You’re starting looking at opportunities in DropShipping and now it seems like everywhere you look, everybody wants your cash. It’s not that you don’t know that you are going to have to put your hands in your pocket at some point … just not yet.
You want to know is how it fits together … because you need to know how to make it work and what you and your partners’ responsibilities are going to be.
Once you have understood what’s going on and you have set up the basics, only then it is time for you to add the cash and grow.
Before reading on, go and have a look at the basic dropshipping models that you are going to encounter as you develop your research. It all helps.
So … here I am going to be looking at 5 DropShipping suppliers that look like they don’t charge upfront.
5 DropShipping Suppliers for Beginners
You are considering a DropShipping business model mainly because you don’t have the capital to buy stock, set up a warehouse and manage inventory, and you probably don’t want to commit to the management overhead of setting up a distribution operation.
There are no rules that say you must own the stuff you are selling. Tesco doesn’t pay its suppliers for the stuff on their shelves … until well after the stuff has been sold. I used to work for Tesco and it was well understood that profits were made at the supply end of the operation rather than at the selling end.
There is no requirement for you to set up a warehouse facility, Amazon will provide you with warehouse space, and Amazon will also deliver your products.
You do, however, need to develop an audience, establish a need witin that audience and then present your audience with a solution.
Simplistically, there are two distinct components to retailing: marketing and fulfilment. You could sub-divide further, which would give you more components but selling is essentially about establishing needs and then delivering solutions; fulfilment is the heavy lifting that delivers marketing promises.
Marketing
Retail marketing is the business of promoting a single product or a set of products or services to a target audience.
There is a lot of thinking in the marketing function, and a lot less heavy lifting than in the fulfilment process.
A successful marketing strategy involves the identification of a specific product or service and then the promotion of that product or service to a particular audience.
You should also be aware that an unsuccessful marketing strategy involves exactly the same approach.
The difference between successful and unsuccessful is a secret sauce, the precise recipe of which might elude you at first.
Don’t give up.
Fulfilment
Retail fulfilment is the process of receiving, assembling and delivering a customer order.
You could argue that retail fulfilment also includes the procurement cycle as without a product, there can be no order fulfilment process.
Retail fulfilment is the physical process that supports your marketing effort and whilst it’s entirely possible to establish a physical store to sell goods without doing any marketing whatsoever, advertising your presence on the High Street certainly won’t do any harm.
The fulfilment process is the key to establishing and maintaining your reputation as a high-quality and trusted retailer, without it you will fall by the wayside.
So … fulfilment without marketing might work, it might not work very well but it might work. Marketing without fulfilment, on the other hand, is pretty much dead in the water.
A dropshipping service provider will provide you with the fulfilment side of your retail business, you can then concentrate on doing the marketing!
We now look at 5 dropshipping service providers that could help kick start your dropshipping project.
Puckator
Puckator is a Giftware company that launched in 1990 to become one of the first dropshipping services in the UK. Whilst the Puckator dropshipping service was introduced primarily to serve their own large range of local and imported giftware, over the years, the service has developed and Puckator now supports a wide and growing network of dropshippers.
The company began by importing wood carvings from Indonesia and has now become an international gift wholesaler supplying products to the UK, and to Europe and beyond.
Selling giftware might not be the first thing that comes to mind if you are looking to start a dropshipping business but it’s worth considering that the UK Gift Market was worth around £40bn per annum back in 2012. I can’t find any more up to date reports that don’t include Gift Cards but the figures are very likely to be higher today and given the current global situation, the proportion of gifts bought online is also likely to be on the increase.
Puckator is a UK-based company, headquartered in Cornwall with offices and a showroom in Sheffield. The company employs around 80 staff (increasing) and the turnover in the year ending in December 2018 was £12.56 million.
How much does the Puckator service cost?
