The Dropship Unlocked Podcast

Dropshipping in the UK | The Do’s and Do Nots (Episode 116)

• Lewis Smith & James Eardley • Season 1 • Episode 116

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In today’s episode, Lewis Smith and James Eardley dive deep into the unique world of UK dropshipping. They’ll explore the essential differences between dropshipping in the UK and other markets, covering topics like UK consumer behaviour, taxes and VAT, choosing the right products, and setting up your Shopify store for success. 

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Topics Discussed:
★ What is UK Dropshipping?
Understanding where your suppliers and customers are, and why UK dropshipping is different from international dropshipping.
★ UK Consumer Behaviour
How UK customers expect fast delivery, excellent customer service, and clear communication. Learn how to cater to these needs effectively.
★ Starting Your UK Dropshipping Business
Where to begin – product research, setting up your Shopify store, and finding reliable UK suppliers.

Links and Resources Mentioned:

Key Takeaways:

★ UK-Specific Dropshipping Strategy: Understanding local suppliers and customers is key to success in the UK market, including shipping times and customer expectations.
★ Customer Expectations: UK consumers expect fast, reliable delivery and good customer service, so tailoring your operations to meet these demands is crucial.
★ SEO and Ads for UK Success: Optimising your store for UK-based SEO and using targeted Google Ads and social media can drive high-quality traffic to your Shopify store.

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Drop Shipping has quickly become one of the most popular online business models, but there's still so much opportunity for dropshipping in the UK. But in order to do that, you have to when I switched my drop shipping from the traditional Aliexpress model to local UK suppliers, that was when everything changed for me, because however, UK dropshipping differs drastically, we should say, from traditional drop shipping of products from abroad, there's a few major differences. There are certain things that you should do and others that you definitely should not do when it comes to drop shipping in the UK. Like, for example, I certainly found out what happens when you try drop shipping in the UK without a specific plan, and because of that, I don't want anyone else to go through that, because what happened to me was, welcome To the dropship unlocked Podcast. I'm Louis Smith, the founder of dropship unlocked, and with me is our Client Success Coach James Eardley. Now when we're not recording podcast episodes or running our own e commerce businesses, you'll find us helping aspiring entrepreneurs launch their own high ticket drop shipping stores. So if you're ready to build your own six or even seven figure online business. Then head over to dropship unlocked.com forward slash, start now. Sit back, relax, and let's unlock your potential with the dropship unlocked podcast. In today's episode, we are going to be diving deep into UK dropshipping. What does it really mean to do drop shipping in the UK, and how can you navigate it successfully? We'll be covering everything from understanding UK consumer behavior to scaling your business in the UK and avoiding common pitfalls. Now, Lewis and I have got years of experience inside the UK market doing drop shipping specifically, and we've generated over 7 million pounds between us. So with that experience, we can go straight to the heart of what it's really like to drop ship in the UK. So firstly, Lewis, let's kick off with the fundamental question, what do we mean when we talk about UK drop shipping? Where are the suppliers and where are the customers? Yeah, clues in the name there UK. So it's a trademarked model, right that we've put together called the home turf advantage. Now that's the core model that we teach at dropship unlocked. But to unpack what that means is UK. Drop Shipping involves working with suppliers and customers who are based in the UK. Now, some people are like, who manufactures goods in the UK? Who makes that? Like, where are the factories in the UK? Now there are some and there are companies that both make the products here and deliver them from here, but just because a supplier is based here doesn't mean that the products have necessarily been manufactured in the UK. So as long as they're in the UK, what that means for us is we're not having to pay things like import duties and taxes and, you know, wait for long delivery times and pay for container loads of stock. We're able to just have them dispatch from their warehouse, usually with next day delivery. So the suppliers that we work with and that our members typically work with are nearly always based in the UK. They've got stock in the UK. They focus on serving customers in the UK with really fast, reliable delivery times. So, yeah, it's just important to understand. Because I know when I first started, I was thinking, Well, I've not run a business before. Do I really want to, you know, have the so many new variables of like, okay, new business, new type of business model, first time entrepreneur, first time director, and I'm now operating in a market I don't even know. I was like, Well, if I can at least change that, make that variable kind of constant, and I know the UK system, I can learn it, understand the tax implications, stuff like that. It kind of made sense to keep things simple. And it turned out later, for reasons I didn't even realize, to be the biggest advantage of the whole system. Hence the name the home turf advantage. Yeah, I like it. It it makes a lot of sense where it come from. And it is an advantage because it's easier to speak with suppliers, isn't it, Lewis, when you've got that UK connection, and it's easy then as well, to serve customers when you're also from the UK. And you kind of get it, you kind of understand the culture. And it definitely helps, I think, with with first getting started. And it's an advantage, isn't it? You want to get every advantage you possibly can. And one of those biggest advantages would be actually coming from the same country as the suppliers that you're working with and having that conversation. Yeah, the amount of them Google Translate chats I had over Ali bar and Aliexpress where, you know, there's like, broken English being converted into Chinese. And then back to that, and we're both communicating in English on the chat, but it's like, really like, and stuff gets missed, and details and, you know, that's just the tip of the iceberg of problems with the kind of AliExpress, Alibaba and Te move, whatever the kids are using nowadays models of drop shipping. But, yeah, it's the very first thing. Is communication. You know, if I, if I go and pick up the phone to a supplier today, any one of my suppliers, I just chat to them, I'm like, Oh, this all. Don't like are they is that ready to go out yet? Or, you know, we had a question from a customer the other day about this product that they can just immediately answer my question in, like, immediate, fluent English, and it's really simple to the point where my team can just have those chats with them now over email, and I don't really have to get involved in that stuff. So, yeah, huge benefits to dealing with people in the same market as you, makes such a difference, isn't it? I mean, I got quite good in the end, actually try and being able to translate what the emails are saying from a Chinese supplier. They have certain ways of talking to you, and you kind of pick up on the way that they speak. And being introduced like as high deer at the start of an email, they love calling you dear, don't they? I don't know why. There