I started dropshipping in Australia back in 2016 and I can tell you one thing, it’s not as easy today as it was back then. So hopefully, I’m qualified enough to give you an honest answer about whether dropshipping still works in Australia and if it’s still worth it.
If you want a quick answer, dropshipping still works in Australia, however, it has changed and many of the tactics that previously worked no won’t work. No longer can you list some trending products from AliExpress on a Shopify store and expect to make sales. Dropshipping in Australia has evolved and I believe that’s a good thing.
If you’re a complete beginner deciding whether it’s worth starting your own dropshipping business in Australia, I would say “definitely”. As long as you’re willing to devote time to learning the process and knowing it is not as easy as many YouTubers make it out to be.
I have a ton of resources you can learn from within this website plus several lists of suppliers that are all based in Australia.
Is Dropshipping Profitable in Australia?
According to the International Trade Administration, eCommerce is growing rapidly in Australia and is expected to reach USD32 billion annually by 2024.
Basically, Australia has a high GDP per capita which means the citizens have excess disposable income compared to some countries and they love shopping online. This makes dropshipping a viable and profitable business venture in Australia.
However, this does not mean dropshipping in Australia is all positive, there are several disadvantages you should be aware of:
- Shipping times from AliExpress to Australia will vary but are often a little longer compared to the US and the UK.
- Australia’s smaller population compared to larger countries can be positive and negative. It often means you can’t target very specific niches with a small audience and will need to broaden your niche to find a large enough audience of buyers.
- There are fewer domestic suppliers meaning it can be tough to source suppliers with unique products other dropshippers have not already sourced.
- Rural areas of Australia can be very expensive for shipping and it can get a little messy when working out shipping costs.
- E-commerce in Australia is not saturated but it is reasonably competitive.
- Advertising costs in Australia are not as high as in the USA but are still reasonably high.
Essentially, this means dropshipping in Australia CAN be profitable but is far from guaranteed.
How Does Dropshipping Work in Australia?
There are several ways you can make dropshipping work, I’ll give you my opinion on the best and worst ways to dropship in Australia.
First, you can try dropshipping on Amazon and eBay. eBay is currently much bigger than Amazon in Australia but I would avoid dropshipping on either of these marketplaces for a number of reasons:
- They are competitive.
- Profit margins are low due to price wars.
- Both platforms have several fees associated with them which really add up.
- They are essentially your boss meaning your business relies solely on them, if they change their policies or decide you can’t use their platform anymore, your business is over.
- You don’t have a valuable asset you can eventually sell for a large sum of money.
A better option is to create your own dropshipping Shopify store in Australia. This way it’s your business and you can run it how you like and your business is not at the mercy of others.
The obvious downside to a Shopify store is you need to drive traffic to your store as opposed to relying on eBay and Amazon which already have the traffic.
You have a few main options when it comes to Shopify dropshipping in Australia.
The first option is retail arbitrage which is not technically a type of dropshipping but is similar. It basically means you list products from other retailers on your store or marketplace at a marked-up price.
For example, you could list products from Kmart or Big W on your online business and have these stores send the products directly to your customer. I do not recommend this option as it’s more ongoing work and is unsustainable in the long term.
The best two options for dropshipping in Australia are;
1. Dropshipping from China
This initially involves dropshipping from AliExpress or CJ Dropshipping for a short period of time. Shipping times from China to Australia are reasonably long, the product quality is hit and miss and the suppliers are notoriously unreliable. This is not a long-term option and why you should not scale your business with AliExpress or CJ Dropshipping.
These platforms are most effective for testing products which help you validate the potential of the product before transitioning to the next step. The next step is sourcing your product in bulk and building a brand within Australia. I have a ton of resources and tutorials on this website on how to do this.
2. Dropshipping from Australian Suppliers
The next option is to find suppliers based in Australia who are willing to dropship for you. Although you can dropship any kind of product fro Australian suppliers, the most viable option is to dropship high ticket products valued at $100 and over.
The reason for this is it’s not worth your supplier’s time to be shipping individual products valued at $20 for small profit margins, especially if they’re shipping across the other side of Australia. The ideal price range for high ticket products is valued anywhere between $200 and $1,000. This provides you both with healthy profit margins whilst not high enough that your customer will have trust issues purchasing for you.
Where Can I dropship in Australia?
You can dropship anywhere in Australia, however, remote areas of Australia can be very expensive when it comes to shipping. If you dropship larger products to many rural Australian areas, you may run at a loss if you’re profit margins aren’t adequate.
For example, dropshipping oversized products such as kayaks or gym equipment to the Pilbara region of Australia will cost you far more than the actual product itself. You need to work with a shipping company that can provide you with delivery cost estimates to your customers or you need to specify clearly which areas of Australia you can and can’t ship to.
Each Australian shipping company’s pricing structure will vary so it’s worth shopping around to find the company that suits your business needs. If you require some assistance I may be able to offer e-commerce support if you’re based in Perth.
Whilst you can dropship from AliExpress to Australia, the estimated delivery times stated are only estimates. Delivery times will vary depending on which State, City or Town you’re shipping to.
Do you need an ABN to dropship in Australia?
You will need an ABN if you plan to start a dropshipping business in Australia. Most domestic suppliers will require an ABN when you sign a contract to work with them.
Do you pay tax on dropshipping in Australia?
Dropshipping works the same as any other business in Australia, you pay tax on the profit your store makes.
Can you dropship in the USA whilst living in Australia?
You can dropship to the USA or any other country whilst you’re living in Australia. No matter which country you dropship in, you pay taxes to the country you’re a citizen of.
How do I legally dropship in Australia?
As long as you register your business and pay your taxes, you can legally dropship in Australia. You will however need to abide by the ACCC‘s guidelines when it comes to which products can be legally sold.
Should I register as a sole trader for a dropshipping business in Australia?
A sole trader is the simplest and cheapest structure if you’re starting a dropshipping business alone.