Reverse Dropshipping: What it is and How You Can Profit From it

Are you an eCommerce entrepreneur ready for a new challenge?

Do you thrive on following the latest trends and business opportunities?

Already tried your hand at dropshipping and want more?

Then look no further, Reverse Dropshipping might be the one for you.

By this point you’re probably well familiar with the traditional dropshipping model. Customers find the products you’re selling on your website or popular marketplaces, but once they place the order it’ll be fulfilled directly by the supplier you’re working with. Meaning that you have no up-front stock purchasing costs, as the product only leaves the supplier once there’s a customer order. 

Reverse dropshipping works in much the same way, except that you’re selling products produced in traditionally importing countries (e.g. the USA) to customers in traditionally exporting countries (e.g. China). So your product is traveling the reverse way, aha!

How does reverse dropshipping work?

Theoretically, reverse dropshipping could be achieved with any product, but realistically it only becomes interesting when you’re looking at high-quality and high-value products. Manufacturing powerhouses like those in Asia have no shortage of low-cost items being produced right on their doorstep. When it comes to luxury and top-tier products however, there might be a niche that you can capture. A niche where a ‘Made in USA’ (for example) tag will make all the difference.

Reverse dropshipping is a relatively new trend, so there’s some confusing and poorly researched information out there – some of which would have you believe traditional dropshipping is all about flogging a high volume of low-value products, with reverse dropshipping being about higher-value products. Which is of course not the case. With any dropshipping model, you want to be looking at selling high-value products that can be marked up sufficiently to make your profit margins worthwhile. You'll really want to pay attention to the trend analysis of each of these products.

What sets reverse dropshipping apart is that in traditionally exporting nations, such as Asian countries, you’re exclusively targeting the wealthy spend-happy slice of the population. Think upper-middle-class with a penchant for brands and the good things in life. They are the ones who will make selling in an unfamiliar, slightly more complex market really worth your time.

So yes, to answer the question on everybody’s mind, reverse dropshipping can be extremely profitable if you do your homework and have the resources to do it right.

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Pros and cons of reverse dropshipping

So let’s take a look at the two sides of the coin: some reasons why you might or might not want to consider giving reverse dropshipping a go.

PROS

Huge market

Number one in our line-up of pros for reverse dropshipping would have to be the huge market segment you’re able to capture here.

It’s no secret that China’s population is vast and its subsequent global market share HUGE. What you might not know is that China’s eCommerce makes up a whopping 52.1% of all retail eCommerce worldwide, with the US reaching distant second place at only 19%.

On top of this impressive market slice, China’s population demographic is ever-evolving. Upper-middle income and above households are rapidly on the rise and forecast to grow by almost 70% in the next few years. The new generation of Chinese shoppers is young, brand-conscious and tech-savvy, making it the perfect audience for marketing foreign luxury and high-value goods.

And it doesn’t stop at China either. Take Southeast Asia – not only is it home to over 680 million people, it’s also undergoing a sweeping wave of modernization and digital evolution. The digital boom has seen hundreds of tech-startups emerge, with over 30 unicorns excelling in the region to date. 

Indonesia is the richest country in Southeast Asia (based on GDP) with a population of 273 million. Its middle-class affluent population has been driving a consumer boom in the country that’s going to keep accelerating as it’s predicted to grow from around 115 million in 2017 to 222 million in 2030.

So while you might not immediately think of traditionally exporting countries as fertile grounds for selling high-value goods, these markets are only set to grow as technology and digital advancements continue to bolster the wealthy middle-classes there.

Higher margins

As we said before, it’s not true that reverse dropshipping necessarily involves higher-value products than traditional dropshipping. 

However, consumers in places like China may be willing to pay more for a premium product than Western consumers would for the same item. This is because they’re already used to having to pay higher taxes, tariffs and shipping costs for American and European products – so adding a little extra margin is likely not going to make a big difference to them at this point. 

This is something you can capitalize on when building your reverse dropshipping business, especially if you can identify those in-demand products that will fill an existing gap in the market. More on this later!

