Always fancied your hand at ecommerce but don’t have the money to buy lots of stock? Don’t worry – dropshipping gives budget-conscious entrepreneurs the chance to start from scratch and sell their way to the top. 

If you’re keen to enter the world of business and you’re willing to put in the hard work, dropshipping might be the perfect choice.

The benefits of dropshipping include:

• Affordability: With dropshipping, you don’t need to buy any stock in advance or invest in expensive warehousing or storage. You also avoid the traditional retail trap of having capital tied up in stock that you’re waiting to sell – meaning you have more liquidity with cash flow. 
• Flexible working: You can base your business anywhere and order from dropshippers across the world, so you can work flexibly when it suits you and build the lifestyle you’ve always wanted. 
• Vast product offering: There’s no end to the number of dropshipping products you can feature on your site. If you’ve got a specific niche you want to explore or you want to go more general, you can find almost any product on the planet available to dropship from the right supplier. 
• Scalability: Dropshipping doesn’t require much investment in infrastructure – so you can scale by increasing your marketing budget and product offering rather than having to recruit new teams or rent premises.
   

Perhaps the most appealing benefit of all, however, is the low cost of entry. Here in the UK, you can start a dropshipping business for less than £100! 

Dropshipping might be an affordable business venture, but there’s much to consider before starting. It might be cheap in terms of cash investment – but starting a dropshipping business still takes lots of time and effort.

In this guide, we’re going to discuss everything you need to know about starting a dropshipping business. Here’s what we’re going to cover:

• Understanding the dropshipping model: Learn what dropshipping really is and discover whether it’s right for you. 
• Choosing a niche: See why being too generic in your product offering often leads to failure and how finding the right niche can help you find your audience. 
• Analysing competitors: Learn from other dropshippers and use key tools to spot trends that will help you get ahead. 
• Choosing a supplier: Master the most important step in a dropshipper’s journey and visit Crunch’s comprehensive list. 
• Products & pricing: Combine your choice of niche and competitor research to build a winning product strategy. 
• Structuring your business: Learn how to register and grow your business within the UK’s somewhat tricky legal landscape. 
• Building a winning website: Avoid common mistakes and design a website that works for you and your customers. 
• Marketing your dropshipping business: Tips and tricks for finding customers and selling products. 

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Understanding dropshipping: Is it right for you?

Dropshipping is a type of retail selling where you list a supplier’s products on your site and take a portion of each sale as your cut. In most cases, the supplier handles the fulfilment of the order, too – so your involvement is limited purely to listing products, marketing your site, and communicating with customers to keep everyone satisfied. 

Dropshipping may be the perfect business for you to try if you value a flexible way of working, a low-cost business model, and the ability to learn and adapt to ever-changing trends. 

It’s worth noting, however, that these low startup costs mean nothing stops anyone else from starting the same type of business and stocking the same products as you. 

Dropshipping is a fiercely competitive marketplace and you’ll have to work hard to stay ahead of trends in pricing and customer habits. If you can’t offer something unique, a customer is just as likely to buy from your competitors as they are from you. 

That’s why anyone entering the marketplace needs to be willing to work hard to make your dream work. You can’t just create a basic site, list a supplier’s products, and expect the money to come rolling in – you need to be willing to do more than your competitors. 

These are the key traits you’ll need to succeed: 

• Patience: You can’t instantly dive in and expect to reap the rewards. The best dropshippers take time to research competitors, plan product choices, and make strategic decisions. 
• Adaptable: The ecommerce world is fast-paced and dropshipping is even more so. You may need to change product lines or pivot your marketing at the drop of a hat if you want to succeed. 
• Customer-focused: One of the biggest misunderstandings about dropshipping is that you don’t need to deal with customers because your supplier does the fulfilment. This couldn’t be further from the truth – you need to be great at customer service, as it may be the only thing that helps you stand out from your competitors. 

New to selling online and need to nail the basics? Read our comprehensive guide to starting a dropshipping business for beginners. 
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How to get started in dropshipping if you have a low budget

Choosing a low-cost niche

In some ways, the core idea of dropshipping is liberating: nobody is selling anything unique. You and your competitors can all source and sell the same products, whether they are from the same supplier or different ones selling similar products. 

You can, however, find a niche that allows you to specialise. Finding a niche means you can enter a marketplace that has lower competition and a more engaged audience.

