and independent. Still, it is not easy for all of us to jump at the opportunity when it arises. Launching a business often costs a lot of money. And even if you have the money, there’s no guarantee your enterprise will pay off.
But dropshipping is different. It requires much less investment to start, and this is one of the most important benefits of dropshipping.
First, you don’t need thousands of dollars to create and launch a dropshipping website. Second, there’s no need to manufacture goods you are going to sell. As a dropshipper, you are going to resell products made and distributed by other companies. And finally, you won’t need to buy products in large quantities and rent a warehouse to stock them, so you will face no inventory issues.
In dropshipping, you buy a particular item only after you get customer orders. After that, your suppliers ship the products directly to the customers. Therefore, you spend money on goods and shipping only after you get paid.
This is why dropshipping gets so popular. Nowadays, it is basically the only type of ecommerce business that can bring you solid profits even if you had really low upfront expenses. Plus, you can safely enjoy this business model and have no fear of any risk factors.
Certainly, you do need a certain budget to start a dropshipping business. But it’s nothing compared to what you need to launch a traditional online store. If you fail, you won’t lose a fortune. And if you succeed, you can make thousands of dollars or resell your store eventually.
2. You don’t have to turn it into a full-time job
Time and energy are additional factors that typically hold people back.
Dropshipping, in turn, doesn’t require that you invest all your time and efforts in store management. You won’t have to quit your job or dedicate all your free time to this business. It works quite the opposite way.
With dozens of automated solutions, you can complete the majority of tasks automatically and save enough time for the things that require your personal attention and individual approach (most importantly, customer relations management). Most people who don’t want to quit their jobs or dedicate too much time to business really appreciate these dropshipping benefits.
The elements of your daily management routine that can surely be done automatically, without your direct involvement, include:
As you can see, you can easily delegate the majority of everyday tasks to automated systems. This way, you can organize your day wisely and pay your personal attention only to the customer service and management issues that include the human factor.
3. You can turn your hobby into a source of income
Among all the benefits of dropshipping, this one is the most romantic. Dropshipping is the business that helps you live your teenage dream.
If you’ve always wanted to explore space, or become a rock star, or live in a well-known universe, nothing holds you back from starting a dropshipping store on related topics.
The same is true for your current hobbies that you love and enjoy. If you like sewing, or dedicate your evenings to drawing, or adore pets’ grooming and training, you can definitely create a store aimed at like-minded people with the same interests.
You know what your clients might want. You can professionally describe your items’ features to them, and offer a suitable alternative if necessary.
It’s easy for you to create a nice and supportive atmosphere in your store and in social networks you run for it. This way, the store visitors will know you are an expert in your business, so they will trust you much more.
Isn’t it awesome to run a business in the sphere you like, and use it to escape from everyday routine while making some lovely profits? There are other benefits of dropshipping as well.
4. You will always find help and useful guides
Another advantage of dropshipping is that you won’t have to start this business alone with no experience and knowledge.
Dropshipping business is quite young. Still, the experience and knowledge accumulated in the industry are already impressive. People who already tried dropshipping are willing to share their business journeys and smart tips on thematic forums, and it gives you a brilliant opportunity to interact with proficient businessmen to learn a trick or two.
So, by choosing the most suitable type of educational materials and studying them carefully, you can find answers to the majority of your dropshipping questions. You definitely won’t be the earliest explorer who tries this business, so you’ll be able to avoid some critical dropshipping mistakes, and start your venture in a safe and smooth way.
5. You still have time to join the community
Actually, the dropshipping business now stays at a really curious point of its life cycle.
On the one hand, it’s quite mature already. Successful entrepreneurs share their business stories, so you can take a look at some real-life examples and understand what you can expect from dropshipping and what its potential is.
On the other hand, this business field is not oversaturated yet. As for now, this model is mostly tried by people from well-developed countries with unlimited access to the Internet. This is why it’s safe to say that dropshipping still has a huge potential for growth, especially in emerging countries. And this is why it’s so important to get involved in business NOW.
Technologies get more and more advanced every month, and people from every region on the globe will soon get the technical opportunity to start dropshipping. It’s wise to take your spot before the competition gets overwhelming, right?