Access to the Puckator dropshipping service is free, and there are no subscriptions or hidden charges … but this is reflected in the price you will pay for the products. Puckator prices to you are calculated by adding 12% to the standard wholesale price, and whilst this may be more expensive than you could probably buy elsewhere, the prices of the goods reflect the fact that the Puckator staff are doing nearly all of the heavy lifting.
This is something that needs to be factored into your business plan.
Products shipped to Amazon, for example, for your orders to be fulfilled by Amazon might look to be less expensive but will incur stocking, storage and distribution costs.
There is probably going to be very little in it.
Payment processing is provided by sagepay, and all major credit and debit cards are accepted, PayPal payments are also allowed. As a comparison, because there is a pattern here, card processing rates are 1.15% whilst PayPal charges 4%. You will not see these payment processing costs itemised on your invoice but they are still passed on. The point is made, rightly so, on the Puckator website that if fewer people paid using PayPal, overall prices would drop.
How does the Puckator dropship service work?
First of all, make sure you are looking at the Puckator Dropshipping site and not the general wholesale site.
Click the login button and you will be asked to register, which is a simple as providing an email address and a password. You will receive an email confirming your registration and when you log in you will be asked a few more questions about the operation of the service and will be given the option of uploading your logo … so that it can be incorporated into your customer communications.
Then comes the confusion …
Puckator is a web-based operation supporting wholesale and dropshipping. Inevitably, there is a certain amount of crossover between the two and this opens the doors to potential confusion. According to the website, the minimum order value is £100 plus VAT, 130 Euros for Europe and $175 for the US and Canada, but the order form allows only for a single delivery address. This approach doesn’t work for dropshipping.
… but it was short-lived.
I contacted the Puckator customer services and asked what would happen if I had two dropshipping orders for £60 each. Their almost immediate response was:
In this scenario two separate orders would have to be placed and there is no minimum order on our drop-ship site.
Puckator Customer Services
This is an important consideration as it seems that the form is the only means of submitting a dropshipping order.
Not surprisingly, there are numerous interfaces and feeds that you will need to implement in order to operate your online store successfully. Out-of-stock reports and back-in-stock reports to help you with your planning, and there are various other feeds that you can subscribe to, depending on the nature of your business.
Round Up
I have rated Puckator as one of my top dropshipping partners as there are no subscription costs or hidden charges. The interfaces also seem to be fairly straightforward, which makes them ideal for beginners.
If you are just starting out, you can set up an online gift shop as a serious venture, or just as a learning exercise. If you are still learning, the technical skills you will acquire are all transferable, as indeed are the marketing skills.
The Trustpilot star rating shows this organisation to be a good all-rounder.
GoTen
GoTen is not a UK company. I could find no reference at Companies House or anywhere else, so if that’s an important factor for you, now you know.
GoTen is, however, a global dropshipping company. It was established in 2012 and belongs to the Zongteng Group based in Shenzhen, which lies somewhere to the north of Hong Kong.
According to their LinkedIn profile, the group is a solutions provider of cross-border shipping and fulfilment services for e-commerce with an expanding global presence.
It has long been recognised that one of the major challenges in selling Chinese-manufactured goods into the UK (and elsewhere) are the delivery times associated with e-commerce. This organisation has recognised this, they have also recognised the shift to online purchasing due to the global pandemic and they are heavily investing in this area.
Of particular interest is the fact that GoTen’s parent company, Zongteng, has secured around $70 million for “New Infrastructure” … in the light of the global pandemic. This investment is going to allow the group to develop its business around the world, establishing local warehouses and distribution centres, thereby raising the profile of the GoTen Dropshipping Service.
They currently have a Warehousing and Fulfillment Network covering:
- Los Angeles (U.S.),
- Atlanta (U.S.),
- New Jersey (U.S.),
- Spain,
- France,
- U.K.,
- Czech Republic,
- Italy,
- Australia,
- Shenzhen (China),
- Dongguan (China),
- Guangzhou (China),
- Ningbo (China).
GoTen is nothing if it isn’t a significant player.
How much does the GoTen service cost?
