Dropshipping is a flexible business model with low risk and high growth potential. So it's no wonder that its popularity has almost exploded in the hands of the world. But how exactly is dropshipping done, and can it be done profitably in Finland?
In the article, we open up these issues and talk about the opportunities that dropshipping currently offers in the Finnish and international markets. At the end, you will also find a few tips on how to set up a profitable dropshipping operation, i.e. an online store without inventory.
What is dropshipping?
Dropshipping means running an online store without your own warehouse or large initial investments. In the operation of the dropshipping model, the goods are bought from the entrepreneur's online store, but they go directly from the supplier/manufacturer's warehouse to the customer.
The dropshipping entrepreneur therefore acts as a kind of intermediary between the manufacturer/supplier and the customer. And since sales are not limited to the company's own limited inventory, dropshipping, if done correctly, has a very high profit potential.
Of course, like any business, there are risks associated with dropshipping.
The dropshipping entrepreneur bears the responsibility for possible fumbles by the manufacturer/supplier, such as quality defects, long delivery times, lost products, etc. However, the entrepreneur can effectively minimize this risk by e.g. by choosing reliable suppliers who are proven to deliver quality products, and by marketing to the right target groups.
Dropshipping in Finland - is it worth it?
Just like in international markets, dropshipping in Finland can also be a very profitable business if done correctly.
Dropshipping also has several advantages compared to regular e-commerce. In the dropshipping model, the entrepreneur does not invest in products, which is usually the biggest expense when setting up an online store. It is also often difficult for a smaller company to acquire the large initial capital required to acquire products and warehouse space.
The dropshipping entrepreneur also does not have to take care of the delivery of the goods themselves, but the manufacturer/supplier takes care of it. It is also possible to automate the reporting of orders, in which case the products are delivered from the supplier/manufacturer's warehouse directly to the customer without the intervention of the entrepreneur.
The dropshipping entrepreneur therefore has more time for marketing and operational development, as well as scaling. Often, the entrepreneur also has the opportunity to start delivering the products themselves, which leaves more margin. In dropshipping, it is also much faster and easier to react to changing demand, because there is no physical warehouse.
Dropshipping offers flexibility that a normal online store and company does not have.
However, a dropshipping online store can also generate a really nice turnover for many years. We say this on the assumption that the entrepreneur has spent time understanding the target market and target group, and adapts to these changes when necessary.
Taxation of dropshipping income in Finland
In Finland, dropshipping activities are taxed in the same way as other businesses, i.e. income after expenses is taxable income.
Ultimately, the taxation of dropshipping income is determined by the form of company. Setting up a dropshipping online store therefore requires the existence of a company, and the most common type of company is a limited company due to tax and other benefits. Of course, it is also possible to do the activity profitably, for example through a business name.
If an entrepreneur is doing dropshipping in the Finnish market, he must take into account the value-added business limit, which is 15,000 e/year, and if necessary, apply for the VAT register. On the international market, the taxation of the countries in question remains to be considered, where an accounting firm can help.
Of course, the dropshipping entrepreneur must be aware of the current laws and regulations regarding taxes and e.g. in relation to data protection . The tax administration has written about the taxation of dropshipping income here .
If the goods arrive in Finland from abroad, as they usually do, the entrepreneur must inform the customer of possible additional costs in advance. These costs include, for example, taxes and customs fees for packages coming from outside the EU.
Amazon dropshipping or dropshipping on the Shopify platform?
If an entrepreneur wants to start dropshipping in Finland or abroad, one of the most important things to decide is the sales channel to be used.
However, Amazon, Ebay and similar large marketplaces should be eliminated from the options right from the start, because there is simply too much competition and too few ways to stand out from the competition. It is not possible to do any major branding and customization of the online store, which makes differentiation and marketing much more difficult.
It is also difficult to build your own brand and maintain customer relationships on these large platforms.
For example, AliExpress offers a customizable dropshipping online store, but then the entrepreneur is tied to one supplier, and it may not be easy to change the supplier in case of possible problems or scaling wishes.
In addition, an online store costs even more per month than a self-managed Shopify.
That is, when comparing Amazon dropshipping and Shopify dropshipping, or dropshipping on another e-commerce platform such as WordPress/WooCommerce , the latter give the entrepreneur a significantly better starting point to achieve a competitive advantage, a strong market position and thus a sustainable and profitable business.
However, Shopify is the best choice for a dropshipping entrepreneur among all online shopping platforms.
As a system, Shopify is very easy to use and quick to learn, so adding products, modifying the appearance of the store, and viewing and exporting sales reports is agile. However, what sets Shopify apart from other platforms are the critical features for a smooth dropshipping business, such as integrations between dropshipping suppliers and platforms, which allow the entrepreneur to manage inventory and orders automatically.
How to start dropshipping in Finland or internationally?
To start a dropshipping operation, you first need an idea about the product or some kind of smell about the direction and demand of online shopping, after which we start to find out if the idea is the basis of a profitable business. Only after the real potential of the idea and the competitive situation have been clarified, do we set up a dropshipping online store.
Here are our tips on how an entrepreneur can ensure a profitable dropshipping operation from the start:
1. Study the needs and the market carefully
The first step to starting a profitable dropshipping business is market research.
The entrepreneur's most important task is to understand the demand and identify current, changing and future trends and thus find out what kind of products could possibly be needed in the market.
Market research and trend analysis can be started easily with the help of the Google Trends tool. Google Keyword Planner and e.g. Ahrefs or Semrush work well in determining internet search volumes and potential demand in certain target markets and regions. The entrepreneur should also dive deeper into the research by looking at dropshipping statistics and browsing, for example , Amazon's best-selling products .