Here are some ideas for low-cost dropshipping business ideas:

• Eco-friendly and reusable products: Cups, bottles, and even lunch boxes are all trendy right now, and relatively inexpensive to purchase.
• Organisation tools: TikTok has seen a rise in the organisational influencer, with many users getting thousands of views on their “sorting” videos. Hop on the back of this trend with plastic or glass containers, 
• Journals and other writing materials: Notebooks, diaries, planners and even pens are all low-cost items with wide appeal, especially during the back-to-school and new year periods. 
• Crafting supplies: At-home hobbies have continued to find popularity after the pandemic, with many people taking up new skills such as knitting, crocheting or sewing. You can dropship supplies targeting both new and established hobbyists. 
• Office supplies: Remember, dropshipping doesn’t always have to be B2C. Businesses buy products online, too, and office supplies like pens, books and files are all great and affordable options.  
• Home decor: Picture frames, candles, ornaments, and plant pots are all popular but inexpensive products that would be easy to market and sell on your online store. 

Get more inspiration in our dedicated guide to dropshipping business ideas, or explore other low-cost business ideas here. 
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Analysing competitors

Once you’ve decided what type of products you are going to sell, it’s time to take a look at your competitors. These businesses are already well-established so they might be intimidating, but a competitor analysis this early on will help you find your gap in the market and how you can differentiate yourself from what’s already on offer.

Here’s what to consider when looking at competitors:

What do they sell? 

Are their products exactly the same as yours, or is there simply an overlap? For example, they might sell craft and hobby supplies, like knitting needles and wool, but they might not have crochet tools. Consider why they sell what they sell - this is likely because these items are popular, but it doesn’t mean you can’t branch out from what they do, as this will help you stand out.

How much do they charge?

Take note of their pricing strategy. Cheap competitors will likely be looking at selling in volume, whereas those with more expensive prices will be investing more in marketing to elevate the perception of their brand. As a low-cost dropshipper, you will want to make your return on investment as quickly as possible, so this is worth considering when you are pricing products. 

You could prompt an early sales boost with a welcome promotion or give new subscribers a discount code to incentivise their initial investment in your new brand. 

What is their brand strategy?

With pricing in mind, consider how your competitors are marketing themselves. Check out their website, social media pages and even sign up for their email marketing - from here you will be able to discern what makes customers choose them, and why their brand is so popular among customers.

What are they missing out on?

Identifying their weaknesses is the first step towards finding your strengths. If your competitor is struggling to establish themselves in a space, ask yourself why that might be? You can learn from their mistakes, even before you list your very first item.

How are they structured?

Does this competitor sell solely on their own website, or does it list products on Amazon, eBay, or other third-party websites? Keep an eye out for competitors who are dominating these platforms, as well as Google’s search results, as they will be the hardest to beat.

Remember, the competitors you discover in this process may very well be selling the exact same products as you – there’s typically no exclusivity in dropshipping. 

With that in mind, let’s take a look at how to choose a supplier and what this means for your low-cost dropshipping business.
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Choosing a supplier

Finding a dropshipping supplier may be easy, or it might be your biggest hurdle; this all depends on what products you want to sell. When starting a low-cost dropshipping venture, your supplier and their costs will be one of the most important considerations, as every single penny you can save will ultimately work towards your return on investment. 

The likes of AliExpress and Cjdropshipping are global market leaders, with millions of products being shipped all over the world every day. There are also lots of smaller suppliers closer to home. 

Choosing a supplier is perhaps the most important initial step in your journey and getting it right is crucial. With that in mind, we’ve created a dedicated guide to the UK’s top 10 dropshipping suppliers to help you make the best choice. 
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Product strategy

This is where your competitor analysis and supplier research all come together. You know what others are selling, and you know what you want to sell - so how do you turn this into a reality?

Product strategy covers everything from:

• Categories and collections: How will you categorise products on your site? You might group by size, colour and material, for example. However, there are also more creative ways to categorise products, such as creating ‘collections’. For example, if you sell stationery, you could create a “Back to School” section. This will cross over into your marketing strategy and allow you to establish yourself as a go-to business for shoppers.
• Product volume: Dropshipping means you don’t have to worry too much about judging how much stock is the right amount to invest in, but you should still consider sales forecasts, as this will help you to identify what you can invest in marketing, etc.
• Pricing: This sits at the core of your success. You must price your products within customer expectations while also looking to make a profit from the outset. Look at competitors, and cross reference this with your financial plan, and find a price that works across the board. 
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Structuring your business

If you intend to sell products online in the UK, then you will need to register with HMRC. An ecommerce business owner can either register as a sole trader, limited liability partnership or limited company, and there will be tax benefits and downsides to all three. That’s why you need to work with an accountant who understands the world of ecommerce, and what this means for UK taxpayers. 

Dropshipping typically involves buying products from abroad to sell in the UK, which will have VAT implications. For example, you will not pay VAT on products purchased from China, but you will have to add this to the sale price in the UK - this impacts both your profit margins and the product price you can offer customers.

