Dropshipping is the business model that lets you sell products without holding inventory — your supplier ships directly to your customer when an order is placed. It's an accessible entry point into eCommerce, but it requires more strategic thinking than the "passive income" narrative suggests. Here's what you actually need to know to make it work.
You list products for sale on your store (Shopify, eBay, or your own website). When a customer places an order, you pass the order details to your supplier, who ships the product directly to the customer. You keep the difference between your selling price and the supplier's wholesale price. You never handle the physical product.
Supplier reliability is the single most important factor in dropshipping success. Slow shipping, inconsistent stock availability, and poor product quality all directly damage your customer relationships — and you're responsible, even though you didn't make or ship the product. Prioritise UK and European suppliers for UK sales to keep delivery lead times competitive. Alibaba-sourced suppliers from China can work for slower-delivery categories, but 10–20 day delivery times are incompatible with most mainstream eCommerce expectations.
Generic dropshipping stores that sell everything rarely succeed — the competition from Amazon and established retailers is overwhelming. A niche focus — camping gear for UK campers, accessories for a specific dog breed, handmade pottery tools — builds an audience, improves ad targeting efficiency, and creates defensible differentiation that generic stores can't match.
Dropshipping margins are lower than standard retail margins because you're not manufacturing or buying in bulk. A realistic target is 25–40% gross margin after supplier cost and shipping. This needs to be enough to cover: paid advertising cost per acquisition, payment processing fees (2–3%), marketplace fees if applicable, and customer service time. Model your unit economics carefully before investing in advertising.
Successful dropshippers often discover that their best-selling products can be bought in bulk at significantly lower unit cost, improving margins dramatically. Moving from dropshipping to holding inventory at a UK 3PL — even for your top 5 SKUs — transforms delivery speed, reduces supplier dependence, and improves profitability. PackPro works with businesses at this transition point. Get in touch to discuss your options.