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How to Start a Dropshipping Business in Australia in 2022

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The ecommerce industry is booming. Australia has a population of around 26 million, and the majority of them are on social media platforms.

With so many people online in Australia, it’s no surprise that the number of online shoppers is increasing by the day.

A popular business model in 2022 is dropshipping, especially for those who are just starting out in their career and are short on funds to invest in products upfront.

Dropshipping is growing rapidly because it offers a low-cost startup, low-risk, and high margins for new businesses looking to set up shop on the internet.

You don’t need any prior experience or capital to get started because you can purchase goods from any dropshipping supplier once you get an order on your online store.

This article will cover everything you need to know about how to start your own dropshipping business in Australia!

Should you do dropshipping in Australia?

First thing’s first, is it a good idea to start a dropshipping business in Australia?

Before starting any business, it’s always crucial to do some market research before taking the leap.

Excellent target countries for dropshipping businesses are often seen to have overlapping characteristics.

Some common ones are:

  • Fast shipping options. The country needs to have fast shipping options available, usually ePacket or better.
  • High GDP per capita. The average income of the country’s residents should be relatively high. This increases the chances of a high disposable income.
  • High social network penetration. If many of the country’s residents are present on social media like Facebook and Instagram, you will be able to reach them more easily!
  • A large population. When dropshipping in a country with a large population, problems like ad fatigue are less likely to occur.

Well, let’s see if Australia has any of these characteristics!

Shipping options in Australia

First, let’s check the shipping options. Australia is ranked 18th best in the world in the logistics performance index. So you will have access to fast shipping options, but they won’t be record-breaking either.

Australia ranked on logistics performance index
Countries ranked on logistics performance index (source)

Income of Australians

Next is the GDP per capita. In Australia, each capita earns around $51,812. For comparison, Canada’s GDP per capita is around $43,242, while people in the US earn $63,544 on average.

Besides having a relatively high income, Australians spend a relatively high amount on ecommerce purchases. On average, each capita in Australia spends around $1,764 on online purchases.

In the end, it’s safe to say that people in Australia do have high disposable incomes!

Social media in Australia

So, what about social media penetration and the population?

Australia features a social network penetration of 79.9%. This means that you will be able to reach four out of five people living in Australia with online marketing campaigns.

Besides, the second most popular media activity for Australians (after watching television) is social media.

Australia’s population

Lastly, Australia has a population of around 25.8 million people. While this may sound a bit little, it really shouldn’t be an issue.

A population of 25.8 million people is still enough to avoid quickly hitting a ‘ceiling’ in the dropshipping market when scaling. Remember that there are also other great dropshipping countries with even smaller populations, like Israel (8.7m) or Norway (5.5m)!

Conclusion on dropshipping in Australia

So, should you do dropshipping in Australia?

Well, to say it straight and simple, yes!

In our ranking of the best dropshipping countries to target, Australia is placed as the 3rd best country in the world!

For a graphical summary of everything above, take a look at our infographic:

Dropshipping in Australia - Infographic

And what about dropshipping from Australia?

Do you live in Australia?

If so, you may be wondering if you should start a dropshipping business from Australia. Said differently, by selling products manufactured or stored in Australia!

Let us tell you this; it could definitely be a smart move!

As you’ve read above, Australia is already a great market to target. By using a local dropshipping supplier, your products won’t have to cross halfway across the world anymore, as they often must when you’re using a supplier located in China.

The effect? Much more competitive delivery times!

And… a great way to win customers over your competitors who still use Chinese suppliers.

So, if you see an opportunity to do this, you should go for it!

Another option of starting a dropshipping store from Australia is by selling Australian products to other countries. This happens way less often but could be worth it if you found a local supplier with a unique product.

It’s called the reverse dropshipping model, and here’s how it works:

How does reverse dropshipping work - Infographic

Note that the image gives the US as an example, but it works the same way for Australia!

Reverse dropshipping is a relatively new online business model that literally reverses the traditional dropshipping model.

It involves buying high-quality products from suppliers in Australia or the US and selling them to wealthy people in China.

Once again, check out this article for more information! But as always, be aware of the downsides of this, such as high costs of goods sold and shipping costs.

Here’s how to start a dropshipping business in Australia in 8 steps

Ready to start working on your online business? Awesome!

Here are the eight steps on how to start a dropshipping business in Australia:

  1. Decide between a general, niche, or one-product store
  2. Pick out the right products to sell online
  3. Define your ideal target audience
  4. Find a dropshipping supplier
  5. Pick your preferred ecommerce platform
  6. Design and brand your dropshipping store
  7. Set up your payment gateways
  8. Promote your store with social media and content marketing

Unfortunately, guiding you through all steps in detail would make this article way too long.

Don’t worry, though.

If you are interested in a detailed guide on creating your online store, check out this article.

Alternatively, you can follow our checklist, a step-by-step guide that includes 22 steps you can follow to start your dropshipping store!

But don’t leave this article just yet. Below, we will give you our best tips for starting a dropshipping business in Australia. Not only that, but we will also answer some frequently asked questions about dropshipping in Australia!

Packages falling in Australia

As a final note, remember that starting a successful dropshipping store in Australia is not as simple as it may sound.

Many factors come into play when building a profitable dropshipping store. Just think about picking a winning product, finding a good supplier, and setting up a profitable marketing campaign.

There will be times when you will feel like it’s better to quit. However, remember that this is just part of the process. Try to evaluate and, if necessary, adjust your plan, and you will see that brighter times will come!

6 Tips for starting a dropshipping store in Australia

The following five tips will be for those thinking about starting a dropshipping store in Australia.