must be an indirect translation. Thank you, dear for your message. So it's very kind for you've completely misunderstood what I asked exactly. Well, you know, you take it because they called you dear. They can say anything after that, but no, you kind of pick up on these kind of different things that they do. And when you have somebody from the UK, you suddenly, then realize what was difficult before, and we are talking about sending products from this country to our customers, it is important that we can have a close conversation and communication, because you need to make sure those products that we're selling are actually going to lead to a happy customer. And the reason we're talking about UK drop shipping is a bit of a revolution, in a way, is because initially, when you're first introduced to e commerce and drop shipping, it's always the same, isn't it? Those you're always introduced initially to products that have been manufactured in China, and you just kind of accept that if you're drop shipping, you have to deliver them across the world to whichever market you're you're sending them to. Yeah. I mean thinking about why that is, I guess the people teaching that model have not done it in a way that is sustainable, you know, where they've built a real, reputable brand purely because there's a bit of a barrier to entry. There's a moat around the types of businesses that we create in that you actually like, heaven forbid, speak to a supplier and like, go and shake someone's hand and like, create an actual contracts to work with them. So if that, you know, if that barrier exists, you just end up with this kind of, like group of people operating on the and the outside of that kind of real business model, just saying, Oh well, you can just do it with suppliers from China, and you just have to log in and create an account on whatever site and have your products auto fulfilled. But then it all starts to fall apart when things work. I think one of the benefits of the barrier to entry is that you then have a more defensible business. And when I say barrier to entry, I'm talking like sometimes you just have to send a few actual emails to suppliers to sign them up, or maybe you have to fill in a form, or you have to have a quick phone call with them. You know, it depends on the niche that you're in, but I would prefer to run a business where I know I've at least taken some steps to kind of differentiate myself from the pack and and then obviously, one of the advantages of having done that is you then have way happier customers. Because, you know, customers expect fast delivery these days, don't they? Not at times, I've ordered something and then only after ordering it, realized it was coming from a drop ship earth through a supplier in China. And you're like, Damn, why did I fall for that again? And, you know, you can't even find a way of, like, canceling the order or whatever. And it's just like, Ah, forget it. I just, you know, wait till it arrives, and then it's inevitably disappointing, isn't it? It is, it is. Yeah, it is. I mean, maybe a few years ago, people were willing to wait two or three weeks for deliveries, but things have just shifted. Things have changed with Amazon and next day, or even same day delivery, consumer behavior has changed, and we have to adapt to that if we're going to sell products online. And what are the things you've seen specifically from UK consumers that now that you've been selling to UK customers make you more aware of how to actually sell to UK customers. Yeah, we're a, we're a funny bunch in the UK, aren't we? Like as consumers? I think they are very quick to complain. You know, it's, I think there's just kind of a like, a tendency to, like, have very high expectations, which is fine, like, that's good for businesses, because it kind of forces businesses to be better and but, yeah, like you say, the days of just being like, oh, okay, you know, I'll let it wait three weeks to arrive, like that doesn't really happen in the world of online, you know, reviews and stuff like, people are gonna let that be known. So I think UK consumers are typically known for valuing fast delivery and great customer service, like, they will not be happy if a product takes weeks to be delivered when you've got something like Amazon Prime that can offer next day delivery. But also, you know, the amount of customers that have bad experiences due to be being put through to some customer support agent who doesn't have a clue about the products they're selling. Yeah, you know, you can do some damage to your business that way. That's where we always make sure whenever we onboard a new virtual new virtual assistant for one of our businesses, it's like your first couple of weeks. Are just listening to calls of previous customers and just learning ropes. Have a look around the website. Make sure you're familiar with all the different categories. Read all the emails we've got so that, and then we'll do role plays with either with me or with someone else on the team. Um. Yeah, and yeah, they expect clear communication. You know, they don't necessarily want to be called Dear in their, you know, communication, emails from from suppliers and from retailers. And they want nice, clear, transparent, shipping policies, return policies. And it's a fairly price sensitive market in the UK, it's not, I mean it, maybe I take that back. It depends on the niche that you're in. I think if you go into a niche where it's like, full of very price sensitive, like, I'm only looking for the best, little, cheapest to deal, then you can make a life harder for yourself by going into a niche like that. And that's one of the things that we go through inside the master class, like talking you through how to actually kind of research a niche ahead of time to ensure that you go into one that you're not too worried about, that you have to be the absolute cheapest in the market. Because there's a lot of ways to win a sale other than just price. That's been my experience. That's right, yeah, you can increase the amount of value that you provide so that customers aren't comparing different retailers on just the price that they're selling the product at. They take in other factors into account. And in the UK, certainly great service, and if you can offer fast delivery, you're going to come out ahead of other options. I mean, what is it then? I think when some people look at a certain niche, they just view those products as like a commodity. And when you go shopping for certain things, you just decide that it's the most important factor when I'm buying certain products is that it's the cheapest, um, I guess that that would become things that have become commodities, and you can get them everywhere. I don't know something that you don't mind about the value. Trying to think of an example now, and I can't, but it's that's why it's important for us, is it's going to a niche where people must enjoy buying the best of what's available, so that it is not just based on price. Yeah, I think the lower ticket you go, the more commoditized you are. And, like, for example, um, winter gloves. Like, you know, you're trying to buy a set of, like, winter gloves you're on Amazon. I think price is going to be quite a major factor in most people's decision on what ones to buy. You know, if you go onto Amazon, and you you see like, five pairs, and one of them's got like, awful reviews, so immediately I'd discount that one. But then there's like, two that have clearly probably come from the same supplier, because the image is nearly identical. One is 30 pounds for the set, and the others 12, I'm like, Well, they've got the same amount of reviews. They look to be identical. Everything. Like, I'm probably just going