You can sign up to the GoTen dropshipping service for free, and there is a table of benefits on the GoTen Membership Page that confirms that there are no Order Processing Fees of Membership Service Fees.
Some things to be aware of are the payment processing fees, and these fees will apply to all your potential dropshipping partners. You might think that payment fees should be trivial, but they’re not! PayPal is expensive.
In the UK, you will be paying 6% plus 20p, so that’s going to be a financial hit on your bottom line of £1.40 for every £20 item sold!
And … don’t forget that this is on top of the payment processing fee that you will incur for taking the money off your own customers. If you are also using PayPal, then the payment processing fees start to become highly significant.
At the other end of the charging spectrum, there are discounts. GoTen awards five levels of VIP membership based on turnover that offer four levels of discount … five levels if you consider a 0% discount to be a discount level.
As a new member, you will start at level V1(VIP1) with a zero turnover. Level V2(VIP2) kicks in at $1000 per month and Level V5(VIP5) at $100000 per month.
Thre are other benefits and services to be had as you move up the VIP ladder, all without charge, and GoTen does provide access to a wide range of merchandise minimal outlay.
The question you need to ask yourself is whether the global distribution network allied to the regionally operating warehouses alleviates some of the often difficult dispute resolution experiences (some anecdotal) of dealing with a remote supplier with different values.
How does Dropshipping work with GoTen?
Registering with GoTen is easy, just click on the “Sign Up Free” button and away you go. You will need to answer some questions, provide an email address and a telephone number and then set some passwords … nothing particularly complicated
With GoTen, you can choose from a fairly wide selection of product categories and you can also choose a dispatch area, which is obviously related to the location of the warehouses. The GoTen website claims to support over 20,000 different products and is currently able to dispatch from the US, Canada, the UK, Germany and France. Using GoTen in this way, you can set up a specialist e-commerce store knowing that the delivery to your customer’s door will be completed within 2~7 working days.
For tiers V1 and V2, ordering is essentially a manual process. You select the products that you need to order, add them to the shopping cart and then check out. There is an option for submitting bulk orders (up to 300) based on an Excel Spreadsheet and once you reach tier V3 ($5000 per month), you have the option of using the API to synchronize all information about products, orders, tracking numbers, stocks and so on.
There is also a Platform Syncronisation option, but the ability to use this will depend on the shopping platform that you are using … it seems to be something that GoTen are working on at the moment.
I am no legal expert but I have read the GoTen Terms of Service and I suggest that you do too. You might also take a look at the section on Returns & Replacements.
Round Up
There are clearly investments being made in the dropshipping space. It’s a growing market proposition and it’s most likely based on the following:
- There is, without doubt, a huge market for Chinese goods but fulfilment and distribution generally sucks.
- The global pandemic is also closing down bricks and mortar stores but people still want to buy stuff.
It looks like GoTen’s parent company is trying to solve these problems by building a global distribution network.
Now, if their customer services can be regionalised to provide the level of service that will be demanded by the regions, these guys are worth a look.
The TrustPilot stars are usually a reasonable indicator of the way an organisation interacts with its customers although in this case, there are only 12 reviews.
Avasam
The first thing that grabbed my attention here was the bold statement that formed part of the Google search result:
Avasam Automated Dropshipping – Fully Automated. The statement certainly worked for me: it was indeed automated and there are verified UK suppliers.
Avasam, unlike the two dropshipping service providers already mentioned, does not operate warehouses and does not, therefore, carry its own stock. Avasam links sellers (like me and you) with manufactures and suppliers who will deliver directly to consumers. There are obviously pros and cons with this model, especially when compared with the warehousing model. You will need to consider all of this in the light of your own requirements.
Avasam is a relatively new dropshipping service integrating the business of selling to consumers with the logistics of fulfilment. Work on the platform kicked off in 2017, the company was registered at Companies House on 6th September 2018 and the service was launched sometime in 2019. It is claimed that Avasam is the first fully automated multi-channel dropshipping platform in the world.