Less Competition

Reverse dropshipping remains a well-kept secret

Dropshipping has been a constantly growing trend over the past years, with more and more competitors entering the market wanting to take advantage of this unique business model.

Reverse dropshipping on the other hand is a relatively new and unexplored area of eCommerce with plenty of scope to make your mark. Perhaps the slightly more complex business setup is putting people off from trying their hand here, but that’s exactly where nifty entrepreneurs can take advantage with just a little bit of extra homework.

Cheap marketing

Another great advantage to selling in traditionally exporting countries is the cheaper marketing costs. In export countries such as Mexico, India, Indonesia, Thailand, Malaysia and the Philippines (to name a few), the CPC (cost-per-click) will be significantly lower than in their import counterparts in the US and Europe (partly because consumers in the US and Europe have more disposable income). Plus, PPC and SEO on the whole are less competitive in traditionally exporting countries, which is great news for running your reverse dropshipping business campaigns there.

When it comes to China, things look a little differently. Google isn’t operative in China and while the main search engine Baidu may have lower CPC than Google in the US and Europe, the up-front payment required to start posting ads is so significant that marketing campaigns end up costing much the same as they would at home. Nevertheless it’s worth pursuing for the sake of China’s incredible market potential.

Better returns policies

Returns and Exchange processes have long been a thorn in the side of dropshipping entrepreneurs. When working with suppliers in China or other Asian countries, returning a product all the way to its source simply isn’t economical, not to mention the fact that many of those suppliers don’t even accept a return to begin with. As a work-around, customers get to keep the original product and then receive either a refund or the replacement product on top. It’s not ideal, but it’s a solution of sorts.

Now imagine working with a supplier from the States or Europe. Returns policies are often extremely forthcoming and customer-services-centric here, which is great news for both you and your future customers. Returns and exchanges aren’t something that you want to be spending a lot of valuable time on (time is money and all that!), so the fact that they’ll be made easier on home turf is a huge advantage for reverse dropshipping.

Nordstrom’s return policy

Offer excellent customer service

Outsourcing customer services to expert nations such as the Philippines or India is old news. Cost of living there is cheaper, so paying staff a living wage is easier, all the while letting businesses capitalize on a motivated, highly skilled workforce. It’s a win-win. 

So if you’re considering serving a customer base in Southeast Asia or India, it’ll mean your customers and customer support are actually in similar time zones! Plus it’ll be easier to assist your customers in their native language, which is ideal considering people in traditionally exporting nations may not be fully proficient in English. All of which means you can offer excellent, timely customer service even more easily. Tick!

Flexibility

If you’re a successful dropshipping entrepreneur, adding reverse dropshipping to your toolkit will keep growing your reach and options when it comes to where and what to sell. You’re able to expand globally into all markets, selling a wide range of products. Things in today’s commerce market change day-by-day, so it pays not to have all your eggs in one basket. Expanding into non-traditional markets may just give you that edge to make your business go the distance.

CONS

Sounds pretty good so far, right? But we wouldn’t be giving you the big picture if we didn’t delve into some of the sticking points too. So let’s take a look at some of the negatives of reverse dropshipping.

Strict regulations

Trading in foreign, unfamiliar eCommerce markets isn’t as easy as putting a shop online. Different countries have different rules and regulations for who is allowed to trade under which conditions, and some of them are a tough nut to crack. You’ll really need to do your homework here and dig into the processes involved in setting up within the legal regulations. This can be both cumbersome and expensive and it might take months to be fully set up.

To get around this, we recommend working with a specialized lawyer and/or accountant who is familiar with the specific legalities of where you’re planning on exporting too.

Language barrier

If you already speak the language of your chosen reverse dropshipping destination – great! For the rest of us things won’t be quite so easy. Information you need for setting up and running your business legally may only be available in a foreign language and different alphabet. 

The same goes for social media channels, other marketing efforts, customer and product research. Any first-hand information will likely not be in English and that can really slow down progress for your business. According to some estimates, only about 1% of people in mainland China are considered conversational in English, and according to research by CSA, 40% of consumers won’t buy from a site unless it’s translated into their language. So you really need to have a native speaker or trusted translator on your team to move forward in these markets.