to go with the 12 pound ones. You know, it's not, it's not like, I'm like, I'm going to pre like, I'm like, I'm gonna pride myself on buying the 30 pound ones of being ripped off, you know. But if you're selling, I don't know, a luxury home sofa set, and it kind of like every retailer on the internet is, is selling it for 1500 pounds. There's one or two maybe selling it for like, 1490 and a couple selling it to 1600 you know, it's not like the 1490 ones are going to just soak up all the sales and everyone else is dead in the market. It's like, well, the 1600 ones could have the best customer service. They could offer premium white glove delivery. They could offer a buyer's guide. They might be the ones marketing the best, so they're the ones that people actually see at the top of the search results, and so that people actually don't even see the 1490 option, because they're, like, on page two of Google, you know, they're not running ads. They're running just a price battle. So I think that's quite, you know, an extreme example of two very different priced products, but where price isn't as big of a factor at that higher premium level, because the type of person buying a 1500 pound sofa suite is not thinking, How do I save 100 quid on this? They're thinking, I want the right company to make my life easier, deliver it, get it all set up, like make my life simple and and I know certainly from my side, I'm not going to be like trolling the internet looking for if I can save 10 pound and then finding some site that's got no reviews on page three of Google, and being like, Yeah, I'll give my 14 190 pounds to them instead. You know, for the sake of like, a 10 quid discount, it just doesn't make sense, right? Exactly. Yeah, that's one of the best things about High Ticket Sales is, I think when you have a high ticket product, people are already used to the fact that they're going to be spending a decent amount of money to buy that product, and so they don't quibble over the 10 pound differences that there might be between certain retailers. And obviously, with the UK market, one of the best things we can do is really manipulate that price to value discrepancy that people have. People in the UK, as with probably anywhere in the world, want to feel like they've got a good deal. Whenever they buy something, they want to feel like they've got more value than the price they paid no matter what they're buying. As an E commerce seller, one of the things that I find really enjoyable is manipulating that price to value discrepancy. There's things that we can do to increase the value while we maintain the price at the same level as other retailers selling the same products. The things to do that would be adding on a guide or a bundle of other free products that comes with the initial product that people buy, or clearly having better customer service, showing people that you reach out to every customer after every order. All things that mean that we're still on the level playing field. But. But when customers actually look at the options that they've got to buy from, we're coming out on top, because there's much higher value for that same product. Yeah, exactly. It's funny. It's reminding me of a conversation I was having with one of my team the other day in the Philippines, and I was explaining to them that we want to kind of bundle this certain unit of products together. So it's like probably four or five, maybe even six products together into one product on Shopify, so that when the customer orders that product, they're getting all six products as one one go. And I kind of, I, you know, did everything, pressed it all up and everything. And initially I was like, I don't even think we need to discount it, because I think that what we're doing here is a convenient play. We're not doing a like, buy all these, and I'll give it, you know, give it to you for way cheaper. It's like, if someone's gonna go and buy that, and then the other bit, and the other thing that goes with it, it's like, just give them the whole lot together in one go. And, you know, like the the sofa, give them the pillow set, give them the free table runner, give them the, you know, coffee coasters, like, all in one, one bundle. And then my one of the team in in the Philippines was like, like, why would someone buy the bundle, though, if it's not cheaper, like, it has to be cheaper. And I was like, No, you're missing the point. Like, the the reason they'll buy it is because they're busy and they don't want to have to, like, fish through 10 different websites to find all the bits that are compatible with the product that they're wanting to buy. They just want their life to be easier. So in time, maybe we will run some offers on it, and we do do some discounts on some bundles, but we're not in the game of like, just trying to compete on price, like, we want to maintain the margin and make sure that it it works for us and the customer, and what we're doing is making the customer's life a lot easier. It's not that we're charging them more for those products. It's the same price as if you did buy them individually, but probably actually cheaper, because you wouldn't then be paying the shipping charge on the smaller items, because we offer free shipping above a certain thrice at price threshold. So it's kind of like a I see it as a win win. Customers do because they buy the bundles, but yeah, not everyone understands, like, kind of where we're coming from on that. Yeah, that's right. I think people often think that the best way to beat another competitor would be to just be cheaper, but all you do then is you erode the margins that you actually make when you do make the sales, whereas if you increase the value, keep the price the same, then you can do things behind the scenes that helps to increase the VA value that you provide. But you don't erode your margin. You still earn the same, if not more, if you can get customers to buy more with a bundle and have a higher average order value. So yeah, it's a great way to do it. It's a good way of doing it for the UK market as well, which is barely price sensitive. And it's a way of doing that so that you don't get discounted instead you increase the value rather than reducing the price. So it's yeah, one of the best things that I like to do now, the only way we know what UK drop shipping is like, is when you know what another market is like. Sometimes it's been the same with me when I've been traveling. I've learned more about the UK when I've left the UK compared to when I was living in the UK, because you start to get a feel for what it's like compared to other countries. And actually, UK dropshipping was the same. I know you've, you've done some drop shipping, or you've, you've tried to implement systems that work in other markets to the UK. And I want to dive into what are the mistakes that can happen if you try and apply other types of drop shipping in the UK market. Yeah. So the concept of high ticket drop shipping, you know, isn't a new thing. Arguably, it's been around since before the internet, you know, like um companies like Argos, for example, if you open the Argos catalog and in, I don't know when, when was the internet, say, 1982 or something, I don't know if Argos existed then, but you open a, you know, a direct mail, um, retailer catalog at that point, and you order a huge kitchen table, Something that they may be unlikely to actually stock themselves. They're probably just then forwarding that order to the supplier through their system, whatever it was, you know, the paper note that gets passed over back in the day before emails, and then the supplier would dispatch the items. I think what's changed now in this world is that we think that if you just apply