6. Dropshipping will teach you useful skills
Even if you decide to quit this business sometime, you won’t be left empty-handed.
Apart from all the money you’ve earned, you’ll have something even more valuable: knowledge and experience.
When you do dropshipping, you eventually get a bunch of priceless skills that can come in handy for your regular full-time job. These skills include social networks management, digital marketing in general, customer relations management, webstore performance analytics, and many others.
In the nowadays world where technologies and services are developing rapidly, these skills give you a substantial competitive advantage and prove you’re a knowledgeable specialist.
Besides, running a dropshipping store has much in common with running regular online stores. In other words, dropshipping can teach you skills required to launch a traditional ecommerce business if this is where you want to move to. And this leads us to another benefit of dropshipping.
7. You can turn a dropshipping store into something much bigger
Have you seen this picture of Jeff Bezos that went viral recently?
This is the year 1999. Jeff Bezos, the founder of Amazon.com, has no idea yet that he will build an unprecedented ecommerce empire and become the richest person of all time by 2019.
Having started from scratch, from launching a really basic online store, he became a role model and inspiration for thousands of people all over the globe who explore the opportunities of ecommerce.
This is not the only story of this kind. Tony Hsieh, the founder of Zappos, also had a simple dropshipping store at the beginning of his business journey. Look what he managed to achieve!
The point is, there are no limits in this business. You can reach the heights you’ve never dreamed of, and one humble dropshipping store can be the right starting point. Why not give it a shot?
8. You have thousands of vacant niches to choose from
As we have already mentioned, dropshipping business is still staying at the growth stage. Technologies and automated solutions for its smooth running emerge every year, and new exciting products and product categories appear daily.
The point is, if you use AliExpress as the core platform to find and pick suppliers, you have a huge product selection – over 100 million items to choose from. This lets you create a unique product offer and explore a highly specific product niche that is not taken by anyone yet. Plus, if you treat your webstore design wisely, you can create a one-of-a-kind shopping destination that is exclusive and atmospheric enough to stand out from competitors.
9. You can profit from large wholesalers
Have you heard about the economy of scale?
Speaking in simple terms, it means that the more you produce, the lower are your production costs.
Since technologies and machinery are evolving rapidly, it becomes more and more profitable for manufacturers to produce items in huge amounts, and the price for these items gets lower gradually. This means that you can find great items on AliExpress for a fraction of the cost, and that’s one of the most important benefits of dropshipping from AliExpress. As a result, you can increase your final price after adding the goods to your store – your buyer won’t notice the difference!
10. You still have time to enter high-potential developing markets
As we have outlined in our previous article, developing markets demonstrate a huge potential in terms of becoming the perfect target segment for you.
With the rapid rise of various information technologies, transport infrastructure, and logistics services, you as a dropshipper get unrivaled opportunities to meet effective demand on the markets that were previously unavailable in terms of their geographic location and/or Internet penetration, devices affordability, payment gateways availability, etc.
In other words, again, if you act quick enough, you can get a solid share of these emerging markets before they become overly competitive. This and other advantages of dropshipping make it a very promising business idea.
Don’t wait for too long; enjoy the numerous benefits of dropshipping while the market offers you this opportunity!
What is more, India is the second most populous country in the world – its population is about 1.38 billion people. In addition, more than 65% of its citizens are below the age of 35. Everyone knows that the younger the generation, the more tech-savvy it is. So the number of people using the Internet will also grow significantly.
As you can see, dropshipping to India seems to be an attractive opportunity. Is it really so? Let’s figure it out!
Dropshipping to India: pros of the Indian eCommerce market
Although some advantages of the Indian eCommerce market were mentioned above, there are lots of other positive moments that you should draw your attention to.
Lots of government initiatives
The government of India has lots of plans on how to improve the eCommerce market of the country and support online retailers. So, it runs and supports different campaigns such as Digital India that help make the country more digitally empowered and contribute to the growth of the eCommerce market.
Besides that, the Indian government is working on building secure cyberspace for India’s citizens and businesses. In 2017, the country even made it to the 23rd place of the UN Global Cybersecurity Index (GCI).
