Dropshipping is a flexible business model with low risk and high growth potential. Therefore, it's no surprise that its popularity has exploded across the world. But how exactly is dropshipping done, and can it be done profitably in Finland?
In this article, we'll discuss these issues and tell you about the opportunities that dropshipping currently offers in Finland and international markets. At the end, you'll also find a few tips on how to set up a profitable dropshipping operation, i.e., an online store without inventory.
What is dropshipping?
Dropshipping means running an online store without owning inventory or making large initial investments. In the dropshipping model, products are purchased from the entrepreneur's online store but they are shipped directly from the supplier/manufacturer's warehouse to the customer.
The dropshipping entrepreneur acts as an intermediary between the manufacturer/supplier and the customer. And since sales are not limited by the company's own limited inventory situation, dropshipping, when done correctly, has very high profit potential.
Like any business, dropshipping also has its risks, of course.
The dropshipping entrepreneur bears responsibility for possible blunders by the manufacturer/supplier, such as quality defects, long delivery times, lost products, etc. However, the entrepreneur can minimize this risk by selecting reliable suppliers who are proven to deliver quality products and by marketing to the right target groups.
Dropshipping in Finland – is it worth it?
Just as with international markets, dropshipping can be very profitable in Finland if done correctly.
Dropshipping also has several advantages over traditional online store operations. In the dropshipping model, the entrepreneur does not invest in products, which is usually the largest cost factor when setting up an online store. It is also often difficult for a smaller company to acquire the large initial capital required for purchasing products and warehouse space.
The dropshipping entrepreneur also doesn't need to worry about shipping the merchandise themselves, as that is handled by the manufacturer/supplier. Order reporting can also be automated, allowing products to be shipped directly from the supplier/manufacturer's warehouse to the customer without the entrepreneur's intervention.
Thus, the dropshipping entrepreneur has more time for marketing and developing and scaling the business. Often, the entrepreneur also has the opportunity to start shipping products themselves, which can increase profit margins. Dropshipping also allows for faster and easier response to changing demand because there is no physical inventory.
Dropshipping thus offers flexibility that a regular online store and business do not have.
Even so, a dropshipping online store can also generate very nice business volume for many years. We say this assuming that the entrepreneur has spent time understanding the target market and audience, and adapts to changes in these areas when necessary.
Taxation of dropshipping earnings in Finland
In Finland, dropshipping activities are taxed in the same way as any other business, meaning income after expenses is taxable.
Ultimately, the taxation of dropshipping income is determined by the type of business entity. Establishing a dropshipping online store thus requires the existence of a business, and most commonly an incorporation form is chosen for tax and other benefits. Of course, it is also possible to conduct the business profitably as a sole proprietorship.
If the entrepreneur does dropshipping in the Finnish market, they must take into account the threshold for value-added tax, which is 15,000 €/year, and, if necessary, register for VAT. In international markets, consideration must be given to the taxation of those countries, where an accounting firm can help.
Of course, the entrepreneur must be aware of the current laws and regulations related to taxes and, for example, data protection. The Tax Administration has written about the taxation of dropshipping income here.
If goods arrive in Finland from abroad, as they usually do, the entrepreneur must inform the customer of any potential additional costs in advance. Such costs include taxes and customs duties for packages coming from outside the EU.
Amazon dropshipping or dropshipping on the Shopify platform?
If an entrepreneur wants to start dropshipping in Finland or abroad, one of the most important decisions to make is the sales channel to use.
Amazon, Ebay, and similar large marketplaces should be dropped from the options right away, because therein lies too much competition and too few ways to stand out. Any significant branding and tailoring of the online store is not possible, making differentiation and marketing considerably more difficult.
On these large platforms, it is also difficult to build your own brand and maintain customer relationships.
For example, AliExpress offers customizable dropshipping online stores, but then you are tied to one supplier and it may not be easy to switch suppliers in problematic situations or scaling wishes.
Additionally, an online store costs more per month than a self-managed Shopify.
So, when comparing Amazon dropshipping and Shopify dropshipping, or dropshipping on another online store platform like WordPress/WooCommerce, the latter give the entrepreneur significantly better starting points to achieve competitive advantage, strong market position, and thus sustainable and profitable business.
Of all the online store platforms, Shopify is however the best choice for a dropshipping entrepreneur.