that same kind of model of high ticket drop shipping and say, I'm like, Okay, I'm going to just do that from suppliers all over the world and sell to customers all over the world. Suddenly you run into some big issues, the same kind of issues that you would run into with low ticket drop shipping doing the same thing, ie not understanding your local tax obligations in all these different markets. So like, VA T, for example, are we charging VA T to customers outside the UK? Are we like, what are we charging customers inside the UK? If the orders coming from outside, are we paying the import fee on that and the customs duty, you know, and stuff's getting held at borders. Or if it's not later on, you're getting this, like, unexpected bill come through for a huge customs fee that you didn't anticipate and you didn't bake into your margin. And like, the goal posts are constantly moving in that as well, because, like, laws are changing in different environments and different countries. So I think one of the biggest mistakes is thinking that just because the internet allows you to run a global business, that it would be easy to just ship physical products all over the planet. It and not have to think about the consequences of it. You know, there's some massive pitfalls, downfalls that people don't see. And because we know this, because firstly, we experienced it, but also we get a lot of people coming to us at dropship unlocked who've been down that road, and they're opening up their laptop every morning, and they're just like, What am I going to find here? It's on my Facebook ad accounts been shut down because I was, you know, getting so much bad bad comments and bad feedback and bad press from the types of products that I was selling. Customers were unhappy, but also, you know, had a huge import tax bill that I wasn't anticipating, or my supplier just shut down for two months, and I didn't know why, and I couldn't suddenly fulfill any of the orders. So Shopify shut down my Shopify, Shopify payment processing account, and you know, all these, these kind of almost second tier, second order consequences that come from the inherent problem with the fundamental business model. So I think that's a that's a big one. The other is probably just choosing suppliers that don't offer fast enough delivery to meet the expectations of the customers that you're working with. Ideally, you know, at the stage where you're thinking about which products to sell, you're in such a great position because you haven't yet wedded yourself to any one industry. So it's like, step back from it, remove the emotion, look at the data and figure out where can I go into business where the suppliers will be able to order offer customers next day delivery, and that way you just, like, immediately setting yourself up for a huge advantage by doing that, because you're not then having to, like, fight the battles later. Once you're in, you get to choose which market you go into, so choose it wisely. Yeah, when you've got that choice, make it easy for yourself. Simplicity probably plays a key part in why the home serve advantage works because we're already in the UK ourselves. If we are based in the UK, our customers are also in the UK, and our suppliers are also in the UK. The simplicity comes from the fact we never have to cross a border with communication or the products that themselves never have to cross the border as well. And the biggest byproduct of that is the delivery time, so customers can get their products delivered from our stores within a day or two or three days. And something that I know happened in your journey, Lewis was learning drop shipping from a different country, trying to apply it into the UK and realizing that the tax laws can actually really bite you if you don't understand what taxes you're going to be paid. How did that play out for you? Yeah, well, I kind of, there's, there's two answers to that. The way that I went ahead with was the lower ticket model where, like, you've got orders coming in from China and stuff. And I'm not, you know, when those orders came through, I'm like, Are we, are we supposed to be, like, declaring those or, like, how does that work? Is it above a certain price threshold? You know, there's the whole kind of thing that they call E packet from China, which is supposed to kind of expedite the process of international low ticket orders. But when it arrives, it's then got the kind of like, you know,$1 whatever you paid for it, price tag on the actual thing to declare to customs, the value of the item. You're like, I just charged $30 for that. I'm like, what if the customer sees that, which they will because it will be on the front of the package. So I think it kind of all comes unraveled there. But the bit that I didn't actually proceed with, but I foresee, would have caused me massive headaches, is more that, like, if I'd said, for example, okay, I'm going to do it in the US market, because, you know, I'm in the UK, US is the market. That's where all the business happens. All right, maybe I need to do it in the US. I think there's a tendency, because of the amount of like, YouTube content you'll see from us content creators about drop shipping, they kind of just focus on the US market. So it's like, there's an there's a bias towards that, and what in the information you'll absorb. So, yeah, I think the danger with going in and doing that is you've then, as a UK citizen, got to go and register a LLC in, you know, a formation agent in in the or incorporation agent, whatever they call them, in the US. You've then got to know, like, am I paying state tax on all of those different orders? You've got contracts with all the different suppliers, like, and then your, how do you get your money out of your LLC, company in the US, back to the UK? Are you paying dual income tax on that? Like, it starts to get quite messy, quite complicated. Do you have a limited company in the UK as well? You just an offshore director, you know, of your LLC? It's starts to become messy. And I was like, this was the point. I didn't go down that rabbit hole just because I was like, let me just keep it simple. And actually what I realized again, the reason why the home turf advantage is called, what it's called, is because while everyone's looking at the US and worried about, like, getting their piece of the pie over there, there's 66 million people over here who aren't really being served that well at a standard that they could be, or that maybe they are in the US market, because it's not very prevalent in terms of, like teaching and education, like people aren't training people on how to set up businesses in this market. And so that's where we thought, Well, look, there's a huge I mean, I did it initially, and then thought, this is actually a. Really good model. It works really well. I can imagine a lot of people wanting to do this too. And when I was in Thailand, I was living in Thailand, I had a few people come up to me and were like, I'd really like you to coach me on how to do that. And, like, actually sit down. And so I sat on some zoom calls, and we kind of went through some of the stuff about how to set it up. And then, you know, out of that little dropship, I noticed one, lo and behold, yeah, and the rest is history, as they say. And you built this huge company, which is amazing, and it's opened up the UK to to the market, because drop shipping is so much more mature in the US. And it's probably no coincidence why we see a lot more US influence of talking about drop shipping. But the UK, as you say, it's a massive market, 66 million people who are looking to buy online, the vast majority of those people, and so we can serve those people with the high ticket products that we