From different tools, an entrepreneur can find new ideas and get a feel for whether their own ideas and dropshipping activities could be successful in the targeted market.
The success of a dropshipping company, like any other business, is largely based on demand, so you should not leave out market research by jumping directly into practical implementation.
However, the research process can be streamlined by knowing at the very beginning whether the entrepreneur plans to do dropshipping in the Finnish market, internationally or both.
2. Find out the competitive situation and find a market niche
The next step is to research the competitive situation of your target market (or markets, if you have several) in more detail and try to find a suitable niche for your business.
You can do dropshipping by offering something completely new and unique, which is still in demand, or by choosing ready-made popular products for your online store, which you believe will be popular among your own target group as well. Ideally, these products will not have too much supply and providers in your target market.
The latter may be a more risk-free operating model, as there is evidence of success in other markets. At this point, at the latest, you should consider the best-selling products of dropshipping platforms and large marketplaces, and find out which of them might have good potential and yet have no or only little supply in the market you are aiming for.
However, remember the differences between the target groups. A product that makes millions in China may not be of interest to Finnish consumers, who are few and far between, and are used to quality.
3. Choose a niche for your business and limit your product selection
Once you have found a suitable market niche for your company, where the supply does not meet the demand, you can determine the niche of your dropshipping online store, i.e. the area to which you will limit your product collection.
Limiting the product range is worth it, because it allows the entrepreneur to stand out from the big and mainstream players, and effectively reach a smaller group of customers with a targeted marketing message.
You should of course figure out what this message is and who you want to reach with it (who is your target group and your ideal customer).
In this way, marketing is also easier and it is possible for the dropshipping business to overtake large general stores in search engines faster and with less work, build a recognizable brand among the target group and achieve a stronger position in the target market.
In other words, by choosing a niche, an entrepreneur can achieve a significant competitive advantage.
However, the e-commerce niche doesn't have to be too restrictive. It can just as well be broad, such as electronics, gifts or pets, or more specific, such as mobile phone cases, funny t-shirts, camping accessories or zero waste interior design.
4. Find and choose the right dropshipping partners
Choosing a dropshipping niche leads to the next step, i.e. searching for reliable manufacturers and suppliers and choosing high-quality products.
Of course, you should only choose reliable suppliers and manufacturers with whom dropshipping in Finland is known to be successful. This means that the products are quality goods, order processing is quick and the delivery process is seamless.
With a disreputable dropshipping supplier, the risk is delivering low-quality or broken goods to the customer, long delivery times and frequent customer returns, which of course eat away at your company's customer satisfaction, cash flow and reputation.
You can find good suppliers by Googling and researching the experiences of dropshipping entrepreneurs, e.g. in Shopify's own App Store on the supplier's page.
Also in the following articles you will find the best international dropshipping suppliers at the moment and the most popular suppliers in Europe .
5. Build an online store and brand that speaks to the target group
Background work is important if you want to succeed in dropshipping in Finland or in any other country, but the implementation and branding of the dropshipping online store is just as crucial.
Specialization gives a considerable advantage to the dropshipping business, but it does not remove the fact that there is and always will be competition, even if there is "something completely new" for sale.
If a dropshipping entrepreneur wants to be as quick and as profitable as possible, the sales package must be excellent from the first day. By overall, we mean a fast, technically seamless online store, all its contents, and a brand that stands out from the competition and speaks to the right target group.
By carefully planning and building the online store, the dropshipping entrepreneur ensures a more even cash flow for himself and faster growth for the company.
This happens by making sure that the right, most potential customers are reached and they are sent exactly the right kind of image. Simply reaching the right people is not enough, but they must still be convinced to buy with a diamond package and carefully honed details.
If the customer thinks something is wrong with the online store, be it a technical or visual issue, a content problem or conflict, or a strange feeling or "feeling" that the online store accidentally conveys to the customer, the same or a similar product will be bought elsewhere.
The user experience of the online store is therefore key, because with it, the entrepreneur guarantees that the customer who has made the purchase decision will see the matter through to the end and the company's account will have a rush of euros.
However, the brand and the online store are their own areas, and there are so many things related to both that you have to focus on them separately, unless you buy expert help. A DIY man or woman can benefit from our guide to starting a Shopify online store or this article on branding your dropshipping business .
Also, remember to choose a relevant and clear domain for the online store, which easily sticks in the customer's mind and brings you an SEO advantage by being closely related to the subject area.
Start a profitable dropshipping business faster with Growly
With these tips, starting dropshipping and setting up an online store should be a little more straightforward process. However, that's what it is - a process that will take time at the latest at the point when an effective online store actually starts to be implemented.
There is more to setting up a dropshipping online store, such as defining the product selection, preparing and updating high-quality product texts and images, etc. content, pricing, and choosing and defining the payment methods the customer likes.
After graduation, the online store must of course also be search engine optimized and the company must be marketed in search engines and on the social media channels preferred by the target group.
Remember that you shouldn't take shortcuts when doing online shopping, because good or bad execution in the endgame determines how well or badly (or very well or very poorly) sales will happen and how fast and big the business will grow.
In addition to careful background work, our most important tip for starting dropshipping is to invest in a high-quality online store.
Digital agency Growly can help you get started not only with creating a seamlessly functioning online store, but also with a beautiful, pre-branded entity, so you can get straight to sales and marketing. And if you also need help with the latter, we'll help with that as well, focusing on real, measurable results and the sustainable growth of your dropshipping business.
Feel free to contact us through the form below and we will think about the implementation of your online store and how to start your company's growth journey together in a relaxed meeting.
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