Which Is easier: Dropshipping in the UK or the US?
The UK and the US are two of the biggest dropshipping markets in the world, with the two countries collectively responsible for around 40% of the global market. Despite that, the operating environment for dropshippers in the UK is vastly different to the US.
To help bridge the gap and shine some more light on why dropshipping in the UK may be more challenging than in the US, in this article, we’re going to go over:
· The 3 key differences between the UK and US dropshipping markets
· The 3 most common challenges for UK dropshippers
· Why the US dropshipping market is more accessible
· How UK dropshippers can compete more effectively
Key Differences Between the UK and US Dropshipping Markets
Though both countries share thriving e-commerce markets, the dropshipping landscapes in the UK and the US differ in several important ways, including:
Market Size and Consumer Base
The most obvious difference between the UK and the US dropshipping markets is the number of potential customers. The United States has a population of around 340 million people, while the UK has just under 68 million. This immediately creates a larger customer pool for US-based dropshippers.
And if we take a closer look at the generated revenue and forecasted growth, the gap becomes even clearer.
In 2024, the US market generated US $121.8 billion in dropshipping revenue, and it’s projected to soar to US $424.3 billion by 2030, at a CAGR of 23.8%. By contrast, the UK reached US $22.95 billion in 2024, with estimates predicting it to climb to US $78.7 billion by 2030, at a CAGR of 23.5%.
While the UK is one of Europe’s fastestgrowing dropshipping markets (6.3 % of global share in 2023), the US commands over 33%. That larger customer base alone affords American dropshippers more economies of scale, advertising reach, and volume-based leverage with suppliers.
Supplier Availability
The US benefits from a larger and more diversified manufacturing and wholesale ecosystem. Many of the world’s biggest product suppliers, distribution networks, and fulfilment services are based there. In contrast, the UK’s supplier network is much smaller, and many sellers rely on overseas suppliers - typically from China or the EU.
This has real consequences for shipping times and reliability. While US-based sellers can frequently access next-day or two-day delivery through domestic partners, UK sellers often contend with slower delivery times unless they work with domestic fulfilment providers, which are fewer in number and can be more expensive.
Platform Preferences (Shopify, eBay, Amazon)
Shopify is a preferred platform for independent sellers in both countries, but UK dropshippers often lean heavily on marketplaces like eBay and Amazon. While these platforms offer broad customer access, they also come with high competition and fees.
In the UK, eBay has a strong user base, but standing out is difficult without a unique product or value proposition. Amazon UK also presents challenges, including strict performance metrics and limited differentiation for dropshippers who are not using Fulfilment by Amazon (FBA).
Common Challenges for UK Dropshippers
While dropshipping is accessible to virtually anyone with an internet connection, certain UK-specific challenges make it a tougher environment for new or small-scale dropshippers. Some of the most common challenges UK dropshippers face include:
Stricter Customs and VAT Regulations
One of the most notorious barriers for UK dropshippers is the country’s strict VAT rules. Currently, any business making more than £90,000 per year in taxable turnover must register for VAT. However, for dropshipping businesses importing goods into the UK, VAT often needs to be accounted for at the point of sale - even if turnover hasn’t yet hit that threshold.
Since January 2021, new rules require VAT to be collected on goods valued at £135 or less imported into the UK, payable at the point of purchase. For goods exceeding £135, VAT and customs duties are paid on import, which can result in additional costs and delivery delays for customers.
These requirements aren’t nearly as complicated in the US, where sales tax thresholds and registration rules differ by state, with many states offering higher exemption thresholds for small businesses.
Smaller Domestic Supplier Network
As mentioned earlier, the limited availability of reliable UK-based dropshipping suppliers presents a logistical challenge. Although several local suppliers exist, they tend to serve niche industries, and their product ranges and pricing structures often don’t compare favourably with larger international suppliers.
The alternative is sourcing from AliExpress (or similar China-based companies), which, according to research by Alibaba, usually results in delivery times ranging from 7 to 40 days depending on the shipping method.
The downside to these extended delivery times can not only negatively affect customer satisfaction, but also lead to an increase in refund or chargeback requests.