can tap into. So yeah, it's still a huge opportunity today. If somebody was keen, they knew that they wanted to start an E commerce business, and they thought, UK, clearly, there's some advantage to doing it in the same country that I'm currently based. But where would they actually first start if they if they know they're going to get into it, how would you recommend that people sort of dip their toe in the water and start drop shipping in the UK? Yeah, the part that I mentioned about not being wedded to the products that you're selling, it always makes me a bit nervous when someone starts working with us at dropship or not, and then they're like, I've got my products. I know what I'm going to sell. I'm coming into this. I just need the strategies on my how to build a store and run ads. And I'm like, okay, but would you be opposed to keeping an open mind just for the first few weeks and just see if it it stacks up to the data? Because your biggest advantage at this stage is that you haven't committed to a particular set of products or niche that could actually make your life a lot harder if you pick the wrong one. So yes, starting with product research makes a lot of sense, picking the products that solve problems for UK customers, but are also in demand and meet all of the other criteria. We've got about nine different criteria that we walk you through, but for example, one of the ones we talked about in this episode is, are there UK suppliers of those products who are willing to send them directly to customers? If there aren't? Do you want to be the guy that goes in and tries to convince the whole market to change, even though it's been doing it that way for 50 years? Or do you maybe just go into a market where it's already happening and take your slice of an ever growing pie. You know, that's kind of the the decision, I guess, that you're faced with at that stage. And for me, it was an easy decision. I was like, I'll just take the slice of the pie proof of concept, and then maybe I'll just take a slice of a different pie as well. And then suddenly, you you've got a lot of pie. One of the ways that after that, and you've got the product set up, you can start to think about, actually, okay, where do I put these? So setting up a Shopify store is a nice way of doing it. Once you have your limited company set up, you've got the right protections in place, you've got your business bank account. Shopify is a great platform, especially for someone who's not had experience running an E commerce business before, because it's kind of like all under one roof. Super simple. You can basically run the business from your phone once it's set up and running. And then after that, it's like, Okay, so you've got, you've selected the product, you'd probably find your suppliers at about the point where you've got your minimum viable store live. And as soon as you find your first supplier, typically those suppliers products, then go onto your store and, yeah, start signing suppliers. And you'll be amazed. We call it the snowball effect. Once you've signed your first, like, three or like, three or four, and you start dropping some of those names to the other suppliers in the industry, you know, they start getting a bit jealous and like, hey, we want in on that life. You're selling that brand. They're our biggest competitor. Like, sell ours too. Suddenly it's like, oh, now we hold the cart. So it's, it's an interesting dynamic shift where you go from like, oh, you know, Please miss the supplier. Work with me to Okay, yeah, well, we've, we've got all the big boys now, you know, on our books, like, we're working with all of the big players. And do you want to, you know, do you want to come as well? And, like, maybe we could feature your brand too, and so it just puts you in a stronger negotiating position, I guess. Yeah, it does. There's a fear of missing out from other suppliers when they realize that you are now entering the market. You've got a good number of products and suppliers on board, and they want a piece of the action as well. And I think when people think about UK drop shipping, it's not immediately apparent who the UK suppliers are. If you go to Google and search UK drop shipping suppliers, it's going to come up with a list of people that you wouldn't actually want as suppliers, because they're advertising themselves as drop shipping suppliers, whereas the suppliers that we sign for the products we want to sell are actually the brands themselves that manufacture or distribute the type of products that we want to sell. So it's there is a bit of an art to it. It's not the case of just easy Google search, and these things aren't readily available. You do need to find the right type of suppliers that sell the right types of products. Otherwise you can land yourself in hot water days. We have something called budget suppliers, don't we? For a reason, because not all suppliers are created the same. Yeah, exactly that. If you get, if you want a sure fire way to make no profit, then just Google drop shipping suppliers in the UK and go with the first result you see. For example. So, yeah, I think that's, that's the the moat I was talking about. That's the, you know, the barrier to entry that you are having to overcome in order to run the business. It's the, don't just pick the first result you see off Google. Find the supplier that doesn't refer to themselves as a drop shipping supplier, but they do offer the concept of drop shipping. You know, maybe they serve a lot of big like huge retailers that you will have heard of, like high street retailers, but they also allow direct dispatch to customers. And therefore, by definition, they offer drop shipping. And so when you can kind of identify that ahead of time, and we go through, like, all the steps of exactly how to do that, but once you've got that, you know, going into that market, you're not going to get faced with disappointment later, because you've already made that very clear. And yeah, once you sign them up, you're good to go. You've got the right type of suppliers that are, you know, you have contracts with you have agreements, you have trade prices with them. You know, you're not buying, you're not kind of selling some brands product at a coupon code discount and then hoping that no one finds it from the actual brand for the same price. These, these suppliers, the best ones, typically don't sell directly to the public in the first place. So the sofa manufacturer, they don't sell to the public, but they do sell through, I don't know, furniture village and DFS, and you know the big furniture stores, and they also drop ship through your site. So you go to the supplier, buy it at trade price. Maybe that's a 30% profit margin, so 30% discount off the retail price, and you get to buy it at that with the customer's money, remember, so you're not parting with your own cash. You wait till the money is in the bank, order it. Order goes out. The next day, you're good to go. Yeah, and there's so many more UK suppliers that are willing to start drop shipping now, as we move forward, they are realizing the benefits. I just want to close a couple of loops that might be in the minds of people now. Lewis, when we talk about UK drop shipping, two questions that we hear quite a lot is, first of all, why would a supplier work with us as a retailer when they can just sell to the customers directly? And secondly, why would a customer buy from us as a middleman and not go direct to the supplier, the brand themselves? So if you can for us, just kind of close those loops, like, why would a customer use us and why would a supplier use us as well? Well, the customer would use us because in an ideal world, we're running ads. We are the top result