How Does International Dropshipping Work?
What is International Dropshipping?
If you are a dropshipping business owner and planning to expand your ecommerce business then international dropshipping is a lucrative business opportunity. This business model allows online retailers to sell products to customers worldwide without the need for maintaining inventory or handling logistics. Instead, dropshipping involves partnering with suppliers who ship products directly to customers on behalf of the retailer.
The concept of dropshipping has revolutionized the way businesses operate, offering flexibility, scalability, and low overhead costs. With international dropshipping, retailers can tap into global markets, reach a diverse customer base, and capitalize on the growing demand for online shopping. From small startups to established brands, businesses of all sizes can leverage the benefits of international dropshipping to drive sales, increase profitability, and establish a global presence. In this blog, we will understand the workings of international dropshipping and what all things should be considered when starting.
Can you Dropship Internationally?
There are two ways to look at what is considered dropshipping internationally.
- Your customers and suppliers are in a different country from where you are based.
- Your supplier is in a different country from the majority of your customers.
Your customers and suppliers are in a different country from where you are based.
One form of International dropshipping I guess you could call it is if your supplier is located in a different country than your business. For example, let’s say both your supplier and customers are in the UK however your business is legally based in the US. If 100% of the customers that you sell to are in the UK then shipping policies don’t play as much of a factor as #2, however, if you are based in the US you will just need to be sure your dropship supplier accepts resellers from other countries. You will also want to be sure you calculate currency conversions properly when calculating profit. You are also at the mercy of the exchange rate. Lastly….taxes….consult your CPA.
Your supplier is in a different country from the majority of your customers.
Now the more common use of the term “international dropshipping” is when your supplier is based in a different country from where your company and a majority of your customers are based. This obviously can have a huge impact on the customer experience. The first question to ask is, “Does my dropship supplier ship to customers internationally, and if so what are the shipping rates, delivery times, and policies?”. If so, understanding the time that it takes to ship the product from your supplier to your end customers should be communicated clearly to the customer. If you are commonly shipping internationally, it may factor into the type of product and buyer you target.
Some buyers and product lines may already come with the expectation of longer shipping times. One example is when customers are purchasing anything that is customized (even slightly), their expectations are usually set for longer ship times. Also, more expensive and unique items usually come with a longer shipment expectation. However, with the booming ecommerce global economy, many international shipments are arriving at the doorstep of your customers quicker than one would expect.
The other areas to consider when shipping internationally are breakage, weight, and price. Shipping a product that easily breaks, is heavier than average, or doesn’t hold a profit margin to justify the higher cost in shipping, can sometimes outweigh the opportunity you may have with an international supplier.
When dropshipping internationally, there are several additional factors to consider beyond just the product itself. Breakage, weight, and price play crucial roles in the success of an international dropshipping business.
Breakage refers to the risk of products getting damaged during transit from the supplier to the customer, especially when shipping long distances across international borders. As a dropshipper, I need to ensure that the products I source are packaged securely to minimize the likelihood of breakage. This may involve working closely with suppliers to use appropriate packaging materials and methods to protect the products during shipping.
Weight is another important consideration, as shipping costs are often calculated based on the weight of the package. As a dropshipper, I need to be mindful of the weight of the products I sell, as heavier items may incur higher shipping fees, which could impact my profit margins. I may need to factor in shipping costs when pricing my products and consider offering lightweight items to minimize shipping expenses for my customers.
Price is also a critical factor in international dropshipping, as it directly affects the competitiveness of my business. I need to consider not only the cost of the product itself but also additional expenses such as shipping fees, customs duties, and taxes that may apply when selling internationally. By carefully calculating all costs involved, including overhead expenses and desired profit margins, I can set competitive prices that attract customers while ensuring profitability for my international dropshipping business.
What are Some Tips for Success in International Dropshipping?
If you are into dropshipping business then these tips will enhance your chances of success in international ecommerce, drive sales, and establish a strong presence in global markets.
Build strong relationships with suppliers – Establishing strong relationships with reliable suppliers is crucial for international dropshipping success. Communicate effectively, negotiate favorable terms, and ensure consistent product quality and timely fulfillment to build trust and reliability.
Offer competitive pricing and shipping options – In the competitive landscape of international ecommerce, offering competitive pricing and flexible shipping options is essential to attract customers. Balance profitability with affordability, and consider factors like shipping speed, tracking, and delivery reliability to meet customer expectations.
Provide excellent customer service and communication – Exceptional customer service is paramount in international dropshipping. Respond promptly to inquiries, address concerns effectively, and provide clear communication throughout the purchasing and shipping process to enhance customer satisfaction and loyalty.
Stay updated on international trade policies and regulations – Navigating international trade policies and regulations is critical for compliance and smooth operations. Stay informed about import/export laws, customs duties, taxes, and shipping restrictions to avoid legal issues and delays in shipments.
Optimize website for international customers – Create a seamless shopping experience for international customers by optimizing your website for global accessibility and usability. Offer multi-currency pricing, language options, and localized content to cater to diverse audiences and improve conversion rates.
Monitor and analyze performance metrics regularly – Track and analyze key performance metrics such as sales, conversion rates, shipping times, and customer feedback regularly. Use this data to identify areas for improvement, refine strategies, and capitalize on opportunities for growth in international markets.
International dropshipping presents a lucrative opportunity for entrepreneurs like us to expand our businesses and tap into new markets worldwide. By leveraging the benefits of dropshipping, such as low overhead costs and flexibility, along with the tips for success outlined earlier, we can overcome challenges and thrive in international ecommerce. Let’s embrace the adventure of exploring international markets, building strong relationships with suppliers, offering competitive pricing and shipping options, providing excellent customer service, staying informed about trade regulations, optimizing websites for global audiences, and regularly monitoring performance metrics.
With determination, adaptability, and strategic planning, we can unlock the immense potential of international dropshipping and take our businesses to new heights of success on a global scale. Sign up for a free Inventory Source account to browse some of our international dropshippers and their policies.