What is drop shipping and how do you succeed with it?

How drop shipping works for companies in Sweden

With drop shipping you can easily start an e-store without the need to invest in stock management and logistics solutions. Products are sent straight from the distributor to your customers. This page contains everything you need to know to get started with drop shipping in Sweden.

Drop shipping is an efficient way to run an online store, and a method which has long been popular in the US, among other places. In Sweden, it’s still a relatively rare to see drop shipping businesses, but interest is on the rise and the number of Swedish players who use this business model is growing.

If you want to start a web store with drop shipping you first need to know how it works. Below is a guide to what drop shipping is, what it takes to succeed, and what the pros and cons are.

What is drop shipping?

Drop shipping is a special form of distance trading which makes it possible to sell products without the need to have your own stock and warehouse. If you run an online store with drop shipping in Sweden, all orders are placed in your own web store, but the products are sent straight from the wholesaler to the end consumer without going through you first.

All sales are by order of you and your online store, but you don’t do any production or distribution yourself. The business model means that you, through your distance trading company, become a trade commissioner rather than a traditional retailer.

How to succeed with drop shipping

To succeed with drop shipping you need, among other things, a solid strategy, good margins, and reliable suppliers. Your choice of products and target group is of course also important. You need to offer products that are in demand, at prices that both appeal to the customer and give you a good profit margin – like any type of sales.

Below are some tips and advice for things that give you the foundation for building a profitable drop shipping business.

Collaborate with suppliers that give good commission

As a drop shipper you get commission from suppliers each time a customer buys something in your web store. The commission can vary significantly between different suppliers, which is why it’s important to be thorough when choosing.
Great suppliers are, in many ways, key to success in a business model like drop shipping.

A simple alternative to finding suppliers on your own is to use an existing product portal for drop shipping – for example Droshi, Oberlo or BigBuy.

Consider what shipping costs and lead times feel reasonable

Shipping costs and lead times are something to consider. On large markets like the US and China, there’s an enormous amount of products to drop ship, but lead times are often long and shipping costs high.

When selecting markets for drop shipping in Sweden, consider the delivery times your customers might expect, and how much it will cost you. And don’t forget that VAT and customs fees must be added to items imported from countries outside the EU.

Build an online store and market your business

Last but not least, you of course need an online store to sell your products in. You also need to market your store to reach the target audience.

Nowadays, there are many great and cheap e-commerce platforms to build your own web store. For more efficient management of shipping, you can also connect your e-commerce system to PostNord’s integration solutions.

Marketing can be done on various social media channels. It’s free and you can reach a lot of people.

In summary, the following 5 things are great to remember to succeed with drop shipping:

  1. Create a clear business plan and sustainable strategy for your business
  2. Bet on products with high profit margins, and which you know a lot about
  3. Find a good supplier – or work with existing platforms for drop shipping
  4. Build a web store using an e-commerce platform that is easy to use
  5. Market your business online and in social media

Frequently asked questions about drop shipping

Do I need my own company to start with drop shipping?

Yes, if you are not running your online store purely as a hobby without profit, you need your own company.

How much can I make on drop shipping?

This depends on how much time you put into it and what you sell, but with good profit margins and reliable suppliers there are great conditions for good profitability.

How does drop shipping and tax work?

General rules for VAT and tax on e-commerce applies, but the terms vary depending on product and country of origin. For more information, check Skatteupplysningen.

Who is responsible for claims and returns?

Different suppliers can have different terms, but usually claims and returns are made through you as the seller. In other words, the responsibility for these things lie with you.

What shipping costs apply to drop shipping?

It depends on what country you buy the products from, and what the product value is. Shipping from suppliers outside of the EU is more expensive because import taxes and customs fees apply.