What is drop shipping and can you do it successfully in Australia?

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The low-cost way to start a business

When it comes to investigating new business ideas, it’s no surprise to find drop shipping on any listicle of best side-hustles. But what is drop shipping and can Australia be a good place to launch such a business?

As the 55th most populated country, Australia punches well above its weight as the 10th largest eCommerce market in the world.

Reselling products online is considered one of the easiest types of businesses to start. It differs from other businesses that sell products they’ve either found, made, upcycled or bought.

Drop shipping is a way of selling goods without ever having to handle them yourself. All you have to do is research and source out the best drop shipping products to sell — and then sell them.

What is drop shipping?

Drop shipping begins with someone making a purchase from you. Then, the product is shipped to them directly from your supplier.

Close-up of a man taping up a shipping box

You never have to deal with the headaches of shipping, storing or packing the products yourself.

By not worrying about supply chain logistics or inventory management, you can focus on finding the best drop shipping products for your target audience. Succeeding with this business model requires informing and connecting with buyers to spark wild demand.

Drop shipping is renowned for its low upfront investment and low barriers to entry. However, don’t think of it as a get-rich-quick scheme.

How to succeed

Drop shipping can be incredibly worthwhile if you do the research and apply the unique promotional skills it takes to be successful. Make sure your interests align with what you’re prepared to invest.

To be successful and enjoy running your own drop shipping business, you’ll want to choose:

  • Appealing or high-demand products for the right price
  • The right marketing strategies to reach, engage and service your desired customers
  • Business processes to cope with returns, complaints, and potential supply constraints

Some upfront investment is to be expected and you’ll want to invest time and funds establishing your online presence.

Since you won’t have to worry about logistics and storage, you have more freedom to explore the best drop shipping products available. This will allow you to focus on your customers and their needs.

Is Australia a good place to start a drop shipping business?

Overhead view of workers in a warehouse

Drop shipping businesses thrive in regions that meet key criteria, including:

  • Strong eCommerce growth potential
  • Good internet penetration
  • High adoption of technology
  • A growing population
  • High demand for online shopping

Australia ranks well for all five of these factors.

According to the Australia Post’s 2020 eCommerce Industry Report, online shopping increased by 31% in April 2020 compared to the average in 2019.

The report also noted Australians’ willingness to support regional and local businesses.

And let’s be honest, Australians love a bargain. However, we’re often deprived of the range and breadth of new and interesting products available overseas. This is often due to shipping, tax and logistical constraints.

Tapping into some of these supply gaps is a great opportunity for savvy Australian entrepreneurs. With Asia being so close, Australia has vast resources to source out the best drop shipping products.

There’s also a plethora of superb, locally-made, products in Australia. These lucrative and unique niches are ripe for the picking — even among the more high-volume, low margin, drop shipping enterprises.

What are the best drop shipping products in Australia?

Shoes in a box sitting on a table

Drop shipping works brilliantly for some products and less so for others. If you’re thinking of setting up a drop shipping business that supplies to Australia, consider asking yourself the following questions:

  • Is your potential supplier willing to ship your product to or within Australia?
  • Is the product something you would buy and use yourself?
  • Do you like the product and are you comfortable promoting it?
  • How easy will it be to resolve supply issues if they arise?

To find out what people are searching for on the internet, you’ll need to review growth trends and their drivers. Analyse keywords and discussion forums for topics or product ideas you are interested in.

Keep a close eye on what people are talking about on social media. You can often find products that help people with a specific need they’re looking to address.

How to choose the products you’ll sell

Below, you’ll find some additional tips on how to choose the best drop shipping products to sell.

1. Choose products in hot categories

Keep in mind, you’ll have to determine which online shopping categories are popular. Over the last year, inventive gadgets have seen strong growth across health, fitness, gaming, home and gardening categories.

Some of the best drop shipping products include:

  • Smart watch bands
  • Gadget casings
  • Eco-friendly innovations

Any accessories that support easy use of technology is sure to be a winner.

You’ll also want to watch out for fads that may quickly fizzle out (like the vuvuzela). If you sit on these products for too long, you could find yourself with excess products you can’t sell.

2. Opt for low-hassle options

Be mindful of products that are fragile, degradable, restricted, copyrighted, or branded.

Some marketplace platforms don’t permit drop shipped food items.

 

You’ll want to avoid these complexities and any legal or remediation expenses with suppliers and customers alike.

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3. Stay within budget

Products that are too expensive to buy or ship could hinder your profits. Be aware of your margins and compare suppliers. Try to avoid sourcing from suppliers across different regions, as the combined shipping costs and logistics can become prohibitive.

4. Assess the quality of your products

The best drop shipping products are often unique. Generally, the more novel the better. But be wary of offering customer-specific modifications before shipping, as this can erode your margins and add an extra step to quality control.

You’ll also want to be on the lookout for attractive products. Anything that’s visually appealing, interesting or quirky can help boost your sales.

Generic or mass-produced items can put you in a race to the bottom on pricing and you may find yourself losing potential customers to cheaper equivalents on other sites.

Offbeat products that evoke emotions tend to fare better than plain products.

 

They also stand out in crowded marketplaces.

Key takeaways on drop shipping

Do your research about suppliers and the types of products you are willing and able to sell. Test the supplier and the products and be honest about what you are selling on your website to avoid customer disappointments.

Remember to focus on areas you are interested in. Investigate lesser-known niches that may be underserviced by other drop shipping businesses and retailers.

In Australia, there can be a seasonal or launch lag compared to overseas markets, so you might be able to get the jump on established local sellers.

Drop shipping is a way of setting up a reselling business without having to learn the ins and outs of supply chain logistics.

It frees you up to reach, educate and understand your customers. This allows you to buy the best drop shipping products to help suit their needs.

As with everything, what you put into drop shipping is what you get out of it.