Shopify as a system is very user-friendly and quick to learn, so for example, adding products, editing the look of the store, and reviewing and exporting sales reports is agile. However, what sets Shopify apart from other platforms are critical features for smooth dropshipping business, such as integrations between dropshipping suppliers and platforms, which allow the entrepreneur to automate inventory and order management.
How to start dropshipping in Finland or internationally?
To start dropshipping operations, you first need an idea for a product or at least a scent of the direction and demand of the online store. Only then, when the actual potential and competitive situation of the idea has been assessed, will you start establishing a dropshipping online store.
Here are our tips for ensuring a profitable dropshipping business from the start:
1. Carefully research needs and markets
The first step to starting a profitable dropshipping operation is market research.
The entrepreneur's most important task is to understand demand and identify current, changing, and upcoming trends and thereby figure out what kind of products might be needed on the market.
Market research and trend analysis can easily be started using the Google Trends tool. Google Keyword Planner and tools like Ahrefs or Semrush work well to find out internet search volumes and potential demand for certain target markets and areas. The entrepreneur should also delve deeper into the research by looking at dropshipping statistics and scrolling through, for example, Amazon's best-selling products.
Through these tools, the entrepreneur can find new ideas and get a feel for whether their own ideas and dropshipping operations could be successful in the targeted market.
The success of a dropshipping business, like that of any other business, largely depends on demand, so market research should not be skipped by jumping directly into practical implementation.
However, the research process can be streamlined by knowing from the outset whether the entrepreneur intends to do dropshipping in the Finnish market, internationally, or both.
2. Determine the competitive situation and find a market niche
The next step is to examine the competitive situation of your target market (or markets, if you have several) more closely and try to find a niche suitable for your business.
You can do dropshipping by offering something completely new and unique that still has demand, or by selecting already popular products for your online store that you believe will also appeal to your target group. Ideally, these products have low supply and providers on your target markets.
The latter can be a less risky business model, as there is evidence of success from other markets. By this point at the latest, it's worth looking at the best-selling products on dropshipping platforms and large marketplaces and finding out which ones could have good potential and yet little or no supply in your target market.
However, keep in mind the differences between target groups. A product that makes millions in China may not interest the less dense, quality-conscious Finnish consumers.
3. Choose a niche for your business and narrow down your product range
Once you have found a market niche for your business where supply does not meet demand, you can define the niche of your dropshipping online store, to which you restrict your product collection.
Narrowing down the product range is beneficial because it allows you to stand out from large, mainstream actors, and effectively reach a smaller group of customers with targeted marketing messages.
You need to naturally come up with what this message is and who you want to reach with it (who is your target group and ideal customer).
This also makes marketing easier and allows the dropshipping business to more quickly and easily override large general stores in search engines and build a recognizable brand among the target audience and achieve a stronger position in the target markets.
In other words, choosing a niche can give you considerable competitive advantage.
However, the niche for your online store doesn't have to be too restrictive. It can be as broad as electronics, gift items, or pets, or as specific as phone cases, funny t-shirts, camping gear, or zero waste decor.
4. Find and choose the right dropshipping partners
Choosing a dropshipping niche again leads to the next step, finding reliable manufacturers and suppliers and selecting quality products.
Of course, you should only choose reliable suppliers and manufacturers with whom dropshipping in Finland is known to work smoothly. This means that the products are quality goods, order processing is quick and the delivery process is seamless.
Working with a disreputable dropshipping supplier risks delivering poor-quality or broken goods to customers, long delivery times, and repeated customer returns, which certainly erode your company's customer satisfaction, cash flow, and reputation.
Good suppliers can be found by Googling and researching dropshipping entrepreneurs' experiences, for example, on the supplier's page in Shopify's own App Store.
You can also find today's best international dropshipping suppliers and the most popular suppliers in Europe from various articles.
5. Build a web store and brand that appeal to your target group
Background work is important if you want to succeed in dropshipping in Finland or any country, but just as crucial is the actual implementation and branding of the dropshipping online store.
Specialization provides considerable advantage to the dropshipping business, but it does not negate the fact that competition will always exist, even if what is being sold is "something completely new".
If the dropshipping entrepreneur wants to be as fast and profitable as possible, the sales whole from the very first day must be top-notch. By the whole, we mean a fast, technically flawless online store, all its content, and a brand that stands out from competitors and appeals to the right target group.