Increase in the number of payment options
Some time ago it was hard for Indian business people to choose the most appropriate payment gateway for their eCommerce stores because of the small number of available options.
But the situation has changed significantly. These days, there are lots of services that you can add to your store to accept payments. Among the most popular ones, there are PayPal, PayU, InstaMojo, PayTabs, etc. All these payment gateways are available for the AliDropship plugin, so if you’re living in India, it will be easy for you to start your own online business.
Positive consumer sentiment
Most Indians feel positive about purchasing goods online. According to the survey, conducted by Capgemini Research Institute, 64% of Indian consumers prefer shopping online rather than in physical shops. So, it’s a good reason to start dropshipping to this country.
Dropshipping to India: cons of the Indian eCommerce market
Now, let’s see if there are any barriers to exploring this market!
Limited Internet knowledge of potential buyers
Although computers, the Internet, and social media are an essential part of our lives, there are lots of people in the world who aren’t good at technologies or don’t know how to use them yet.
According to the data published by UNESCO in 2017, only 70% of Indian citizens aged 15 and above can both read and write. As for digital literacy, only 46% of the Indian population aged 14 and above can operate a computer.
When these people start using the Internet to buy something from online stores, they will probably face different issues. It is likely that they will have trouble finding the necessary products and placing their orders.
Of course, it doesn’t mean that you can’t work with these customers! On the contrary, you can be the person (or the company) that guides them through this new exciting world. It will require lots of your patience, energy, and time, but the result will totally be worth it.
Psychological barriers to online shopping
Although the number of digital buyers in India is increasing, a lot of Indian consumers prefer to touch a product before purchasing it. This is especially the case when buying clothing, shoes, perfumes, and accessories.
The lack of touch and feel experience may significantly affect Indian customers and put up barriers that stop them from buying. Although the situation is gradually changing (especially because of the COVID-19 pandemic), many Indians still prefer either buying in brick-and-mortar shops or order stuff with cash on delivery options.
If you want to start a dropshipping business in India (where you live), you need to register your business officially. And you may feel confused when choosing the most appropriate business form and dealing with the paperwork.
Actually, there are 4 popular types of companies in India:
One person company
Limited liability partnership (LLP)
Private limited company
The type of business form determines how money flows in and out of the business, how the business is taxed, and what documents you need to start it.
The easiest way of company registration is deciding on the sole proprietorship model. You will just need your Aadhaar and PAN cards, a bank account, and proof that you have an office. That’s it.
This business type is ok for people who have never had their own businesses and just want to try their strengths.
However, if you have some experience in eCommerce, you can focus on other forms. Although it takes more time to get all the necessary documents, these business forms are more flexible and have some more benefits than the sole proprietorship model.
Is AliExpress banned in India?
Last year, the Indian government banned a number of Chinese apps including the AliExpress mobile app. As the officials explain, these apps collect massive amounts of user data that have nothing to do with their services. So, they were banned due to security reasons.
By the end of 2020, the government banned over 200 apps in total. With continuing tensions on the India-Chinese border, one could expect more moves of this kind in the nearest future.
At first, the consequences of this decision were not that harsh as the AliExpress site was still working and customers could place orders. But later, AliExpress sellers faced certain problems at the customs.
By the end of 2020, AliExpress officially stopped exporting goods to India. As of now, it is impossible to place an order on AliExpress if the customer’s address is located in India. This is what the platform’s Help Center says:
Does it mean dropshipping to India from AliExpress is no longer available? Some buyers report that they were able to place orders by contacting sellers directly and asking them to send goods via more expensive shipping options (often with longer delivery times). But even in this case, sellers don’t guarantee that the parcel will be successfully delivered.
This is why, right now, we’re considering dropshipping from China to India to be too risky, and can’t safely recommend following this business model. However, it doesn’t mean that as an Indian citizen, you can’t do dropshipping at all!
As of now, the best countries to dropship to are the United States, the UK, Australia, Canada, and a number of European countries. So, instead of dropshipping to India, pick one of these destinations and start your dropshipping business there.
Only one product to sell? Not a problem if you’re using a one product store theme! The right store design can get you countless sales. What’s the secret? And what does Picasso store theme have to do with it? Let’s figure it out together!
