Can You Make Money From Dropshipping?

It’s no surprise that more and more people are turning to side hustles to boost their income in recent years. As the cost of living crisis has deepened, the proportion of the population making extra money from a side hustle of some sort has increased drastically. An estimated 22.8 million Brits are using a side hustle to top up their income - around 43% of people!

Source: Finder’s Side Hustle Statistics

For many, a side hustle is the perfect way to monetise a hobby or passion, or to make a little extra cash from your existing expertise. But not everyone has a passion, and even if they do they might not want to turn it into a side hustle - especially as monetising hobbies can involve an awful lot of work for disappointingly small amounts of money.

For those with an entrepreneurial spirit, dropshipping is an appealing side hustle. You have next to no overheads, a simple business model, and great potential for scaling it up if things go well. But is dropshipping still a viable side hustle, having become so popular in recent years? We’ve delved into the fine details to find out all you need to know about dropshipping in 2024, so you can make an informed decision before setting forth as a dropshipper.

What Is Dropshipping?

Dropshipping is a type of eCommerce that allows you to sell products to customers without ever handling them yourself, instead sourcing them from a third party, which ships direct to your customer. As the retailer, all you have to do is process a customer’s order and arrange for the product to be delivered to them, as well as handling any contact from that customer.

Usually, that third party supplier is based overseas, often in China, and sells a vast range of goods at low prices. AliExpress, Spocket and Avasam are some of the biggest dropshipping suppliers in the world, with large numbers of dropshippers offering products from their sites.

There are also dropshipping suppliers actually based in the UK, however. Their range of products may not be quite as wide as the largest international dropshipping suppliers, but the delivery time to your customers will be much reduced. This not only keeps your customers happier, but helps build trust - many consumers are quite suspicious of products shipped from the other side of the world.

How To Get Started With A Dropshipping Side Hustle

1. Decide on your concept

You could in theory choose a random selection of products you like the look of and hope to sell them, but it isn’t the best business strategy. Dropshipping is really very little different from marketing - and in marketing, brand is key. You’ll need to decide on the type of brand you want to be, and the market you want to serve, before you do anything else.

You could, for example, launch a 60s themed homewares shop, and populate it with retro and vintage-style home furnishings, decor and cookware. Or you might perhaps decide to sell puzzles and games, maybe with some kids’ toys thrown in.

Whatever you want to sell, it’s incredibly important to build a consistent and appealing brand around your products.

2. Research your market and competition

You need to know as much about your target market as possible, if you’re hoping to sell your products to them. Find out about current trends within your niche, successful marketing strategies, and the best avenues to grow your business.

You also need to understand your competition. Whatever concept you choose for your dropshipping business, there will certainly be many other online stores with extremely similar products, hoping to find the same buyers. Research those competitors to see how their stores are designed, what products they’re offering (and which seem to be successful), and identify what you think you could improve on for your own online store.

3. Find your products

Before you start creating your website, you’ll need to be sure that the products you have in mind will be available for you to sell, and at prices that allow for a profit margin.

It’s a good idea to compare the products and prices offered by a variety of dropshipping suppliers, so that you can establish which will work best for your business. The biggest suppliers, such as AliExpress, SaleHoo and Spocket, are likely to have a larger range of products, and probably lower prices, but slightly smaller UK based companies, such as OnBuy or Costway, will be able to deliver more quickly if they’re despatching items from a UK warehouse, and may well be easier to deal with in the event of any problems or disputes.

When considering where to source your products from, take into account more than just the price. The cheapest supplier might make you the biggest profit, but if they’re unreliable or provide poor quality products, customer complaints or refund requests could quickly eat into those profits.

You should also consider the returns policy of your suppliers - not all suppliers will allow returns, but as you have to allow your customers to return items under Distance Selling Regulations, you could be left with a loss if a customer wishes to make a return.

4. Register your business

It’s important to be registered as a business in the UK, so that it’s separate from your personal assets. You’ll need to have decided on your business name, and you’ll also need to register for self-assessment tax returns. You can find out more from the government’s guide to setting up your own business, which will also help you decide whether to register as a sole trader or as a limited company.

5. Build your website

If you’re going to make any sales, you need people to know what you’re selling - and that makes your website the most important part of your business. You can use a service such as Shopify, which is specifically designed for online retailers, to help you build your online storefront, or alternatively use a more flexible content management system such as WordPress or SquareSpace, both of which have tools designed for online stores.