By designing and building the online store carefully, the dropshipping entrepreneur ensures a steadier cash flow and faster growth for the business.
This is done by ensuring that the right, most potential customers are reached and they are sent the right kind of image. Just reaching the right people isn't enough, they still need to be persuaded to buy with a brilliantly entire and carefully polished details.
If something in the online store seems off to the customer, whether it be a technical or visual issue, a content problem or inconsistency, or an odd feeling or vibe that the online store inadvertently conveys, the same or similar product will be purchased elsewhere.
The user experience of the online store is, therefore, crucial because it ensures that the customer who has decided to make a purchase completes the transaction and euros click onto the company's account.
The brand and online store, however, are their own territories, and there's so much to cover that they need to be addressed separately unless you are buying expert help. The do-it-yourself man or woman can benefit from our Shopify Online Store Setup Guide or this article on branding a dropshipping business.
Also, remember to choose a relevant and clear domain for the online store that stays in the customer's mind and brings you SEO benefits by being closely linked to the topic.
Start a profitable dropshipping business faster with Growly
With this advice, starting dropshipping and establishing an online store should be a clearer process. It still is – a process that will take time, especially when a functional online store is actually being implemented.
There are other aspects related to setting up a dropshipping online store, such as defining product range, creating and updating quality product texts and images, pricing, and choosing and defining customer-friendly payment methods.
Once finished, the online store must, of course, also be search engine optimized and the business must be marketed in search engines and social media channels favored by the target group.
Remember, it's not a good idea to take shortcuts when making an online store, because good or bad implementation will ultimately determine how well or poorly (or very well or very poorly) sales will occur and how quickly and greatly the business will grow.
In addition to thorough groundwork, our most important tip for starting dropshipping is to invest in a quality online store.
Digital agency Growly can help you get started not only with a seamlessly functioning online store but also a beautiful, pre-branded package, allowing you to get straight to sales and marketing. And if you need help with the latter as well, we're here to focus on genuine, measurable results and the sustainable growth of your dropshipping business.
Feel free to contact us through the form below to discuss your online store's implementation and how to start your business's growth journey in a relaxed meeting.
Dropshipping is a flexible business model with low risk and high growth potential. Therefore, it's no surprise that its popularity has exploded across the world. But how exactly is dropshipping done, and can it be done profitably in Finland?
In this article, we'll discuss these issues and tell you about the opportunities that dropshipping currently offers in Finland and international markets. At the end, you'll also find a few tips on how to set up a profitable dropshipping operation, i.e., an online store without inventory.
What is dropshipping?
Dropshipping means running an online store without owning inventory or making large initial investments. In the dropshipping model, products are purchased from the entrepreneur's online store but they are shipped directly from the supplier/manufacturer's warehouse to the customer.
The dropshipping entrepreneur acts as an intermediary between the manufacturer/supplier and the customer. And since sales are not limited by the company's own limited inventory situation, dropshipping, when done correctly, has very high profit potential.
Like any business, dropshipping also has its risks, of course.
The dropshipping entrepreneur bears responsibility for possible blunders by the manufacturer/supplier, such as quality defects, long delivery times, lost products, etc. However, the entrepreneur can minimize this risk by selecting reliable suppliers who are proven to deliver quality products and by marketing to the right target groups.
Dropshipping in Finland – is it worth it?
Just as with international markets, dropshipping can be very profitable in Finland if done correctly.
Dropshipping also has several advantages over traditional online store operations. In the dropshipping model, the entrepreneur does not invest in products, which is usually the largest cost factor when setting up an online store. It is also often difficult for a smaller company to acquire the large initial capital required for purchasing products and warehouse space.
The dropshipping entrepreneur also doesn't need to worry about shipping the merchandise themselves, as that is handled by the manufacturer/supplier. Order reporting can also be automated, allowing products to be shipped directly from the supplier/manufacturer's warehouse to the customer without the entrepreneur's intervention.
Thus, the dropshipping entrepreneur has more time for marketing and developing and scaling the business. Often, the entrepreneur also has the opportunity to start shipping products themselves, which can increase profit margins. Dropshipping also allows for faster and easier response to changing demand because there is no physical inventory.
Dropshipping thus offers flexibility that a regular online store and business do not have.