Shipping holdups and tariffs

One of the things that’s vital to any eCommerce business is fast and reliable shipping. This becomes even more crucial when you’re talking about dropshipping (traditional and reverse), because you’re often shipping products over a longer distance. Any additional holdup or delay can really push the shipping time over the edge of what the customer may deem acceptable. Plus the whole thing may cost you too! Tariffs for importing to some countries are crazy high and what’s worse is that all these import and export regulations and tariffs can shift and change depending on countries’ relationships with each other.

Because traditionally exporting countries don’t import as much, exporting to them can come with additional red tape and costs. These processes aren’t as streamlined as in countries who get a lot of imports all of the time, so your products may be held up at the border until all the necessary paperwork is processed. To prepare for this and make the process as smooth as possible, make sure you know exactly what papers and information need to accompany your goods. Again, working with a lawyer or an expert with local knowledge will work to your advantage here.

Another thing to keep in mind is free trade agreements between countries that greatly reduce or or completely eradicate all tariffs and make importing goods between countries all that much easier. One such agreement is NAFTA (North American Free Trade Agreement) between the US, Canada and Mexico.

Culture barrier

Forget about language for a moment, you’re actually dealing with a completely different culture here! – with different sensibilities, customs and preferences. How to know how to talk to your customers, how do you know what’s important to them and what they focus on when online shopping? Where do they go for recommendations, what do they like to see in photos? The answers to all of these questions (and more) can’t simply be transferred from one market to another.

For example, Chinese culture places a lot of importance on ‘saving face’ which refers to the amount of dignity or prestige connected to a person. As a result, Chinese customers like to buy from brands with a rich history and heritage, because owning products from those reputable brands will elevate their own social status.

Finding and knowing about these things without speaking the local language can be difficult, but not doing this research will make or break your business. So make sure that understanding the cultural identity of your chosen audience is part of your business plan.

Step-by-Step guide on how to create a profitable reverse dropshipping business 

So you’ve decided the pros outweigh the cons and you want to know how to get this reverse dropshipping ball rolling? Here’s a quick step-by-step guide on how to divide and conquer.

1. Pick a market and work out legal requirements with a professional
2. Find your supplier
3. Define your audience and pick a product
4. Figure out your sales platform
5. Write and translate your product descriptions
6. Marketing: find the right channels and approaches

Let’s take a look at these in detail.

Pick a market and work out legal requirements

Where do you want to sell? That’s the first question you need to ask yourself. There are a range of different exciting options, so there’s a lot of potential for profit. If you have an edge in one location, say a friend from that country that might help you with your business or some local knowledge, then that’s an advantage you definitely want to be using. 

Once you’ve picked a locality, you need to get into the nitty-gritty of any necessary paperwork. As mentioned before, consulting with a professional like an accountant or lawyer with local knowledge is a good idea, as a lot of info online can be outdated or inaccurate. If you choose to do all the paperwork yourself, you’ll likely need at least a translator to help you with any forms or communications from government entities. 

Even better, you might be able to take advantage of trade deals such as the NAFTA or business opportunities like Shopify’s recently announced partnership with Chinese marketplace JT.com  which significantly reduces the paper trail and timeframe for merchants wanting to enter the Chinese market. 

Find your supplier

Whether you want to find a supplier first and then pick a product and audience, or do it the other way round is up to you. It depends whether you already have a product in mind or would prefer to pick a reliable, high-end supplier that you like and know is going to work for your business. 

When picking a supplier you want to make sure that they have a reasonable product catalog so you can sell a few products from the same supplier (having one supplier will make returns and exchanges much easier), and that they ship to your chosen destination country. In addition to that, while you don’t necessarily need to settle on a product straight away, you’ll at least want to make sure that the supplier’s product category is an in-demand one in your destination country. For example, the top products bought online in China are cosmetics, luxury bags, clothes, shoes, fashion accessories and home & furniture, with premium foreign furniture being a particular recent trend for the wealthy Chinese at present. Always pay attention to the trend analysis, when determining what products to sell to which market.

Pick a product and define your audience

Next comes figuring out what you want to sell in your chosen locality. You can either pick a product first and then define your audience, or start with an audience and work from there. (Picking a supplier and product first is sometimes called the Reverse Market Research Method and can be useful if you have a particular supplier that you want to work with)

When looking at product selection you want to be doing your research and keep your thumb on the pulse of the market. What’s trending and which trends are set to last? Fads can be great short-term investments but shouldn’t burden your business beyond their life cycle. SaleHoo’s market research lab is a great resource based on data from Amazon and eBay, so it’s awesome for finding trending products. Paying attention to trend analysis is crucial.

If you’re looking at the Chinese market (which uses different platforms for eCommerce), a tool like Thieve which tracks Alibaba.com trends can give you valuable insights. 

Your audience for dropshipping will most definitely be some segment of the affluent middle-class population in your chosen locality. But you really want to narrow it down more and find out as much information and relevant detail about your customers as you can. Where do they like to shop, get recommendations, what’s important to their shopping experience? What are their values and what are their sticking points when it comes to buying products online? All this information will be invaluable in tailoring your approach for marketing and selling your product.

Figure out your sales platform

Once you’ve picked a market, supplier and product and have gained some insights into your audience, it’s time to decide on where exactly you’ll be selling from. There are numerous options for marketplaces online and of course you can also launch/ expand your own custom shop.

Here’s where your customer and market research will come in very handy. For example, Chinese customers don’t use Amazon or eBay, but instead buy from TMall, TaoBao (both owned by Alibaba), or JD.com to name a few. China has even been called ‘one of the most mobile-centric societies in the world’ so shopping always needs to be mobile-friendly too.

Each country will have their own preferred marketplace platforms, so be sure to find out the ins and outs of these and their logistics if you choose to go that way.

Write and translate your product descriptions

Product descriptions are the final frontier when it comes to eCommerce! You’ve reached your customer, they’ve clicked your product and now all you need to do is convince them to add it to their cart. Depending on your audience and product, different things will be important here, so put some thought into how to make the messaging really pop here. Then, get everything translated to a high standard and you’re ready to go live!

Marketing: find the right channels and approaches

Again, your approach to marketing will be very specific to your market and audience. To come back to our previous example, a lot of high-converting marketing in China works through endorsement from influencers and celebrities, with paid ads taking a smaller role than they would in traditionally importing countries and Google-based campaigns.

So keep coming back to your market research and make sure you target your audience in their natural habitat.

Legal considerations

Within any business, it’s obviously vital that you’re doing everything legally and won’t be getting prosecuted or sued for any trespasses.

Dropshipping and reverse dropshipping itself are completely legal business models. There are two main points you need to be aware of to cover your back:

1. Copyright infringements
   For reselling some brands and trademarked products (or images), you need a special license. However, you can still legally resell them without that license as long as you purchased them from a licensed, accredited distributor. They would have got the products directly from the manufacturer that holds the copyright, in which case the whole chain of commerce here is completely legal.
2. Disgruntled customers taking legal action
   If you’re not transparent about the timelines and fine print of your shop, customers might get seriously frustrated and decide to take legal action. To prevent this complete headache situation, make sure you clearly define the following on your website: Privacy Policy (how you capture and store data), Terms and Conditions (your and the customer’s rights and obligations), Shipping and Refund Policies (estimated delivery times and under which circumstances returns and exchanges are accepted). It also really pays to have excellent customer service, so that any disgruntled customer is able to talk to someone and resolve their issue before it even gets to this point.

How to enter the chinese market

Speaking of legalities, we thought we’d give you a very brief overview on how to enter the Chinese market and take advantage of that huge wealthy customer base there.

1. Set up a WFOE: wholly foreign enterprise

   This can be a complex process that includes getting a local bank account but will allow you to legally trade on the Chinese market

   OR

   Sell on Tmall Global which allows you to sell in China without setting up a local business (deposit fee: $25,000, service fee $5000-10,000/year, commission: 2-5%)

   OR

   Take advantage of Shopify’s newly launched partnership with JD.com which lets Shopify store owners sell on JD.com’s Marketplace (Commission 2-8%)

2. Get an ICP license (Internet content provider license)

   This license is relatively easy to get and enables you to set up a Chinese website/ online store. You don’t need it if you’re selling on a marketplace like Tmall or JD.com but it’s useful to have anyway

The best european and US suppliers for reverse dropshipping

Ready to dive in? Here’s a run-down of some of our favorite suppliers who dropship worldwide from Europe and the US, in alphabetical order to keep it nice and simple. For detailed product catalogs and more great choices, consider checking out Salehoo Directory which features over 8,000 vetted suppliers.

EUROPE 

Bombay Sunset – Unique jewelry pieces and dresses

This Madrid-based supplier established its business in 2012 designing and manufacturing high-quality jewelry and dresses. They offer dropshipping at no extra cost, ship internationally and accept major credit cards as a safe payment method. Turn around time for Asia and Oceania is 4-7 business days. 

BrandsGateway – Womenswear, menswear, accessories, shoes

Brandsgateway is a global distributor of designer apparel and accessories. Their dominant brands include Dolce & Gabbana, Balmain, Versace, Galliano, Karl Lagerfeld and GF Ferrİ, among others. They currently supply over 500 clients globally, including small retailers, department stores, other wholesalers and e-commerce stores. Their large range of both women’s and men’s designer clothes and global shipping policy make them an excellent candidate for a reverse dropshipping supplier. You can easily register online to work with them. 

ILA Uhren GmbH – Watches and jewelry

This supplier established its business in 1995, dropshipping and wholesaling thousands of products from the best-known luxury and mainstream watches and jewelry. Their main office is located in Germany and they require no monthly fee and access to their inventory for registered suppliers. Dropshipping service costs an additional 2,90 EUR per shipment only. 

Watches and jewelry are a great dropshipping product due to their high value but small size ideal for shipping, so register for free with this supplier to get started today.

International Design – Furniture

International Design is a French furniture supplier with over 30 years of experience, offering a large range of design products at attractive prices. Their clients are major e-commerce players in France, Germany, Luxembourg, Belgium, and Switzerland as well as big store chains with over 400 selling points. Their turnaround time for dropshipping usually ranges from 2-10 days (domestic and international).

Logideez – Toys

This supplier established its business in 2013 manufacturing beautiful wooden handcrafted puzzles. Their designs won the Hungarian Design Award 2013 and they were one of the 8 best contestants (out of 260) at the 1359 cm3 design toy competition of Moholy-Nagy University of Art and Design. They ship internationally from their headquarters in Budapest, Hungary and they accept PayPal as a safe payment method. Dropshippers are guaranteed a 54% margin (35% discount) plus shipping, and turnaround time for international order is 3-14 days. Products are shipped in paper tubes/ boxes to protect them from damage and are wrapped in beautifully designed gift-boxes inside. A gorgeous toy experience all around – and we all know people love buying gifts for children! Send a direct message to Demeter Fogarasi for orders and dealership.

Norvine – Men’s Fashion

Norvine established its business in 2011 as a men's store for streetwear + outdoor carrying several European premium quality brands. They ship internationally and they accept PayPal and major credit cards as safe payment methods. Dropshippers are guaranteed 30-40% off of the retail price. Brands stocked include Norvine, Urban Classics, Mister Tee, Brandit, Starter, Nasa, Southpole and more.

Purely Diamonds – Jewelry

Diamonds are a dropshipper’s best friend! Purely Diamonds established its business in 1979 as Stephen Tyler Limited, a well known UK manufacturer of fine diamond jewelry, and created the Purely Diamonds brand in 2005. All jewelry is designed and manufactured in-house in their workshop in London. Dropshipping and private labeling are available at no extra charge. They ship internationally and accept PayPal and major credit cards as safe payment methods. Turn around time is two weeks and all products come with a 5-year manufacturing guarantee.

RUIGOR – Swiss bags and backpacks

Ruigor established its business in 2014, manufacturing and designing bags using Swiss quality and craftsmanship. Their headquarters and manufacturing facility is located in Winkel (ZH) Switzerland. They ship internationally and accept PayPal and major credit cards as safe payment methods.  Turn around time for international order ranges from 15-21 days and returns are accepted within 30 days of receiving the product. 