on Google when they search for that brand, they can't buy directly from the brand anyway, even if they know the brand they want to buy, which often isn't the case anyway. And so they're seeing us next to these other retailers as well, and we're standing out because we've got better reviews, because we offer a nice Buyer's Guide, because we're the ones that have a live chat on our site. We're the ones that give them a call and help them through their order using a virtual assistant. So this is what I mean about not just competing on price. And so that's why, you know, it's, it's difficult imagine, yeah, I think the sofa analogy is quite good. Imagine you're selling the sofa, if, like, you're not selling an Apple MacBook, right? Because clearly, if someone wants one of those, they're probably going to buy it from Apple or from one of the big retailers, we're not selling stuff where the company themselves sell directly in most cases, although we can still do that, and actually we end up out ranking the supplier in most of those cases, certainly with ads, and sweetening the deal by adding on like free gifts and free accessories and stuff, so that customers still buy from us anyway. So that's the big one that that kind of hopefully breaks that misconception of, why would customers buy from you? It's like, why would you buy a product from Wayfair? Because it was a good price and a good deal, and it was the first result you saw, and it looked like a trustworthy site. Same reason they'd buy it from you. A lot of these suppliers are not as big of an operation as you might think they are. I think we've got this kind of misconception about, like, our supplier this, like, global enterprise, with this enormous, you know, headquarters and 1000s of corporate people walking around. Typically, it's like one or two people. Some of these are, like, family run businesses where they are just swept off their feet. They've got a warehouse of full to the rafters of boxes, and they're just trying to ship them out at the best they can. If I said to them, Do you want to now create an e commerce website and have to manage live chat and customer support and return to do all the emails and do all of the marketing and spend money on ads? And do they're just like, what like, what's, what is, and what does any of that mean? You know, it's just not their forte into in most cases, some it is, and they've made an active decision that they just don't want to do that. But a lot of these suppliers have always sold through retailers that was just their route to market. So even before the days of the Internet, if they were in existence, back then, the these retailers, these suppliers, they were still selling their products through retailers, through high street shops and, you know, stores and things like that, catalogs, Argos, for example, they were selling their items through those types of platforms, and so they never had to deal with any of that stuff. Now, of course, they're set up to manage returns, and it's nice and easy, you know, if they have to, because they have the warehouse, but we're their single point of contact. You know, my virtual assistant is the person that is kind of liaising with them on. Half of the 1000s of customers that we have, because it makes a nice single point of communication. We've got our own systems processes. We kind of manage all of that heavy lift for them, and they do the actual heavy lift of getting the product out to customers. Yeah, and it's a nice relationship where everyone wins, because from the suppliers point of view, they still take 70% if you've got a 30% margin, agreed they would still take 70% of the sale price. But they don't have to find the customer and then have to serve the customer. They just get that product sent out. So it is a win win for everyone involved. And when you realize that, you realize that UK suppliers, the fact that there's such a boom in sort of E commerce space for UK drop shipping is because that there's so many suppliers that are willing to do it. Now, although they're a little bit mysterious as to where they are on the internet, and you have to do a bit of research first up front to find the best UK suppliers for drop shipping. Some of them aren't on the internet. Well, there you go. They have it. How you gonna find them? Then, if you don't have the tools? Yeah, there are ways, right? Yeah, there are always ways, but some of them are just not that advanced as suppliers, yeah, and that's perfect. If they're if they're out of view, then that makes your business that bit more defensible, doesn't it? Exactly, yeah, it means soon as you've got them over the line, although it might take a bit of a phone call or, you know, a few emails or even an in person meeting, once you've got them over the line, you've got a partner for years, and you can sell their products for years and benefit from that, maybe one conversation you had over the phone for years to come. There's conversations you've had various years ago you probably still pat yourself on the back for today. Yeah, it's probably the best investment of a three pound 25 Starbucks, where I bought for myself and the director of one of these suppliers years ago and have then gone on to like, do millions in sales for them. And it's like, well, that was a worthwhile cup of coffee. Cup of coffee, you know, I'm glad I got in the car and drove an hour in the rain that Thursday morning or whatever, because that's then what comes of it. And this is what I mean about the, you know, the I think when I say barrier to entry, I think that, well, it probably puts off the bright people, right? It puts off the kind of get rich quick seekers, the people that are like, oh, you know, I just want passive income from day one. The people that take this seriously enough to say I'd be willing to do that. I'd be willing to get in a car for an hour and go and see a supplier and chat to them, even if I don't know yet what to say, because we'd give you all the scripts and stuff you know, as to like, how to present yourself and what to say, how to overcome any of the questions they have. But I think if you kind of set yourself apart from the pack, to that extent that you're willing to do that, you're showing your your true colors as a business owner, and it's like that's going to come through, both in terms of customers coming to choose your brand, but also suppliers being willing to work with you. And there's always rewards, isn't there? When you put work in, you get the output that comes out of it as well. And there's still a time and a place in the UK market, even in the digital world that we live in today, for shaking someone's hand, looking in the eye, maybe at a trade show, maybe for a three pound 20 coffee, whatever you can do to get that person over line, it's going to pay off for years to come. Something else that I think we should touch on when it comes to UK drop shipping is the tax implications, just for people that decide they want to set up a company in the UK and start drop shipping in the UK, people might have that at the back of their minds. So sort of just share a little bit about the tax obviously, without being accountants ourselves, but an idea of what people should expect when they get into UK drop shipping. Yeah, of course, we're not tax accountants. We can't advise on this stuff, but we can certainly point out a few things to be aware of that you might want. Of that you might want to look into. Big one in the UK is probably VA T that's the one to kind of be be most aware of. And so the threshold is always changing. So you can Google right now, what is the UK VAT threshold? And you'll find it depending on when you're watching this episode and but once your sales exceed that threshold, or