Even so, a dropshipping online store can also generate very nice business volume for many years. We say this assuming that the entrepreneur has spent time understanding the target market and audience, and adapts to changes in these areas when necessary.
Taxation of dropshipping earnings in Finland
In Finland, dropshipping activities are taxed in the same way as any other business, meaning income after expenses is taxable.
Ultimately, the taxation of dropshipping income is determined by the type of business entity. Establishing a dropshipping online store thus requires the existence of a business, and most commonly an incorporation form is chosen for tax and other benefits. Of course, it is also possible to conduct the business profitably as a sole proprietorship.
If the entrepreneur does dropshipping in the Finnish market, they must take into account the threshold for value-added tax, which is 15,000 €/year, and, if necessary, register for VAT. In international markets, consideration must be given to the taxation of those countries, where an accounting firm can help.
Of course, the entrepreneur must be aware of the current laws and regulations related to taxes and, for example, data protection. The Tax Administration has written about the taxation of dropshipping income here.
If goods arrive in Finland from abroad, as they usually do, the entrepreneur must inform the customer of any potential additional costs in advance. Such costs include taxes and customs duties for packages coming from outside the EU.
Amazon dropshipping or dropshipping on the Shopify platform?
If an entrepreneur wants to start dropshipping in Finland or abroad, one of the most important decisions to make is the sales channel to use.
Amazon, Ebay, and similar large marketplaces should be dropped from the options right away, because therein lies too much competition and too few ways to stand out. Any significant branding and tailoring of the online store is not possible, making differentiation and marketing considerably more difficult.
On these large platforms, it is also difficult to build your own brand and maintain customer relationships.
For example, AliExpress offers customizable dropshipping online stores, but then you are tied to one supplier and it may not be easy to switch suppliers in problematic situations or scaling wishes.
Additionally, an online store costs more per month than a self-managed Shopify.
So, when comparing Amazon dropshipping and Shopify dropshipping, or dropshipping on another online store platform like WordPress/WooCommerce, the latter give the entrepreneur significantly better starting points to achieve competitive advantage, strong market position, and thus sustainable and profitable business.
Of all the online store platforms, Shopify is however the best choice for a dropshipping entrepreneur.
Shopify as a system is very user-friendly and quick to learn, so for example, adding products, editing the look of the store, and reviewing and exporting sales reports is agile. However, what sets Shopify apart from other platforms are critical features for smooth dropshipping business, such as integrations between dropshipping suppliers and platforms, which allow the entrepreneur to automate inventory and order management.
How to start dropshipping in Finland or internationally?
To start dropshipping operations, you first need an idea for a product or at least a scent of the direction and demand of the online store. Only then, when the actual potential and competitive situation of the idea has been assessed, will you start establishing a dropshipping online store.
Here are our tips for ensuring a profitable dropshipping business from the start:
1. Carefully research needs and markets
The first step to starting a profitable dropshipping operation is market research.
The entrepreneur's most important task is to understand demand and identify current, changing, and upcoming trends and thereby figure out what kind of products might be needed on the market.
Market research and trend analysis can easily be started using the Google Trends tool. Google Keyword Planner and tools like Ahrefs or Semrush work well to find out internet search volumes and potential demand for certain target markets and areas. The entrepreneur should also delve deeper into the research by looking at dropshipping statistics and scrolling through, for example, Amazon's best-selling products.
Through these tools, the entrepreneur can find new ideas and get a feel for whether their own ideas and dropshipping operations could be successful in the targeted market.
The success of a dropshipping business, like that of any other business, largely depends on demand, so market research should not be skipped by jumping directly into practical implementation.
However, the research process can be streamlined by knowing from the outset whether the entrepreneur intends to do dropshipping in the Finnish market, internationally, or both.
2. Determine the competitive situation and find a market niche
The next step is to examine the competitive situation of your target market (or markets, if you have several) more closely and try to find a niche suitable for your business.
You can do dropshipping by offering something completely new and unique that still has demand, or by selecting already popular products for your online store that you believe will also appeal to your target group. Ideally, these products have low supply and providers on your target markets.
The latter can be a less risky business model, as there is evidence of success from other markets. By this point at the latest, it's worth looking at the best-selling products on dropshipping platforms and large marketplaces and finding out which ones could have good potential and yet little or no supply in your target market.
However, keep in mind the differences between target groups. A product that makes millions in China may not interest the less dense, quality-conscious Finnish consumers.
3. Choose a niche for your business and narrow down your product range
Once you have found a market niche for your business where supply does not meet demand, you can define the niche of your dropshipping online store, to which you restrict your product collection.
Narrowing down the product range is beneficial because it allows you to stand out from large, mainstream actors, and effectively reach a smaller group of customers with targeted marketing messages.
You need to naturally come up with what this message is and who you want to reach with it (who is your target group and ideal customer).
This also makes marketing easier and allows the dropshipping business to more quickly and easily override large general stores in search engines and build a recognizable brand among the target audience and achieve a stronger position in the target markets.
In other words, choosing a niche can give you considerable competitive advantage.
However, the niche for your online store doesn't have to be too restrictive. It can be as broad as electronics, gift items, or pets, or as specific as phone cases, funny t-shirts, camping gear, or zero waste decor.
4. Find and choose the right dropshipping partners
Choosing a dropshipping niche again leads to the next step, finding reliable manufacturers and suppliers and selecting quality products.
Of course, you should only choose reliable suppliers and manufacturers with whom dropshipping in Finland is known to work smoothly. This means that the products are quality goods, order processing is quick and the delivery process is seamless.
Working with a disreputable dropshipping supplier risks delivering poor-quality or broken goods to customers, long delivery times, and repeated customer returns, which certainly erode your company's customer satisfaction, cash flow, and reputation.
Good suppliers can be found by Googling and researching dropshipping entrepreneurs' experiences, for example, on the supplier's page in Shopify's own App Store.
You can also find today's best international dropshipping suppliers and the most popular suppliers in Europe from various articles.
5. Build a web store and brand that appeal to your target group
Background work is important if you want to succeed in dropshipping in Finland or any country, but just as crucial is the actual implementation and branding of the dropshipping online store.
Specialization provides considerable advantage to the dropshipping business, but it does not negate the fact that competition will always exist, even if what is being sold is "something completely new".
If the dropshipping entrepreneur wants to be as fast and profitable as possible, the sales whole from the very first day must be top-notch. By the whole, we mean a fast, technically flawless online store, all its content, and a brand that stands out from competitors and appeals to the right target group.
By designing and building the online store carefully, the dropshipping entrepreneur ensures a steadier cash flow and faster growth for the business.
This is done by ensuring that the right, most potential customers are reached and they are sent the right kind of image. Just reaching the right people isn't enough, they still need to be persuaded to buy with a brilliantly entire and carefully polished details.
If something in the online store seems off to the customer, whether it be a technical or visual issue, a content problem or inconsistency, or an odd feeling or vibe that the online store inadvertently conveys, the same or similar product will be purchased elsewhere.
The user experience of the online store is, therefore, crucial because it ensures that the customer who has decided to make a purchase completes the transaction and euros click onto the company's account.
The brand and online store, however, are their own territories, and there's so much to cover that they need to be addressed separately unless you are buying expert help. The do-it-yourself man or woman can benefit from our Shopify Online Store Setup Guide or this article on branding a dropshipping business.
Also, remember to choose a relevant and clear domain for the online store that stays in the customer's mind and brings you SEO benefits by being closely linked to the topic.
Start a profitable dropshipping business faster with Growly
With this advice, starting dropshipping and establishing an online store should be a clearer process. It still is – a process that will take time, especially when a functional online store is actually being implemented.
There are other aspects related to setting up a dropshipping online store, such as defining product range, creating and updating quality product texts and images, pricing, and choosing and defining customer-friendly payment methods.
Once finished, the online store must, of course, also be search engine optimized and the business must be marketed in search engines and social media channels favored by the target group.
Remember, it's not a good idea to take shortcuts when making an online store, because good or bad implementation will ultimately determine how well or poorly (or very well or very poorly) sales will occur and how quickly and greatly the business will grow.
In addition to thorough groundwork, our most important tip for starting dropshipping is to invest in a quality online store.
Digital agency Growly can help you get started not only with a seamlessly functioning online store but also a beautiful, pre-branded package, allowing you to get straight to sales and marketing. And if you need help with the latter as well, we're here to focus on genuine, measurable results and the sustainable growth of your dropshipping business.
Feel free to contact us through the form below to discuss your online store's implementation and how to start your business's growth journey in a relaxed meeting.