You should think carefully about the design of your website, which should be in keeping with the concept of your brand. You can also consider selling through social media or Amazon, eBay and other platforms - making use of diverse platforms can maximise your business’s exposure and increase your sales significantly.

6. Start marketing your business

Having built your website and added your products, you need to get potential customers to visit it. But with so many competing businesses out there, it can be hard to attract the attention of people online.

One of the best ways to organically build traffic to your website is to become part of relevant communities. This doesn’t mean joining a Facebook group and constantly trying to sell yourself - this is likely to be counter-productive, and will probably result in your being banned from the group. Instead, offer neutral help and advice to demonstrate your expertise, and customers will naturally start to investigate your background and your website.

That isn’t to say that direct advertising isn’t also worthwhile. Purchasing ads on Facebook doesn’t have to be particularly expensive, and it can give your fledgling business a real boost in traffic.

It can also be a good idea to start a blog. It should be on a theme relevant to your online store, with good quality content designed to help customers find you through SEO (search engine optimisation) strategies. This does require consistency and a fair bit of work, though, so you may not feel it’s the best use of your time while launching your new business.

What Kinds Of Products Can You Sell Via Dropshipping?

The kinds of products you can sell via dropshipping are almost limitless, but some products are better suited to dropshipping than others.

• Clothing will always be hugely popular, and although there’s no end of competition, there’s also no end of consumers. Customers are used to buying clothing online, so not having a physical store to allow customers to try products on isn’t much of a disadvantage. However, returns can be a real problem for clothing retailers, so this does add a potential logistical difficulty for your business.

• Toiletries and beauty products can be excellent for dropshipping, as by nature they’re items that people expect to buy repeatedly as they run out. On the other hand, consumers can be loyal to particular brands or products, so if you’re only able to source obscure products, you may struggle to find customers. You also need to ensure that any products you’re selling meet UK regulations - as they’re mostly applied to the body or hair, there can be health and safety problems if they aren’t properly checked.

• Homewares are a very popular dropshipping product, and with good reason. Home goods are often bought on a whim, especially if they’re interestingly or amusingly designed, and aren’t usually so expensive as to put people off. It may be difficult to find a niche where the market isn’t already saturated, but if you have a good concept and a sharp eye for design, there’s definite potential for profit in dropshipping homewares.

• Pet supplies are a growing market, with consumers becoming ever keener to treat their pets to the very best toys, accessories, beds and equipment money can buy. If you can tap into the nation’s love of animals, you’ve got a brilliant basis for a sustainable business.

• Wellness and fitness equipment and accessories are also very popular at the moment. You can take advantage of both existing fitness enthusiasts and newcomers looking to turn over a new leaf by offering items such as yoga mats, resistance bands, weights, water bottles or running belts - and know that you’re contributing to the health of your customers while you’re at it!

• Print on demand products, while often considered to be a separate business type from dropshipping, are another option. If you’ve got an artistic side, you can create designs yourself and offer a wide range of products featuring those designs - all of which can be sent to your customers without you ever having to worry about storing or shipping them.

Tips And Tricks To Boost Your Sales

• Offer top tier customer service. When running a dropshipping business, a lot of things will be outside your control. You can’t guarantee that your supplier will have an item in stock, that they’ll package it appropriately or that they’ll ship it on time - but you can offer stellar customer service if anything goes wrong.
  
  Even if you have to accept sacrificing some profit, if you take responsibility for any issues, offer prompt refunds where needed and take the time to respond to any customer queries quickly, you’ll build trust between you and your customers. This should result in better long term results than doing the bare minimum for the sake of short term profit.

• Make use of data analytics. Most dropshipping platforms offer analytical information on your sales and website visitors, which will allow you to consider the comparative performance of different products, as well as different pages of your website. You can use this information to tweak your website or your product line and improve your sales figures.

• Order samples. While you don’t want to be responsible for storing and shipping your products, you should order a sample of each product you sell so that you can be confident of its quality. This also mitigates the risk of customer complaints if a particular product doesn’t meet their expectations.

• Make sure your website looks professional. Some small dropshipping websites have a distinctly homespun feel, which doesn’t inspire confidence in customers. Some will even have entire sections copied direct from Shopify’s guidance (e.g. ‘Write your About Us description here’), which will seriously undermine your reputability.

• Automate order processing. This probably won’t be necessary immediately, but as business picks up it’ll become far more difficult to keep up with orders. It’s much more efficient, and reduces the risk of errors, if orders are sent automatically to your supplier when a customer purchases one of your products.