Since its launch, the platform has already been nominated for several awards, it supports more than 120,000 products and has completed more than 85,000 orders.
The company is young and as such, there is limited access to financial statements.
How much does the Avasam Service cost?
At the top of this article, I said that I was looking for UK dropshipping services that didn’t charge upfront. Avasam doesn’t charge upfront, but there are charges.
You can sign up to Avasam for free, and it remains free for up to 10 orders per month. This is good enough to get you going before jumping to the second tier at £9 per month for up to 250 orders.
There is a steady increase through five tiers from the free tier. At the top end of the pricing structure is the “Guru” subscription that essentially allows you an unlimited number of orders per month (it kicks in at 2000) for £149. The Avasam tier structure means that the cost should always reflect your level of selling.
The free tier allows for one platform integration; the starter tier allows five and anything above the starter tier is unlimited (60+).
Your Avasam account is funded using Debit Cards and Credit Cards, I have looked and I see no reference to PayPal.
The rest of the Avasam services are available across the board; the only restrictions are the number of platform integrations allowed and the number of orders that can be processed in a month.
An “integration” is a plug-n-play connection into any one of the external platforms supported by Avasam.
How does the Avasam service work?
The Avasam service is integrated with your e-commerce platform and picks up the orders once your customers have completed them. Avasam will then request payment for the value of the completed order from your default payment method. This means that you may need to provide funding for the outgoing order before your customer’s payment has settled in your bank account … which is no different to any other dropshipping method but because it’s automated, you need to be aware. The default option is to pre-fund your Avasam account ensuring that the orders are fulfilled immediately.
The first “integration” on the list is Shopify, so that’s the one I shall use to outline the process.
The Avasam integration to Shopify supports the following e-commerce functions:
- Order Management
- Secure Payment Processing
- Inventory Management
- Pricing Automation
- Shipping Updates
There are other functions available to other platforms and I assume that the whole thing is being constantly developed and improved. It’s still early days but this looks promising.
Shopify orders are downloaded to Avasam as they are completed. They are then passed to the supplier for fulfilment and dispatch.
When one of your customers pays in Shopify, Avasam can automatically pay the supplier, which means that fulfilment is not waiting on you, and your customer receives their order quicker. If you are using a credit card that is not carrying a balance, this can be a no-cost option since you will have received the funds from your customer into your bank account before you need to settle the credit card.
The Inventory Management integration means that as supplier stock levels change, the Avasam engine fairies can update your Shopify store in near real-time. This means that items running low with the supplier can be marked as out of stock in your shop … preventing further orders being taken and helping you manage your customer expectations.
The Avasam Shopify integration allows you to set rules that will automatically manage and update your product pricing as your suppliers change theirs.
Finally, Avasam integrates with shipping service providers, allowing notifications and tracking information to be sent to Shopify automatically.
Round Up
I’m impressed.
For what is undeniably a new company, there are clear indications of the 100+ years of experience they claim has gone into the concept, the design and the delivery of the Avasam platform.
Where this proposition differs from the others is in the scale of the possible integration of partner platforms, to come together to deliver a coherent end-to-end consumer experience.
The Trustpilot reviews are worth a read, I had a look and there are no negative comments, every review so far has given Avasam a 5-star rating. I am encouraged by the fact that the Trustpilot reviews reflect my thoughts when I was looking at this. The 4.5 rating above, I am led to understand, is derived from the Trustpilot algorithm adjusting for the number and the age of the comments.
Spocket
Spocket is a subscription-based wholesale marketplace that connects dropshipping suppliers with online retailers. This means that Spocket does not carry any stock and is therefore not directly responsible for delivery.
I had a look at the Companies House site in the UK for any Spocket entry. I can confirm that there is no evidence of any UK presence … and this is because Spocket is headquartered in Vancouver, Canada. This may or may not be important for you but I mention it as I was looking for UK dropshippers and whilst Spocket is based in Vancouver, I feel they are integrated with suppliers in the UK.
