To start a dropshipping business, the first step is to choose a sales channel where customers can see and buy your products. There are several sales channels available on the market today, but the key is choosing the right supplier.
In a world where online shopping is the norm, there's no shortage of dropshipping suppliers, but they will often be located in different regions of the world. This means you need to have good knowledge of English and excellent negotiation skills.
Knowing how to negotiate is a broad concept that refers not only to the ability to convince a supplier to lower their price but also to the ability to maintain a relationship with the supplier themselves, including through follow-up calls or visits to verify the products.
Choosing your suppliers will get you off to a good start, but it's not enough on its own. Since there are millions of products on the market, you'll need a clear process for sorting through them. The goal is to identify the products that customers are most likely to buy.
Products that are unattractive or in low demand are unlikely to generate sales. Selling attractive products, by contrast, leads to high sales and repeated purchases — often even from the same buyers.
Finding the best products is one of the most important tasks when running a dropshipping store and can make the difference between success and failure.
Lastly, you need to have good knowledge of the aspects related to shipping and importing products that often arrive from non-European countries, being fully aware of the possible customs fees, costs and shipping times.
Another fundamental aspect that must be taken into account before embarking on this adventure is tax.
This necessitates finding out about the taxes that apply to this type of commercial activity.
The invoicing methods for dropshipping and traditional e-commerce are the same. The necessary payments and documentation will vary only according to the geographical location of the operators involved. Consequently, given that three parties are involved in the sale/purchase, dropshipping is considered to be trilateral trading from a tax point of view and, as such, is subject to very specific VAT rules.
There are three different types of trilateral trade depending on where the three sale/purchase transactions take place:
Given the different settings in which each of the trilateral trade situations outlined above occurs, it goes without saying that different VAT rules governing the levies to be paid are applied for each of them.
There are countless websites that offer dropshipping and Amazon allows dropshipping too, but on the condition that its guidelines are followed.
Some limitations that are often found due to the guidelines are: