Shopify Dropshipping in Australia: What You Need To Know

This article will cover the basics of Shopify dropshipping in Australia, guiding you – new dropshippers, through the essential knowledge to establish and scale a successful dropshipping business.

Is Dropshipping Allowed In Australia?

Dropshipping is completely legal in Australia, as long as the business complies with legal and regulatory requirements.

Therefore, there are several key requirements that entrepreneurs must meet.

• Business Registration: 

You need to get a business license to start dropshipping on Shopify (or other ecommerce platforms). It simplifies tax processes and boosts your credibility with suppliers.

It’s crucial to register your business with the Australian Securities and Investments Commission (ASIC) via the Business Registration Service, which facilitates the registration of your business name and other necessary details, such as the acquisition of an Australian Business Number (ABN) and the registration for taxes such as GST and PAYG, boosting your credibility.

• Compliance with Consumer Law: 

Dropshipping businesses must adhere to the Australian Consumer Law (ACL), which is part of the Competition and Consumer Act 2010. This includes providing accurate product descriptions, fulfilling orders on time, and offering refunds or replacements for faulty or misrepresented products.

• Tax Compliance: 

When operating a Shopify dropshipping business in Australia, entrepreneurs need to be aware of relevant taxes, including the Goods and Services Tax (GST) and income tax. Both GST and income tax obligations must be fulfilled according to Australian law. 

Additionally, import duties and customs regulations apply to goods imported into the country.

• Supplier Agreements

Clear agreements outlining responsibilities, pricing, shipping terms, and dispute resolution mechanisms should be established with suppliers to minimize legal risks.

Here are the notable points on taxes and regulations that dropshippers in Australia must be aware of:

• GST registration: Dropshippers must register for the GST if their annual turnover exceeds $75,000. GST is a 10% tax applied to most goods and services sold or consumed in Australia.
• Income tax: Just like any other business, dropshipping entities are subject to income tax on their taxable income, with rates varying by income brackets.

Is Shopify Dropshipping In Australia Profitable?

The 2024 Australian Post eCommerce Industry report reveals a significant increase in e-commerce, with 8 in 10 households now shopping online. This reflects over 80% of all households, highlighting a major shift towards digital retail experiences. 

Dropshipping is emerging as a profitable business model in this growing trend, known for its low startup costs and reduced risk. Profit margins on items dropshipped generally fall between 15% and 20%. 

Initially met with skepticism, dropshipping has proven to be highly profitable in Australia when carried out with careful planning and strategy. 

How to Get Started With Shopify Dropshipping in Australia

Now, let’s take a deeper dive into how to kickstart your Shopify dropshipping journey in Australia.

Step 1: Find Your Niche

Identifying the best products to dropship in Australia involves examining market demand, profit potential, and ease of shipping. 

Based on some statistics showing the most popular categories and high-demand products for online purchases in Australia, here are some promising product lines for dropshipping:

• Clothing and accessories: Given the highest demand, this category includes loungewear and unisex clothing, which are trending due to changes in work habits and a rise in fashion inclusivity.
• Health and beauty items: With a strong interest in cosmetics and body care, this niche is ripe for dropshipping, especially if you offer products with natural and organic ingredients or cater to specific skin and hair care needs.
• Home office equipment: Home office equipment is a growing niche due to the increase in remote work, including ergonomic chairs, desks, and productivity-boosting gadgets.
• Sports equipment: Aligning with Australia’s sporting culture, high-quality sports equipment for popular sports like cricket, rugby, and surfing can be a lucrative niche.
• Tech and appliances: Smart home devices and kitchen appliances, which offer innovation and convenience, could be a great fit, considering Australia’s tech-savvy consumer base.
• Eco-friendly and sustainably made items: There’s a growing environmental consciousness in Australia. Products like reusable household items, clothing made from sustainable materials, and zero-waste essentials could have a significant appeal.
• Specialty food products: Subscription food products like gourmet snacks, specialty ingredients, or meal kits cater to various dietary preferences and offer the excitement of new experiences.
• Home decor and wall art: Wall art is a part of the larger home accessories trend, and offering a range of decorative pieces can appeal to customers interested in interior design.
• Mobile electronics accessories: Considering the reliance on mobile devices, accessories like high-quality phone cases, charging cables, and wireless headphones can be a good niche.
• Children’s toys: This is a vast category that includes educational toys, outdoor play equipment, and games, which can be an excellent opportunity due to the diversity of products.

Consider your wishes and market trends to choose the most appropriate for your business.

Step 2: Source Your Suppliers

After deciding on your products, it’s time to find trustworthy suppliers to collaborate with. 

Below are our five suggested suppliers for dropshipping in Australia that are directly integrated with Shopify via dedicated apps on the Shopify app store. These apps can help you synch data (products, shipping) with the suppliers for a streamlined fulfillment process.

1. Spocket: Spocket is a favorite among dropshippers for its robust selection of EU and US-based suppliers, but it also includes suppliers from around the globe, making it a great option for Australian dropshippers looking for quality products and faster shipping times within Western markets. It also offers sample requests and automatic inventory management for a swift and reliable service to get a global reach.
2. Printful: Specializing in print-on-demand dropshipping, Printful is an ideal choice for custom merchandise,​​ from product creation to fulfillment, and design and branding assistance to enhance your product offerings.
3. AliExpress: As a well-known wholesale and dropshipping platform, AliExpress connects you to a massive selection of products, particularly from China, offering competitive pricing and no minimum order quantity, making it accessible for new and growing dropshipping businesses.
4. Alibaba: The go-to B2B marketplace for bulk purchases, Alibaba is perfect for Australian businesses that are ready to scale and wish to work directly with manufacturers for custom branding and private labeling opportunities, benefiting from competitive per-item pricing and interest-free purchase financing options.
5. SaleHoo: Offering a directory of over 8,000 vetted suppliers and a vast product catalog, SaleHoo is a comprehensive platform suitable for dropshippers who seek high-quality products and lifetime access to market research tools with strong customer support.

However, if you want to source suppliers yourself, there are several dedicated resources to kickstart your search in Australia:

• The Australian Dropshippers Directory or Australian Wholesale Directory, compiles lists of verified suppliers categorized by product types and niches, specifically within the Australian market.
• Platforms like DHGate and Global Sources are virtual goldmines for finding suppliers. They feature extensive listings and can filter searches by criteria such as ratings, minimum order quantities, and location.
• Participating in trade shows related to your niche can connect you with suppliers seeking to partner with dropshippers. These events also offer the unique advantages of direct interaction and product examination.

Step 3: Register Your Business

As mentioned above, registration is not compulsory, but it is necessary for businesses to start dropshipping in Australia.

A shortlisted analysis of the typical requirements and considerations for this process:

• Business name registration: Choose a unique business name and have it registered with the ASIC. This ensures your business name is legally protected and not already in use.
• Australian Business Number (ABN): Apply for an ABN, which is essential for tax purposes and to legally conduct business in Australia.
• Tax registrations: Depending on the nature and size of your business, you may need to register for GST
• Business structure: Determine the legal structure of your business, such as a sole trader, partnership, company, or trust. Each structure has different legal and tax obligations that need to be considered.
• Domain registration: Secure a domain name for your online store. It’s best to have a ‘.com.au’ domain to signify your presence in the Australian market.
• Trademark protection: Consider registering a trademark for your brand, providing exclusive rights to use the name and logo within Australia.
• Permits and licenses: Depending on what you’re planning to sell, you may need specific permits and licenses. For example, selling organic products, health supplements, or certain technologies might require additional approvals.
• Insurance: While not a legal requirement, having insurance, such as public liability insurance and product liability insurance, can protect your business from potential claims.

Step 4: Price Your Products

When it comes to pricing your products for dropshipping in Australia, the key is to strike a balance between competitiveness and profitability.  

Here’s a condensed analysis of how to approach an optimal price for your product

• Cost analysis: Calculate the total cost of your product by adding the cost of goods sold (COGS) with shipping, packaging, and any additional fees. This forms the baseline over which you will add your markup.
• Profit margin: Determine a profit margin that reflects your business strategy and the nature of the products. While the aim may be a 15-20% profit margin, this can vary. For instance, high-volume goods like groceries typically operate on very thin margins, while niche products might command higher margins.
• Fixed costs: Take into account fixed costs such as subscriptions, licenses, insurance, and rent. Spread these costs across your expected sales volume to find out how much you need to add to the price of each item to cover these expenses.
• Pricing strategy: Choose a pricing strategy that aligns with your brand and market position. Whether it’s competitive pricing, value-based pricing, or cost-plus pricing, the strategy should be appropriate for the product and the competition on the Australian market.
• Platform fees: If you’re selling on platforms like Shopify, include additional costs like credit card fees and transaction fees in your pricing.
• Adjustment over time: Tweak your pricing strategy according to how your products perform in the market. Increase prices to maximize profits if your items sell well. If sales are lagging, consider lowering prices to boost customer interest and enhance sales volume.

Step 5: Build Your Shopify Store

Shopify proves to be a valuable platform for Australian businesses venturing into online sales. It supports a diverse range of product offerings, accommodating both physical and digital goods, and integrates seamlessly with POS systems for brick-and-mortar operations. 

Additionally, its straightforward setup process is particularly advantageous for different types of businesses looking to establish an online presence quickly and efficiently.