The first page of the Spocket Web site makes a big thing of discovering “dropshipping suppliers of original US/EU products”. A good start as it implies the potential for local shipping … and local shipping should mean that it’s quicker. In my opinion, the biggest challenge to complete consumer satisfaction at the end of the dropshipping supply chain is the shipping lead time – the guys at GoTen appear to be acutely aware of this, hence their spending on global warehousing for Chinese-manufactured products.
The Spocket website claims Fast Shipping as 90% of suppliers are based in the US and Europe. They also claim 100% Automated Order Processing and Branded Invoicing.
How much does the Spocket service cost?
The Spocket service is not free. At the bottom end, there is a free option that will allow you to browse the catalogue of products but if you want to try it, it’s going to cost $24 per month after the 14-day free trial, for 25 unique products.
The top-end “Unicorn” subscription rate is $299 per month, but as a high-end beginner, you would probably be better off with the “Empire” option at $99 per month. Both options support 10,000 unique products and 10,000 premium products.
Billig is via Credit Card, but I assume this also means Debit Card is acceptable. There don’t appear to be any other payment options, PayPal isn’t mentioned and I didn’t see any options for account transfers.
How does Spocket work?
On the surface, the Spocket operation is not disimilar to to that of Avasam. Both are acting as an intermediary and both support direct integrations with third party shopping apps. Both support, for example, integrations with Shopify and WooCommerce.
Spocket gives you access to thousands of products from a wide variety of niches: clothing, footwear, tech and pet products. Whilst it does require a monthly subscription, products from suppliers all over the world can be added to your store with zero upfront cost.
Before you begin building your dropshipping shop you will need to complete the Spocket integration process.
Spocket provides an all-in-one plug-in for WooCommerce that will allow you to browse products and add them to your store, leaving Spocket to do the rest.
I was going to try this out with WooCommerce but when I looked, the Spocket plugin hadn’t been updated for the last 3 major releases of WordPress. The Spocket reviews are generally good but I am going to wait until it’s been updated.
Once integrated, completed customer orders from your shop are transferred to and saved in Spocket. You will need to visit the Spocket Orders Page to authorise and place the order with the supplier.
There is a facility within Spocket to allow for automatic product pricing updates based on the supplier price and a set of preset pricing rules that will allow mark-ups based on percentages, a multiplier or a fixed amount.
Round Up
Spocket was founded in 2017 and currently employs (Dec 2020) 44 people, which is not dissimilar to Avasam – the same year and a similar number of employees.
Both organisations are acting as intermediaries between dropshipping e-stores and dropshipping suppliers. Both organisations support integrations with mainstream e-commerce software, Avasam seems to do more. But … if you are only looking at integrations with WooCommerce, for example, that isn’t necessarily an issue.
The Trustpilot star scores for Spocket are based on nearly a thousand reviews and 86% are excellent. I would, however, read the bad ones before you proceed. I say this not because of the complaints being made – most of them are about subscription charges rather than the quality of service – but because of the tone of the responses from Customer Services. I accept that this might be a cultural thing so read and draw your own conclusions.
Geko Products
A UK family company founded in 2014 as a wholesale trade only supplier of Artificial Plants, Vanity Cases, Furniture, Homeware and Gifts. If that’s not going to spark up your interest, I don’t know what is.
The Geko Products site is worth a look … it’s not just artificial plants.
Actually, even if it was, the artificial plants look pretty good.
Over the years since 2014, the company has become a leading importer, wholesaler and distributor, and now operates out of a 10,000 square foot warehouse in Newark in Nottinghamshire.
Geko Products is in a good position to be able to take advantage of the current national and global situation. In my opinion, they are worth a look.
How much does Geko cost?