Long story short, here’s the deal: more and more people all over the globe are showing interest in stores that sell only one product.
Are online users looking them up because they want to buy something from such stores?
Well, that would make a lot of sense. Dealing with one product only, a store is 100% focused on ensuring a top quality of this item and providing first-class customer service. And that’s what every buyer wants from their shopping experience, right?
But what if people are looking this term up because they want to try out this business model themselves?
That’s easy to understand, too. A one product store or a website template that can put any of your multiple items in a limelight gives their owners multiple benefits – let’s take a brief look at them!
What’s so great about running a single product website?
But what if I told you that by cutting down the amount of products offered in your online store, you’ll get rid of numerous extra worries?
Here’s what I mean.
You need to come up with ONE idea only
Filling your store with 50+ products, you need to make lots of important decisions.
For example, exactly what niche will you occupy with these particular products? Or will they have in common? How will you need to write their descriptions and ad texts to convey the same brand message and tone of communication?
Since it’s one item only, it’s not a big deal for you to actually order it from AliExpress. This is how you will:
See if the supplier is polite, trustworthy, and quick to react
Make sure the item truly has a good value for money
Get the opportunity to make a fancy photoshoot of the item and create enough catchy visuals to use for your further marketing activities
What is more, you can even make this purchase through your own dropshipping store and test order processing and order tracking features with no rush and worries. 😉
You complete daily business operations much quicker and easier
With only one product in your store, you don’t need to spend days and weeks polishing the item description and images, figuring out the perfect price, and monitoring competitors’ offers. Similarly, you don’t spend much time making your online store SEO-friendly. There is only one product to take care of, which is why you can target all your energy and resources at it freely.
The same goes for an ecommerce store that has multiple products but focuses on just one. In this case, the inventory will most likely consist of a small number of goods closely related to the main product. So, it’ll require less work than a standard store with 50+ items.
Moreover, it doesn’t take you much time to learn your main (or only) product inside out. It allows you to treat your customers with exceptional pre-purchase counseling and post-purchase support. And that’s the key to winning their loyalty and making them recommend your store to others!
Plus, it gives you an unbeatable chance to establish yourself as an expert in the field you’re working in. Knowing everything about your product, its benefits and areas of use, you can confidently publish informative articles in your blog, run social media accounts that spread valuable insights, and contribute to industry-related forums, platforms, etc.
You plan your marketing activities with a higher efficiency
Positioning yourself as a ‘guru’ in your product field, you’re actually making the first step to building a strong brand that helps you make more sales.
And it’s not the only marketing benefit of a one product dropshipping store!
When you’re promoting one and the same item over and over again, you are not distracted by any other items. You can test any types of ads, any audience targeting settings, any business collaborations, and any promotional tactics you can possibly think of. Gradually increasing the efficiency of your promo efforts, you’ll surely discover the perfect ads mix that works best for this particular product – without excessive spennings of time and money!
But is it actually as easy as it sounds? Let’s find out the secret recipe of success when you’re running this business!
What’s the key to a profitable one product website?
If you’re already excited about trying out this business model, here are 3 crucial things you need to consider before you start.
#1 Your product must be AWESOME
A “just fine” or “good” item won’t do. You’re looking for the absolute best here!
The perfect candidate for being sold in a one product store is:
Maybe it’s a hype thing of this year or season, or maybe it’s something evergreen that won’t go out of fashion ever.
In any case, it’s something that people really want to buy very much, and (most importantly) don’t mind ordering from an online store.
To make your dropshipping store successful, you need your product to trigger impulse purchases. In other words, it should be simply irresistible: overwhelmingly cute or insanely geeky, or totally badass – well, you got the idea. The stronger the emotion, the better!
The product’s idea, purpose, and benefits should be clear immediately. You don’t want your store visitor to leave the website and go googling this product, right? It’s definitely not a good thing if your potential customer starts overthinking the purchase and having doubts – or even worse, finds a similar product in a competitors’ store!
Again, nothing should stop your client from placing the order right here, right now. Of course, every customer segment has their own understanding of ‘affordable’, and every product has its own specific product range. That’s the thing you need to research.
Limited in availability
What’s the point of dedicating your store to a product that can easily be bought everywhere?