Send a direct message to Matthias Scappi via for orders and dealership.

UNITED STATES

Donna Bella Cosmetics – Luxury skincare

As a luxury skincare brand, this supplier strives to maintain the highest standard in the cosmetic industry. They have a combined experience of 75 years in the cosmetic research and development industry and travel the world in search of the finest ingredients available.

They ship internationally and they accept all major credit cards and PayPal as safe payment methods. Turnaround time for international orders range from 7-14 days. All products are insured upon shipping and they offer customer service and flexible returns. Contact Abdul Hasib Safi for dropshipping inquiries.

ISO Beauty – Hair products

ISO Beauty is a trailblazing trendsetter in the beauty industry. Their innovative products have seen the brand featured in magazines such as Vogue, Life & Style, Cosmo and Allure as well as television shows like Good Morning America, The Talk, The Today Show, and more. 

Their salon-grade product range include curling wands, blow dryers, hair straighteners, as well as styling sets and personal hair-care items. Their self-proclaimed mission is to empower each and every individual to bring out their unique beauty. Create an account today to start working with this supplier.

Homey Design Inc – Furniture and upholstery

With 15 years of niche furnishing sales, Homey Design are one of the leaders in the home and furniture sector and provide great margins on their products. They’re open to dropshipping and private labeling. Turn around time for International orders is 5-7 business days to ship and returns are accepted, but subject to a small restocking fee. View their catalog online and if you want to work with Homey Design, just complete the new account form.

You can also get in touch with Keith Vey for dealership and product inquiries.

Karo’s Shoes Inc – Sexy fashion footwear

Karo's Shoes Inc is a leading manufacturer of sexy fashion footwear. With a customer base distributed around the globe, they continue to grow and serve retailers of brick-and-mortar shops and various online retail stores. They accept Visa, MasterCard, and American Express and can ship worldwide. Their dropship fee is $6 plus shipping costs, but don’t have a minimum order for dropshipping.

Luxcom Inc – Fine jewelry

Luxcom have over 30 years of fine jewelry experience, spanning production, merchandising, design, and sales with almost a decade in e-commerce too. They ship from their headquarters in NYC and accept PayPal as a safe payment method.

Become a dropshipper by completing their application form online. A valid Federal Tax ID/ EIN number or social security number will increase your chances of getting approved – a process which takes around 2-3 days.

Turn around time international orders (non-ring) is 24-48 hours and all ring orders ship within 1- 4 days depending on the item and if it needs to be resized.

Native Remedies – Health and wellness products

Native Remedies is one of the market-leading brands of natural remedies especially formulated to offer a complete solution for holistic wellness. Founded in 2002, they currently have more than 500,000 customers worldwide and offer over 250 herbal and homeopathic remedies for adults, children and even pets. Orders can be paid by credit card, debit card and PayPal. You can easily join their dropship program for free by completing the application online.

Verra Nova – Home decor

Verra Nova established its business in 2016 as a direct importer and wholesaler of home decor, furniture, and fashion accessories product lines. They ship internationally and accept PayPal and major credit cards as safe payment methods. 

Turn around time for dropship orders is 1-2 days and international shipping takes is around 15-21 days. To work with this supplier as a dropshipper, email them directly for a dealership application and requirements.

The Wine Enthusiast – Wine accessories

The Wine Enthusiast has the Internet's most extensive selection of high-quality wine accessories, wine cellars, glassware, and more. From wine racks to wine glasses, their wine-related products make the perfect gifts. All products sold by The Wine Enthusiast come with a limited warranty provided by the product manufacturer. Payments can be made by Visa, MasterCard, Discover, and American Express and they ship worldwide. 

To work with this supplier, contact them via email or phone (1-800-648-6058 9am-6pm EST). You’ll need a reseller number to complete the application.

That brings us to the end of our top suppliers list! Is there any other product category you’d be interested in exploring for Reverse Dropshipping? And is this a dropshipping branch you think has potential for you? Let us know in the comments below! And if you have any specific questions about getting started with dropshipping in general, don’t hesitate to speak with one of our lovely customer service representatives on live chat!