I believe it's like in the year that you're projected to exceed that threshold, I think it is, I'd need to check the exact terminology on that, but it's not kind of on the day you reach 90k or whatever it is. I think it's like if you're anticipating surpassing that, then you should have registered in advance. You need to start charging VA T to customers. Now, one of the ways that you can do that, we talked about this, we did an episode. I don't know what the episode number is. Maybe we can, maybe you can look that one up for us. James, while I'm I'm explaining and but that one was all about, that was with an E commerce accountant. And that was all about, like, kind of, making sure your accounting is tight from the beginning. And one of the things that Ben said on that episode was, make sure you're almost accounting for VA T in your sales from day one. Not that you're charging customers VA T, but just act as if you are, in the sense of like, make sure it would still be profitable for you if that transaction did have VA T on it. Because remember when you charge customers VA T, and you're then going to beat, well, you are going to be charged VA T from day one by your suppliers, usually, but you can then kind of offset the, what's called the input and the output to VA T against the two. So you're not completely using out, you know, it's just the government are going to take their slice of whatever the difference between those two are, and that's a. That's something to be aware of from the beginning. But one way you can kind of take the stress out of that is just work with an accountant early on, make sure you don't miss any of those calculations and get that stuff right. We give you all the kind of profit calculators and the VA T trackers and stuff like that inside the program. So you know, you can kind of input every sale in there to make sure. But do you know what that episode number was? Episode Number 92 Yeah, check that out while you were going. And it was Ben Ben's episode in the from the E commerce accountant. And yeah, he goes all of that. And I think one of the takeaways is that just bring an accountant on board takes all the headaches away, doesn't it? When you can just bring an accountant to make sure you still got lucky. Now you've got to be able to be on top of it as a business owner, but they remove so much of the headaches down. They do so worthwhile having an accountant on board. Definitely. Yeah, yeah. So final thing to mention, then, when we're talking about UK drop shipping, is actually, how do we then generate sales? We've found the right products. We've considered how it works in the UK, with the consumer behavior, with the tax. We've built a Shopify store. We've signed suppliers. We now need to go ahead and get some customers, get some sales, bring some money back into the business. Is there a specific way that works best for the UK? What's the best way to make sales? Yeah. I mean, yes, yes, the version that we see that works best. And you could argue, you know, any of these paid marketing or even non paid marketing channels, can be used effectively. But the kind of fast result, high intent platform that we see is Google ads. Now, the reason for that is that at the time of recording this episode, who knows what it will be like in the future, but a lot of the time when someone's searching for a product and they're thinking about buying something, they'll search it on Google. Now, Google make most of their money from advertisers like us who show their who get to pay to show their products at the top of the Google search results. So if you've ever searched Google for three seater sofa, you'll probably see a load of items appear at the top of the search results with photos and prices on them, and then they'll say, usually like, free delivery, and they'll have the reviews underneath. That's what's called a very high commercial intent click. If someone clicks that, because the chances are they're not going to click that, unless they're actually thinking that they want to buy one, if they want to look for images of them, they might go to Google Images. If they just want to have a little browser around, they might just like, kind of like, scroll down the results. But if they're actually thinking that, I like that one, I like the price, you know, they've not been put off by the price. They like the reviews, and they click it. That's very high intent. So that's where we start with Google ads. That's Google Shopping performance, Max search text ads. There's lots of different stuff. We guide you through all of that stuff, how to set those up, but that allows you to get traffic very, very quickly once you switch ads on the other platforms you can use that are helpful as kind of like an accessory, I guess, platform to really boost the results of your Google ads are meta. So meta ads being Facebook and Instagram ads primarily. And with that, what we can do is create retargeting campaigns. So if you think about it, anyone who clicks the ad on the on the Google search result, goes to your site, gets, you know, a cookie they get, they get pixeled as to like. They can then be tracked around the internet. We can then show them our ads on Facebook, on YouTube, on Instagram, for that same product with maybe, like, a coupon code, or like, you know, head back and complete your order, you know, or you were, you still interested in these that kind of advertising. I'm sure we've all been the consumer of that kind of advertising. We've seen it, but that's really important, and actually will be one of your highest conversion Return on Ad Spend campaigns. The other thing is search engine optimization. You know, there's lots of different ad platforms you can do, but you don't want to neglect your search engine optimization, which means optimizing your site for searches that can bring what's called organic traffic, which is non paid traffic, to your store. So imagine if you're searching for that sofa. You see the ads for the sofas at the top. Below that, there's probably a couple of search text ads that are also paid for clicks. But then if you go down, all of those results are organic, and that means that they've not paid to get that click. They're just ranked highly in Google because of various factors, things like backlinks, on site optimization, stuff like that. So, yeah, those are the key things that we would advise doing to make sure that you kind of get 80% of the results beyond that. You know, there's all kinds of stuff you can do. There's cross channel advertising, there's Tiktok ads, there's like, you can take it to a whole new level if you want to, but you know, until you're at 100,000 a month, there's probably no need. I agree. Yeah. I think when it comes to thinking about where should you advertise for UK drop shipping, you should probably just think about, how do you actually go about shopping yourself? Where do you start your journey for online shopping? And for a lot of people, it's on Google. So that makes a lot of sense for us to get ourselves in that position. For people that are searching for the products that we sell, we can get ourselves in front of those eyeballs who are people who are ready to buy. At the moment, it's Google. Maybe in the future, we'll be using a new search engine in the way that AI and chat GPT is going with that new functionality. To be able to search the web live whenever you search a query. I think there's probably something in that as to where we'll be going to shop in the future, but we can be adaptable with our E commerce stores and fit into however consumers are looking to buy our products in the future. So if someone's excited, realize that there's a big opportunity, maybe they're based in the UK themselves and want