You need to be looking for an interesting and rare to find product variation that has an unusual design, or some extra features, or any other non-typical modification.
#2 The quality of visuals is crucial
When you deal with a one product store, basically, your website consists of one page – the Home page.
And most certainly, it must be product-centered and good-looking: you only have this one page to catch your visitors’ attention and convert them into buyers.
So, high quality close up product images, fascinating product videos, and customer-focused texts are a must. Without them, you won’t really be able to let the visitors know it’s a reliable and safe shopping destination, and convince them to buy your outstanding product right now.
#3 Social proof is everything
In fact, social proof is vital for any online store. But with a one product store, it gets absolutely essential.
Just think about it: your store visitors see this one page only. Does it provide them with enough information to rely on? Are you giving them enough product details to help them make their purchasing decisions?
A little motivational booster that you need here is social proof: previous customers’ feedback showing that the product is fine and safe to buy. And, given that you don’t really want your visitors to go online searching for more details and reviews, you need to find a way to integrate it in your store. How can you do that?
How to create the perfect one product store?
We’re thrilled to introduce Picasso: our brand new theme exclusively created for websites that focus on a single product. Feel free to check out a demo website built on it!
Here’s what makes this theme so unique, outstanding, and money-making.
Grab your store visitor’s attention from the first second!
This theme is perfect for showcasing your main (or only) product in the best way possible. A huge image that is seen immediately and a short, persuasive text next to it is exactly what you need.
Customer-oriented product info
The first button your store visitor sees is not ‘Buy Now’, but ‘Learn More’. And you already know the logic behind this: your goal is to give plenty of details that convince the viewer to place an order.
Clicking on this button or scrolling the page down, your store visitor sees this:
After a block with general terms of purchase, there’s a part that looks like a usual, familiar product page. There’s a product title, picture gallery, price and variations, and finally, the ‘Buy Now’ button.
And right next to it, there’s a whole new eye-catching element!
You get the opportunity to showcase your delightful offer once again, and focus the viewer’s attention on the exceptional benefits that go with the purchase.
Only after that, you’re getting to the ‘boring’ details describing the product’s actual features and specifications.
And if your client feels ready to place an order at this point, they can conveniently do it without scrolling all the way back to top!
The same catchy purchase-motivating element gets repeated a bit further on the page.
When it’s shown for the second time, it accompanies the FAQs section that provides your potential customer with even more details on your terms of service.
Integrated social proof elements
This important point of generating more sales in a one product store is covered in our Picasso theme, too!
First of all, there are previous buyers’ reviews collected neatly on the following board.
And what’s more, this theme gives you the opportunity to connect your business Instagram to the store in a very fancy way.
It encourages the visitor to stay on your website and research the provided feedback instead of leaving the store and looking for more info somewhere else.
The best news: you can try and test the one product store strategy at ANY moment!
All of it sounds great, but what if you don’t like the idea of selling a single product? I mean, what if your dropshipping business grows fast and you’ll need more goods? Does it mean you’ll have to build another website to replace your one product dropshipping store?
Not at all! The Picasso theme lets you create regular product categories, just like in any online store, and fill them with multiple products. The home page still focuses on your main product, but your visitors can also browse other items in your catalog.
You can turn it on or off whenever you want to make a one product dropshipping website or a regular store with a stronger focus on a particular item.
Summing it up, Picasso is a theme that fully meets the industry requirements for a user-friendly, income-generating single product website. At the same time, you can customize it by adding a regular catalog of complementary goods.
And you just can’t argue: it looks absolutely adorable! 😉
How to get Picasso theme for your one product store?
By the way, don’t forget that you can customize your store in multiple ways. To learn more about the modifications you can make with the Picasso theme, please read this Knowledge Base article.
Now you know what’s so special about a one product store – and, most importantly, how to get a proper one for yourself! Don’t put this opportunity on hold: isn’t today the perfect day to start your own money-making business?
Want to start a dropshipping business in the UK? Interested in selling goods to this country? In this article, we’re going to give you the answers to the most burning questions about UK dropshipping!
The UK is the home of progress. It is the country that once turned the tide and changed the world once and for all.