Advantages Of Dropshipping As A Side Hustle

• Your startup costs and overheads are extremely low, so you don’t need much money to get going.

• You can work from anywhere - all you’ll need is a laptop and an internet connection.

• You can fit your side hustle around your schedule. While marketing and managing orders will take up some of your time, you can usually fit these tasks in around your life without too much difficulty.

• It’s very easy to adapt to trends - as you’re sourcing products from third parties, you don’t have to worry about creating anything from scratch if a certain product or design suddenly gains huge popularity. You can simply track down an appropriate product from one of your suppliers and start listing it immediately.

• As you don’t have to order or store stock yourself, considerations of how much stock to order and whether you’ll sell it all are removed, and you’re unlikely to have to worry about cash flow.

Disadvantages Of Dropshipping As A Side Hustle

• You have to take on responsibility for factors that are outside your control. Especially if your suppliers are based overseas, there’s next to nothing you can do to ensure that they package items safely and ship them promptly. This means that you’ll be accountable for any problems that arise, but with very little ability to prevent those problems occurring.

• Your profit margins may not be very high. As you’re acting as a middleman, there’s only so much of a markup you can put on your products before customers will consider the pricing too steep. You may need to sell large numbers of products in order to make a decent profit.

• There’s a huge amount of competition. Because dropshipping is easy to get into, and operates worldwide, you’ve got the entire globe’s worth of entrepreneurs to compete against for custom. Trying to launch a business in such a competitive environment is no easy task, and you’ll probably need to be a very competent marketer to be successful.

• Quality can be poor or inconsistent. There’s a reason a lot of items offered by dropshipping are cheap. Products tend to be mass-produced in China, often with little care for quality. If your brand is going to be represented by poor-quality products, it could do far more harm than good, so you need to be very careful about the products you decide to sell.

Legal And Financial Considerations

You may not be physically handling your products at any point, but you still bear the legal responsibility for getting them safely to your customers, and you’re also required to operate according to Distance Selling Regulations that apply to all online retailers in the UK.

You’ll need to register your business with HMRC, and decide whether you’re going to operate as a sole trader or as a limited company, separating it from your own personal assets.

As well as this, you’ll probably need to be VAT-registered, as dropshipping often involves selling items originating overseas. Since Brexit, VAT must be paid at the point of purchase on any items sold to UK customers from abroad, even if you personally are based in the UK.

Finally, you’ll need to submit a tax return each year to declare your earnings from your dropshipping business and pay any tax you owe.

Alternative Side Hustles For The Business-Minded

If you aren’t sure about dropshipping, but you’ve got a business-oriented brain, there are other side hustles you could have a go at instead.

• Affiliate marketing. If the brand-building aspect of dropshipping appeals to you, but less so the logistics of retail, you could be well suited to marketing. You can use your online presence and social media savvy to sell products from companies you’d like to partner with, without having to be personally responsible for getting those items to customers.

• Consulting. For anyone with expertise in a particular industry or area, consulting can be a very lucrative side hustle. Depending on the demand for your knowledge and skill set, you may be able to make good money from offering advice to individuals or businesses, or even giving talks in your field.

• Property management. If you’ve got great organisational skills, property management could be the side hustle for you. You act as a middleman between landlords and their tenants, drafting necessary documents, arranging inspections and visits, and handling any problems that arise. Similarly, you could act as an agent for holiday homes, handling the day to day management of the property and ensuring any guests have everything they need.

• Social media management. Someone who’s a dab hand at social media is likely to be quite sought after nowadays. If you’re comfortable navigating corporate social media, you can make a fair bit of extra income from offering your services to brands and businesses, to allow them to make the most of their social media accounts.

• If you’re well-organised and enjoy the financial aspect of business, you could try your hand at Matched Betting. This is a strategy that allows you to take advantage of bookmaker offers to guarantee profits, regardless of the outcome of a match or race. Our guide takes you through all you need to know about how Matched Betting works - or as an alternative, you could take out our free trial and get stuck in right away.

Summary

Dropshipping is a relatively easy side hustle to get started with, and it certainly is still possible to make money from it, but it does have its downsides. You’ll need to work hard to market your dropshipping business, and focus on providing excellent customer service to compensate for your comparative lack of control over logistics.

If you’ve got a good business brain, a strong concept, and a drive to make your online store a success, you’ve got a great chance of significantly boosting your income through dropshipping as a side hustle - and who knows, you might even make it a full time living.