Updated
Dropshipping is retail without inventory. You list a product, a customer buys it, and only then do you pay a supplier to pack and ship it — usually straight to the customer. You never hold stock and you never pay for a product you have not already sold.
That single change removes the biggest barrier to starting a shop: capital. It also introduces new problems — thinner margins, slower shipping, and no control over the warehouse. This guide covers both sides honestly.
01How the money actually moves
A dropshipping sale has three prices: what the customer pays you, what you pay the supplier, and what delivery costs. Your profit is the first minus the other two, minus any payment or return cost.
Example: you sell a product for £29. Supplier cost is £12. Delivery to the customer is £4, paid by you or added to the order. Your gross margin is roughly £13 before returns and advertising.
| Line | Amount |
|---|---|
| Customer pays | £1,290 |
| Supplier product cost | £620 |
| Courier / delivery | £110 |
| Gross margin | £560 |
02Who does what
In a working dropshipping setup there are four roles, and only one of them is yours.
- You: choose products, set prices, run the storefront, answer customers
- Supplier: holds stock, packs the order, ships it
- Courier: moves the parcel and confirms delivery
- Payment provider: settles card or mobile-wallet money into your account
03Where beginners lose money
Dropshipping fails on arithmetic far more often than on product choice. The three costs new sellers forget are return shipping, cash-on-delivery failure, and advertising spend per sale.
Price with a margin that survives one failed delivery in five. If a £200 margin cannot absorb a returned parcel, the catalogue is priced too thin.
- Refused cash-on-delivery parcels still cost you the courier leg
- Returns arrive days later and rarely go back to the supplier
- Paid traffic has a cost per order, not a cost per click
Questions
- Do I need stock or capital to start?
- No stock. You need a little working capital for supplier cost on early orders and for any advertising, but you never buy inventory up front.
- Is dropshipping still viable?
- Yes, but not as a get-rich scheme. It works as a real retail business with sensible margins, reliable suppliers and honest delivery timelines.
- How long does delivery take?
- Domestic fulfilment is usually 1–4 days. International supplier shipping is typically 1–3 weeks, which you must state clearly on the product page.
Do this in Global DropShop
Global DropShop gives you product listings, margin-based pricing, a branded storefront, checkout and delivery tracking in one place.