Indeed, the industrial revolution began exactly in Great Britain and spread around the globe at breakneck speed.
Today, the digital revolution is taking over the world at an even greater pace. And obviously, the UK can’t stand aside while it’s happening.
There are close to 70 million people living in this country, all the necessary civil liberties, and a stable and fast Internet connection. In other words, Great Britain is a great market for ecommerce entrepreneurs.
The only thing that can keep you from starting your UK dropshipping business is a lack of information.
To fill that gap, we’ve decided to answer the most commonly asked questions about UK dropshipping.
So, let’s start!
Disclaimer: This article reflects the political situation in the UK and the post-Brexit business environment as per February 2021. We strongly recommend that you consult your local lawyer and get expert legal advice if you’re looking for more relevant data.
#1 Do I need to register my dropshipping business in the UK?
Is dropshipping legal in the UK?
Yes, dropshipping is just a business model, so it’s totally legal. Does it mean that, if you want to start a dropshipping business in the UK, you have to register it?
This question bothers most UK-based dropshipping newcomers.
And the short answer is yes. You do need to register your online venture in the UK if you want to get around any legal consequences. The good news is, it’s not a big problem.
There are three basic business structures in Great Britain:
If you want to figure out what each of them implies, you can easily find the necessary info online. Yet, I’ll take the liberty of saying that the most suitable option for dropshipping store owners is to become a sole trader.
#2 How can I find the best suppliers for UK dropshipping?
It’s hard to downplay the importance of reliable dropshipping suppliers for your business success.
The quality of the products you sell, your customers’ satisfaction, and many other things depend on the suppliers you cooperate with. So, looking for a credible business partner could be a real pain in the neck for online entrepreneurs.
Another common issue related to UK dropshipping is delivery time. As of now, shipping from China to the United Kingdom with free delivery options and even a number of paid options takes 20-50 days. A number of AliExpress suppliers offer faster shipping options, but in these cases, delivery can cost up to $50. Considering that dropshipping expensive goods is much more difficult than selling affordable ones, these options can hardly be viable.
Many AliExpress sellers have warehouses in Spain, Germany, Italy, Poland, Czech Republic, and France. All these countries are close at hand to the UK. Such options are often free and take about two weeks, which is much faster than other alternatives. So, you can easily find these suppliers and speed up the delivery.
Even if you can’t find faster shipping for products you want to dropship and have to use standard options, make sure you notify customers of the delivery time. Otherwise, you’ll have to deal with a lot of complaints from clients who didn’t expect to wait for so long.
#3 What taxes do I need to pay when dropshipping in the UK?
Another common question is do you have to pay taxes on dropshipping to the UK. And the answer is of course you do!
The United Kingdom, like many other developed countries, has a complex tax system. And it’s hard to cover the whole issue in one article.
Yet, there are four main types of obligatory payments every UK ecommerce entrepreneur has to deal with while dropshipping in the UK.
VAT on products
Income tax is a tax that the UK government imposes on your earnings. In other words, it’s the share of your income you must pass to HM Revenue & Custom.
Great Britain has a progressive tax system. That means that your income can be divided into four parts called bands. And each band has its own name and tax rate. Here they are, according to the UK government’s official website:
Personal allowance: 0% for your income up to £12,500
Basic rate: 20% – £12,501 to £50,000
Higher rate: 40% – £50,001 to £150,000
Additional rate: 45% for the income over £150,000
So, you pay different percentages from different parts of your income. For example, if you earn £65,000, you pay nothing for the first £12,500, 20% (£7,500) for the next £37,500 you’ve made, and 40% (£6,000) for the rest £15,000 of your income. The total sum you need to give for your £65,000 is £13,500.
Besides, if you live in Scotland, you must pay your taxes to the Scottish government, which sets slightly different bands to tax your income. You can see them below:
Personal allowance: 0% for your income up to £12,500
Starter rate: 19% – £12,501 to £14,549
Basic rate: 20% – £14,500 to £24,944
Intermediate rate: 21% – £24,945 to £43,430
Higher rate: 41% – £43,431 to £150,000
Top rate: 46% for the income over £150,000
Customs duty and VAT on dropshipping in the UK
VAT, or value-added tax, is a consumption tax assessed on the value added to goods and services. It’s used in many countries including the United Kingdom.