Geko Products is a small wholesale dropshipping organisation similar to Puckator. Whist Puckator is free to use, the same is not true of Geko Products. You will need to pay an annual membership fee of £30! I suspect this fee is imposed to limit the number of potential dropshippers registering for an account to those that might actually be serious. I have been in contact and I have registered.
The Geko Products dropshipping prices are slightly higher than the bulk wholesale prices because they are doing much of the work. The wholesale prices are available to you if you are prepared to buy in bulk, take delivery of the products and then store them yourself.
Dropship prices include individually packing a product and sending it directly to your customer. The pricing also covers the cost of dealing with delivery issues, damages and defects.
There are no minimum order values and shipping within the UK is £2.95 + VAT for orders below £9.99 excluding VAT. Above this, shipping is free.
Prices are hidden until you register, but you can request more information via the Contact Us page on the main site. I did this and I received a spreadsheet of descriptions and pricing covering just over 1500 product lines.
I can now see the real differences between trade prices, dropshipping prices and recommended retail prices, which is pretty good as previously some of the finer details were a little confusing.
How does the Geko service work?
The Geko Products dropshipping service is very similar, in principle, to that of Puckator, and because of this, there are some product category overlaps.
It’s probably obvious but worth mentioning nevertheless that the wholesale (or Trade) prices quoted are for bulk orders to retailers and not for dropshipping individual items to individual customers.
Like Puckator, Geko Products support a standard wholesale supply operation and run the dropshipping service on top. This makes sense as dropshipping adds an additional revenue stream for a low additional cost.
If you’re not sure how dropshipping prices compare to other prices, it’s not pertinent to this review but it’s probably worth having a look at the Payment Monkey dropshipping price comparison page.
Geko Products provide a dropshipping portal for placing dropshipping orders, with no minimum order value. It is also possible to place bulk orders via a spreadsheet and they tell me that a Shopify integration is imminent. There is also a stock download link and daily email updates.
Round Up
I think Geko Products is worth a look.
I rate them as one of my top dropshipping partners even though they charge a £30 per annum membership fee and I was looking out for the cost-free option.
I am especially interested in the Shopify integration as I am specifically looking for the ideal automated dropshipping business model that retains a small business relationship. I am trying to avoid building a business based around the multinational big-boys as I believe in supporting local industry and local communities … even though Geko Products are in Newark and I am in Hertford.
Conclusions
Dropshipping is not just a business model to be adopted by you or me, it’s growth is largely indicative of a change in shopping demographics and it’s likely to grow more in the future as the impact of the global pandemic takes hold.
There are going to be opportunities as more people look online for the products they find difficult to source on the High Street.
This means that there is a future for the dropshipping of local products as well as those that have been imported. It’s also possible that the financial resources that have previously been spent on maintaining retail premises are likely to be diverted more towards distribution.
The guys with the deep pockets at GoTen have already spotted the growing need for local warehouses to support the sale and timely delivery of what are essentially Chinese products … and the scale of the GoTen operation is huge.
The GoTen investments are driven by a recognition that there is a demand for Chinese products that cannot be serviced from abroad. The potential demise of the High Street (which is not someting that I want) will mean a similar demand for local products that can no longer be serviced locally.
Sadly, the pandemic is pushing customers away from the High Street, but there are still customers out there. They are just forced, at the moment, to look around and shop elsewhere, and at the moment, the safest place to shop is online.
I have presented here five potential suppliers that you can use to build your own dropshipping service, without spending a fortune. I have set up a Shopify store at twofishe.com, which is free for 14 days but I’m not sure that 14 days is long enough to set up the processes and test them out.
Without a doubt, I am going to have a go with Avasam, because it looks good and offers a lot of services … now to go look at the products!
I shall also be looking at Puckator and Geko Products because they appear to support some locally-sourced product lines. I am also interested in the Shopify integration processes and wonder how close I can get to a fully automated dropshipping service.
I shall also be looking at the others, and I will be reporting back here.
In the meantime, check out the step-by-step guide to setting up a dropshipping operation that I am writing as I step through the processes.