Market Saturation in Popular Niches
Dropshipping relies heavily on identifying profitable niches, but many popular product categories in the UK are already saturated. Niches such as fashion accessories, homeware, gadgets, and beauty products attract intense competition.
Given the smaller UK market size, saturation occurs quickly, making it harder for new sellers to gain visibility or achieve meaningful profits without significant ad spend.
Why the US Dropshipping Market Is More Accessible
The relative ease of dropshipping in the US comes down to several important factors that give American sellers a structural advantage. They include:
Larger Customer Base
The US e-commerce market is the second largest globally (second to China), with US$1.14 trillion in retail e-commerce sales recorded in 2023 alone.
This enormous market size means dropshippers can test product ideas and advertising campaigns across a much larger audience. In turn, higher demand allows for more product diversity and can sustain a greater number of competing sellers within the same niche.
Better Domestic Fulfilment Options
US-based dropshippers benefit from affordable and fast domestic fulfilment options like Amazon FBA, ShipBob, and Walmart Fulfillment Services. These services offer reliable, same-day and next-day delivery options across a significant part of mainland US.
Such services are either absent in the UK or offer limited coverage and higher fees relative to the size of the market.
Lower Shipping Costs Within the US
Domestic shipping rates in the US are also typically lower than in the UK. Services like USPS First-Class Package and UPS Ground offer affordable rates for packages up to 1kg (2.2 lbs).
In comparison, the UK’s Royal Mail Tracked 24 or Tracked 48 services are significantly more expensive, especially for packages weighing over 1kg. This cost differential has a direct impact on profit margins and competitiveness.
More Flexible Tax Regulations for Small Sellers
While the UK imposes VAT on almost all dropshipping sales, the US operates a state-level sales tax system with individual thresholds and requirements. Many states only require tax collection once a business reaches $100,000 in annual sales or 200 transactions within the state, providing more flexibility for smaller sellers who are just starting out.
How UK Dropshippers Can Compete Effectively
Despite the challenges UK dropshippers face on a daily basis, dropshipping in the UK is far from impossible. With careful planning and strategic decision-making, sellers can still thrive in this competitive environment. Here are a couple of strategies UK dropshippers can implement to compete more effectively:
Focus on Niche Products
Rather than competing in oversaturated markets like mobile phone accessories or fitness gadgets, UK dropshippers should focus on specialised, under-served niches. For example, products targeting specific hobbies, interests, or communities often face less competition and can command higher profit margins.
Some examples include eco-friendly home goods, pet supplements, or personalised gifts for niche professions (personal trainers, mechanics, dentists, etc).
Partner with UK or EU-Based Suppliers
Working with local suppliers will dramatically improve delivery times and reduce the risk of customs delays. While these suppliers may charge higher unit prices than their Chinese counterparts, faster delivery and easier return processes will enhance customer satisfaction and allow you to bump up the price of the products you sell.
If there are no suitable UK-based suppliers, suppliers from the EU are also a good alternative, provided you have a good understanding of the customs regulations that will apply to you.
Prioritise Fast Shipping Options
With 62% of online shoppers in the UK expecting next-day delivery (up from 44% in 2020), it’s clear that dropshippers need to focus on offering their customers faster shipping options.
This may mean paying extra for express services or using fulfilment partners offering next-day options. If that’s not quite possible for your business just yet - don’t lose hope. Being transparent about estimated delivery times goes a long way in managing expectations and minimising disputes.
Optimise for UK Marketplaces and Local SEO
Success in dropshipping often comes down to visibility. Selling on platforms like Amazon UK, Etsy UK, Not On The High Street, and eBay UK can expose your products to ready-made audiences.
Additionally, optimising your website content for UK-specific search terms (spelling, phrases, and delivery expectations) can help increase your visibility on search engines like Google and help drive organic traffic to your site.
Final Thoughts
While dropshipping remains a compelling business model, the operational environment and the challenges dropshippers face on a daily basis play a big role in their likelihood of success in the long run.
And while dropshipping may be easier in the US, there are plenty of strategies UK dropshippers can implement to remain competitive and increase their chances of becoming part of the 10% of dropshippers who achieve success in their first year in business.