Now that the kingdom has left the EU, customs and tax regulations have changed. So if you want to start or continue dropshipping after Brexit, here’s what you should know.
Do you need to register a dropshipping business for VAT?
Yes, any business that sells goods sent from overseas directly to UK customers without using online marketplaces must register for the VAT to HMRC.
So, businesses dropshipping from China to the UK definitely must register. The same goes for dropshippers that sell goods from EU countries.
Previously, businesses were exempt from VAT and didn’t have to register unless their yearly revenue is below £85,000. But you must register for VAT no matter what revenue your business makes.
Changes to UK VAT tax
Previously, if the cost of a consignment of goods did not exceed £15, you didn’t have to pay customs or import VAT. Now Low Value Consignment Relief has been abolished. In other words, you still have to charge VAT for such consignments.
If the value of a consignment of goods does not exceed £135, you have to pay VAT, but no customs duty is charged. However, while previously, the government collected VAT at the point of importation, now the tax is collected at the point of sale.
For an ecommerce store, the point of sale is its payment gates (Stripe, PayPal, etc.). It means that the value of the goods is based on the price at which you sell them to customers rather than the value calculated at the point where the products cross the border.
It’s also important to note that the £135 threshold is applied to a consignment of goods, i.e. the whole package, and not to individual items. It, however, excludes transportation and insurance costs or any other taxes and charges.
It means that if you’re going to sell two items at a price lower than £135 each, you’d better send them in two separate packages to benefit from customs duty relief.
If the cost of a consignment of goods exceeds £135, instead of supply VAT, you will have to pay import VAT at the border, as well as customs duty.
The standard VAT rate is 20%, while the reduced rate equals 5% (for some categories of goods). Some products are exempt from VAT. You can see VAT rates for different goods here.
As for customs duty, it’s zero for consignments under £135 in value. For consignments that cost £135-£630, you will have to pay 2.5% in most cases. For consignments above the £630 threshold, the rate can be different. You’ll have to consult the UK government’s helpline to learn more.
Please note: the information we give you on tax requirements and regulations cannot be considered as legal advice. To handle your taxes properly in full accordance with the country’s law, we recommend you consult your local lawyer.
#4 Is there anything tricky about UK dropshipping?
As you can see, the consequences of Brexit for overseas sellers aren’t exactly positive. By leaving the European Union, Great Britain made it harder for foreign companies to sell goods in the kingdom.
Previously, one could dropship products from warehouses located in Europe, but now this maneuver won’t change anything.
Nevertheless, UK dropshipping remains a popular business idea. And despite the new rules, one can still make money by selling goods to locals. But you’ll have to adapt.
First of all, despite Brexit, you should still dropship goods from European warehouses whenever possible. You will still have to pay taxes, but it’ll considerably shorten your shipping time.
I also recommend being honest with your clients. To keep your customers’ anger at bay and avoid a misunderstanding, you should let your UK clients know about the possible fees they could encounter.
#5 What about dropshipping to other countries?
Unlike many other business models, dropshipping is easier to start and run. But there are other features that make it so great.
One of them is the ability to sell products to any country you want or to several countries at once. Your dropshipping store doesn’t have to be confined to UK customers. With AliExpress sending goods to almost any destination on the planet, you can sell internationally.
You can easily find an AliExpress supplier that has warehouses in Europe and sell your products to any EU country. Your customers won’t face any unexpected payments.
You can also successfully target such countries as the USA and Australia. AliExpress sellers store their goods there as well.
If you choose a country like Canada, which has a low limit on online purchases ($20), you should warn your clients in advance about the extra fees they may face. However, there is some loophole in the case of Canada.
In 2018, the USA and Canada made a new trade deal. And now, Canadian customers can buy online up to $150 from the United States and pay no customs duty (although taxes are still applied if the cost is above $40).
So, if you choose an AliExpress seller with a warehouse in the USA, you can make good use of that.
We hope this article will help you get your head around UK dropshipping and start your online business. If you have more questions, please leave them in the comment section below. We’re always happy to lend you a hand.