to get started, understand there's there's learning and support required to get up and running. Where would you recommend that they start? Yeah, I mean, you if you are based in the UK, then this, this makes a lot of sense. If you're not, but you think I like the sound of that, and I want to start a UK business, serve that underserved market, or even maybe serve apply this model in your own market. You can absolutely do that too. And best place to start is if you head over to dropship unlocked.com, forward slash, start. That will get you everything you need to get started. If you go there, you'll find resources, our guides, the step by step stuff, and yeah, a lot more to help you get started on your UK drop shipping journey. Are you enjoying the podcast. We'd love to hear from you leave a comment or a review, and we might feature it in an upcoming episode, and for detailed show notes and resources, visit dropship, unlock.com forward slash podcast. If you found value in any episode of this podcast, please. Could you take just 10 seconds to leave us a quick five star review on your favorite podcast app? It helps us more than you can imagine. And who knows, you might just hear your comments read out on the show. Thanks for being a part of our community. Your support helps us keep delivering new episodes to you every week. Okay, now it's time to answer a question that we've received from a listener. So remember, if you're listening to the episode today and you have a question in your mind, then simply leave a comment beneath the YouTube video version of this episode, and it won't just be answered in the comments, but it will also potentially be answered on an upcoming podcast episode. So this week, that's exactly what Louise has done. So Louise's question is, how do you place orders with suppliers and what paperwork do they keep like, for example, do you need to raise a PO when you send an order to a supplier, or do you just send an email? Are there files involved, etc? Yeah, thank you for your question. Louise, order processes are different depending on the supplier that you're dealing with. So generally, we'd have like, a spreadsheet that kind of gives the order process per supplier to our virtual assistants to be able to kind of know exactly how to place an order. Some you'll have like an order portal, where you can just log in with an account and then just place the order, and they'll just send it straight out, and then they'll typically like invoice you at the end of the month. If you've got credit terms with them when you first start out as a new business, you might not get given credit terms. They might not be able to trust you enough yet to kind of extend 30,000 of credit to you or whatever. So they might instead just say, we'll just do it as a cash account, or what's called pro forma, which is where you just pay for the orders before they go out. So at that point, you can just have either a VA, or you yourself can just call up and have that. Or some suppliers will keep your card details on the book so that they can just charge the order before it goes out. And typically it's as easy as just sending an email to the supplier with the order details, and then the supplier will respond with depends how you ask them to do it, but typically they'll just send the order out and then send an invoice for the trade amount that you got charged for that order. So if it was the 2000 pound sofa, they might send a trade invoice to us afterwards and say, You got charged 1400 pounds. And therefore we know, okay, made 600 pounds on that sale, you know, because the difference between what we got charged and what we sold it for. And yeah, after a sale goes out, an order is shipped, the supplier typically will send us a tracking code, and we can just plug that straight onto the Shopify order in the back end, and then reduces any customer questions that we get about like, where's my order? When's it going to be delivered? Because they'll be getting text notifications and updates, and depending on the apps you're using, we use after ship as an app to do that, but yeah, the whole process is online. You know, you never have to touch the product up front, and you can actually automate that process, or certainly, template it to make your life easier as well. So you can have all of the kind of template order forwarding responses saved in your email account. We give you all of this stuff, you know, as part of the masterclass, but you just forward the order on insert the template, and then it will all be done for you. So yeah, no need for any like physical files or purchase orders and stuff like that. That's very rare in my personal experience. And yeah, something that can be easily outsourced, yes. And then when it's outsourced to virtual assistants, we don't actually handle the orders ourselves, but when we do in the first place, like you say, it's just normally a case of sending a few emails and the product gets sent to the customer. So thank you very much for your question, Louise, and also a big thank you to canzo, who has left us a nice review, Louis for an episode of the podcast. Now this was an episode where you were actually phoning suppliers live. It's a video on YouTube that people can find on the YouTube channel if they type in building a dropship. Business from Scratch and candle left a great review on that video, because he said, I can see the nervousness on your face Louis while on the phone to suppliers, and I know how it feels, as I'm also a member of dropship unlocked and having a script to follow makes life a lot easier. Well done for setting up another online store and showing everyone that it isn't hard if you put the work in. Thank you so much for your review, canzo, and you're very perceptive in your in my nervousness. I think it's funny. I typically if I called a supplier. Now I'm fairly conversational and fine with it. I think I was probably more nervous about the fact that we were recording the video for YouTube of me recording a call with a supplier, knowing that, like, the whole thing was like, had to go well, so yeah, but there's definitely, when you first start out, there's definitely an element of that. And I'd absolutely be lying if I didn't say that, it just gets the adrenaline going a little bit more, doesn't it? Because it's kind of like, okay, I want this to go well, you know, I want it to work. So, yeah, absolutely. But no, very glad to hear that you've been enjoying the podcast and enjoying being part of dropship unlocked, and hopefully you're using the script and getting your own supply aside now. Now just a quick one. If this particular episode has resonated with you, perhaps you'd consider sharing it with someone who might benefit from it. Your recommendations as our listeners really help us grow our community and continue delivering valuable content to you, so a really quick share with someone just on WhatsApp could make a big difference to someone you know. Thank you for joining us on this episode of the dropship unlocked podcast. We hope you are leaving with new insights and inspiration to fuel your entrepreneurial journey, to kickstart your E commerce business. Head over to dropship unlocked.com, forward slash, start. It's the perfect place to start and get access to resources that will help you build your business from the ground up. And don't forget to hit that subscribe button for more episodes packed with strategies, tips and success stories. Plus, if you enjoyed this episode today, a five star review would mean the world to us, and you might even get a shout out on the next episode. Thank you for choosing to spend your time with us today. We can't wait to bring you more insights on the next episode of the dropship unlocked podcast. You.