You’ll also need to submit an annual Self Assessment and annual company accounts if you run a limited company. All of this takes time and industry knowledge, so it’s worth working with an expert ecommerce accountant like Crunch. Access expert chartered accountants as well as cloud-based accounting software, so you can feel confident in the potential of your online venture.

Learn more about taking the step from sole trader to a limited company in our guide, and get your head around the legal ins and outs of dropshipping with this guide.
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Building a winning website

Creating a website is a big task and one that requires an understanding of design, accessibility, SEO (Search Engine Optimisation), and customer behaviour. That being said, if you are hoping to launch your business on a budget, you might not have the cash to hire a professional web developer.

Let’s take a look at the most popular website-building tools:

1. WordPress

The world’s leading content management system (CMS) for a reason, WordPress has reigned supreme for many years. The software is open source, so you can install it on your own hosting, giving you ultimate control over the ownership of your site. 

While the WordPress software isn’t super complicated, it does still require some experience to get right, especially when it comes to adding plugins for SEO, privacy and contact forms, so if you want something more ‘out-of-the-box’ then this might not be right for you.

2. Squarespace

Business owners were quick to adopt Squarespace as it offers easy ‘drop and drop’ functionality and built-in marketing tools, including email marketing and SEO. Squarespace is structured as a monthly subscription, and your site is hosted on their platform - you cannot transfer it to another host or CMS. That being said, building the site and ensuring it works across all devices is relatively easy, even for those who have never built a website before.

You’ll need to consider that because Squarespace uses templates, there might be other websites with a similar look and feel. 

3. Shopify

The ecommerce specialist is still very popular with all types of ecommerce businesses, including dropshippers. Shopify charges a monthly fee, and your website is hosted on their platform. The templates give good flexibility, and you can monitor analytics, sales and other important stats from within the platform. 

Do I need a website to dropship?

You don’t necessarily need your own website, as you can sell dropshipped products on third-party websites like Amazon and eBay, as long as you adhere to their policies. So, while your own website is not technically required, it’s still a good option as you have control over your marketing, you can set up and maintain with minimal costs, and you are not reliant on any one ecommerce platform. Keeping your options open and diverse is certainly one of the secrets to success in this industry.

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Marketing your dropshipping business

On the topic of success, if you fail to market your products to the right people, you won’t achieve your dropshipping goals. In an industry filled with competitors, your marketing and customer service will help you stand out. Make marketing a priority from the outset.

Here’s what you need to consider:

Social media

Where are your customers hanging out online? We mentioned earlier that certain influencers are finding great success on TikTok, so if they match your niche, that’s where you need to be. Create content in your audiences' favourite spaces to maximise any potential engagement. 

Email marketing

This is one area that ecommerce businesses cannot afford to skip - email marketing is one of the most profitable activities, with some studies finding an average ROI of £36 for every £1 spent. People can sign up for your email list on your website if they opt-in, but you must make sure your privacy policies align with GDPR and PECR requirements.

To get the most out of email marketing, you’ll need to send regular, exciting emails tailored to your customer’s interests and needs. Once you’re generating profit, it might be a good idea to invest in email tools that offer segmentation and automation to help drive ROI even higher. 

SEO and content

We’ve touched on SEO already, but it’s so important that it requires its own section. Most website builder tools will have SEO tools, so you can manually input your meta titles, descriptions and alt text, for example. But there’s more to good SEO than just filling boxes - you should look into tools like Google Trends and Answer the Public to ensure you align your brand with popular keywords and trends.

Content is an extension of this, be that copywriting on your homepage and products, or a dedicated blog - content remains king in the world of digital marketing, and you’ll need to invest in it to get the results you want.  

Paid advertising

If you are reading this article, then cost is likely one of your biggest concerns - you want to keep spending to a minimum, and therefore are exploring affordable options. As you grow, however, you need to invest in your business if you want to keep expanding your customer base. 

Pay-per-click (PPC) advertising is one of the best ways to reach new customers in a highly targeted way. PPC covers Google Ads, Meta (Facebook & Instagram), and other platforms where advertisers pay “per click.” Once you have a steady income flow, you’ll need to invest profits back into your marketing, and grow your potential reach. 
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Start your dropshipping business today

You might have landed on this page wondering: is it possible to start a dropshipping business for free? While dropshipping is a low-cost option, it still requires a little upfront investment, especially in the realms of marketing and website development. 

If finance is only your mind, don’t take any risks - keep track of everything you spend, and work with Crunch to identify any cost-saving opportunities, plan for taxes, and forecast sales with our specialised ecommerce accounting software, which includes support from qualified accountants.

Sign up today to start chasing your dropshipping dreams.

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