A brief overview of the Shopify store setting up process, including:

1. Registration: Visit the Shopify website and sign up for an account.  After the initial setup, you’ll be guided through the process of starting a trial period, which allows you to set up your store before committing to a payment plan.
2. Choose a theme: Shopify offers a wide range of free and paid themes. Select a theme that aligns with your brand’s aesthetic and the types of products you plan to sell. 
3. Set up payments: Shopify supports multiple payment gateways for Australian dropshippers, including Shopify Payments, PayPal, and other third-party providers, which are straightforward to set up and accept major credit cards. 
4. Configure shipping: Set up your shipping rates and options in the Shopify settings. You can choose to offer flat rates, weight-based, or price-based rates. For dropshipping, consider setting up different zones for the areas you’ll be shipping to, especially if your suppliers are located internationally.
5. Add products and connect to dropshipping suppliers: You can manually add products or use a dropshipping app that integrates directly with Shopify. These apps allow you to import products directly from suppliers into your store and automate parts of the sales process, like order fulfillment.
6. Set up legal and tax compliance: Make sure your store complies with Australian laws, including consumer rights and tax regulations. Add necessary pages such as terms of service, privacy policy, and refund policy, which are important for building trust with your customers.

Step 6: Use Apps To Automate Your Shopify Dropshipping Store

With the advancement of technology, you can significantly streamline operations, ensuring that your products are sourced efficiently and your orders are fulfilled promptly, all integrated directly with your Shopify store.

To automate your Shopify dropshipping store and directly link with suppliers in Australia, consider using the following extensions and apps available on the Shopify App Store:

• Spocket: Spocket is highly favorable for dropshippers looking to connect with suppliers in Australia and other Western countries. It allows for easy integration and automation of the entire ordering process, from product import to fulfillment.
• Avasam: This platform offers a selection of verified suppliers, including those based in Australia. Avasam automates dropshipping by integrating supply sources directly into your Shopify store, facilitating seamless product listings and order management.
• Syncee: Syncee has a global supplier network with a strong presence in Australia. It provides a marketplace to find suppliers, automate product uploads, and manage orders efficiently, which makes it ideal for scaling operations in the Australian market.

Step 7: Launch And Marketing Your Store

No matter how well your store is set up or how great your products are, your target audience may never find you without effective marketing and a strategic launch.

To ensure the visibility and accessibility of your business to potential customers, it is necessary to have a detailed plan with the suggested key steps below:

Pre-Launch Preparation:

• Build anticipation through social media and email newsletters.
• Optimize your website for SEO to attract organic traffic.
• Set up and optimize social media profiles to engage with your target audience.

Launch Day:

• Announce your store opening with a press release and email blasts to your subscriber list.
• Use social media to promote special launch day events or discounts.

Post-Launch Marketing:

• Implement paid advertising campaigns on platforms like Google Ads and Facebook.
• Create valuable content, like blogs or videos, to attract and engage visitors.
• Partner with influencers to extend your reach and credibility.
• Initiate retargeting campaigns to draw back visitors who didn’t purchase.
• Collect customer reviews to enhance trust and credibility.
• Develop a loyalty program to encourage repeat purchases.

Ongoing Optimization:

• Regularly analyze marketing and website performance to adjust strategies.
• Conduct split testing to optimize conversions.
• Gather and act on customer feedback to continually improve the shopping experience.

Step 8: Manage Orders and Make Adjustments

The last essential step is to manage orders and fine-tune your operations, ensuring your business runs smoothly and remains responsive to customer needs, which are fundamental for achieving customer satisfaction and sustaining long-term success.

Here’s a streamlined approach to what this step entails:

• Order processing: Quickly and accurately process orders to avoid delays, ensuring they are promptly sent to suppliers for fulfillment.
• Shipping and tracking: Provide reliable shipping and timely tracking information to customers, enhancing trust and reducing order status inquiries.
• Inventory management: Regularly update inventory based on sales trends to prevent stock-outs and minimize overstock.
• Customer service: Efficiently address customer inquiries, complaints, and returns, maintaining a positive shopping experience.
• Feedback collection: Gather and utilize customer feedback to improve product quality and service.
• Performance analysis: Analyze sales and business metrics to identify trends, adjust pricing, and optimize marketing strategies.
• Make adjustments: Based on performance insights and market trends, adjust your product offerings, marketing approaches, and operational procedures to better meet customer needs and enhance profitability.
• Stay updated: Keep up with market trends and adjust your practices to new technologies or changes in consumer behavior.

Bottom Line

Your journey into Shopify dropshipping in Australia is set for success. By carefully selecting a robust list of products and suppliers, leveraging automation tools for dropshipping, and continuously testing and adapting your product offerings, you’re well on your way to building a profitable dropshipping business.

FAQs