They will help you make some critical business decisions like what ecommerce platform to pick or what dropshipping supplier to choose.

Furthermore, they will help you prevent some of the common mistakes that people make, which will make your dropshipping adventure much smoother.

Let’s start with the first one!

1. Use an ecommerce platform suited for the Australian market

Your ecommerce platform will be the base of your dropshipping store. It is a platform that allows you to design, build, and manage your store.

An excellent ecommerce platform should offer the right features, be easy to use, and provide excellent customer support.

Choosing an ecommerce platform for your dropshipping store can be difficult because there are so many options to choose from.

However, the right one will offer a range of features and some easy-to-use capabilities. If you manage to find one that matches your business model (and it’s not too expensive), you will genuinely benefit from the simpler experience when managing your store!

Start a dropshipping business in Australia with Shopify
Homepage of Shopify (one of – if not the best – ecommerce platforms out there)

The platform that fits you best depends on a few things.

For instance, do you have the budget to spend on a platform with a bit more features? Or, are you looking for the platform with the best SEO performance because you want to market your store organically?

Whatever it is, the following table may help you decide which platform to pick:

And if you are still not sure, let us give you our recommendation.

Three brilliant choices for dropshipping businesses in Australia are Shopify, BigCommerce, and WooCommerce.

Lastly, remember that you can always read our review of them (link in the table above) before starting if you have any doubts!

2. Find a dropshipping supplier located in Australia

Another important thing to research before opening up your store is the dropshipping supplier you will use.

A dropshipping supplier holds the product you sell in stock and ships them to your customers once you start receiving orders.

Flying on a package in Australia

You could opt for the ‘traditional’ option and go for a Chinese dropshipping supplier. However, our tip is to look at dropshipping suppliers based in Australia.

These dropshipping suppliers operate from and store their products in Australia.

The result?

  • Faster shipping times
  • An easier return process
  • Sell high-quality ‘Made in Australia’ products
  • A better customer service

The only downside is that you may have to pay a bit more for the products themselves, but you will get all of the listed benefits in return!

Sounds great, right?

Once again, we have a table for you. This time, it’s an overview of some of the best dropshipping suppliers in Australia!

By clicking on the supplier’s name, a new tab will open to that supplier’s website. You can also click on ‘Read Review’ to open a new tab where you will be able to read our review of that supplier, including things like their pros and cons:

Tip: Want to discover more dropshipping suppliers in Australia? If so, check out this article!

3. Offer the most popular payment methods in Australia

Shopify - Ways to accepts payments in Australia

An important part of starting a dropshipping business in Australia is researching which payment methods your customers prefer to use.

If you don’t offer these on your online store, you may end up with lots of abandoned checkouts!

Tip: Are you interested in more reasons why visitors may be abandoning their cart of checkout? If so, check out this article!

But how do you make sure you offer the most important payment methods for the country you’re targeting?

Well, it all starts with setting up the right payment gateways, which are systems from third-party companies that make sure your customer’s money ends up in your account safely and smoothly.

Each payment gateway is often integrated with one or multiple payment methods.

Let’s take a look at the most popular payment methods in Australia.

It turns out that credit and debit cards are by far the most preferred payment method in Australia, with a rate of 52%. This includes popular cards like VISA, MasterCard, and American Express.

Digital wallets are ranked second with a rate of 22%. The bulk of this rate is likely from PayPal, but wallets like Amazon Pay and Apple Pay are quickly gaining popularity too.

Last but not least are the direct bank transfer (13%), cash (7%), and other (6%) payment methods.

One popular payment method specific to Australia is an online banking system called ‘POLi Payments.’ You should try to offer it as a payment option on your online store to let customers check out safely and securely from within their own banking environment.

To sum up, if you can offer the payment methods in the following list on your dropshipping store, you will satisfy pretty much all of your visitors!

  • Credit card
  • Debit card
  • PayPal
  • Amazon Pay
  • Apple Pay
  • Bank transfer/POLi Payments

If you struggle to choose the best payment gateway for your store, we recommend reading our article about the seven best payment gateways for dropshipping stores in 2022.

4. Be prepared for the expenses on your Australian dropshipping store

Although the dropshipping business model requires minimal startup costs, it’s not something that can be done for free.

You will need to reserve a budget to invest in your dropshipping business.

One of the first things you will have to buy is your domain.

We recommend checking out Namecheap as it offers one of the lowest prices for domains. Besides, it provides free privacy protection, which will keep your name and information private.

Buy a domain on Namecheap for cheap

Luckily, a domain is not that expensive. For less than $11 per year, you can have your own professional .com domain! (Which you can then use as a custom email address as well.)

Next up, you will need to pay for your ecommerce platform. Most people choose Shopify, which costs $29 per month for the basic plan after your free 14-day trial has ended.

You may also need to pay for some dropshipping apps that add some extra functionalities to your store. However, if you choose the right apps, they may very well all be free. Check out the best Shopify dropshipping apps for beginners here!

Then, you may need to pay for your dropshipping supplier. Some Australian dropshipping suppliers (like CJdropshipping) are free, while others (like Spocket) can be paid and often cost you around $29 per month.

Once you have started dropshipping, marketing could be one of your highest costs. Some people will need a marketing budget of $250 before they see any success, while others will need $1,000-$2,000, or even more.

Here is an overview of the costs that you may expect when starting a dropshipping business in Australia:

Expense Amount
Domain (Namecheap) ~ $11 per year
Ecommerce platform (Shopify) $29 per month
Dropshipping apps (costs vary depending on you) ~ $10-$50 per month
Dropshipping supplier ~ $0-$29 per month
Marketing ~ $0-$2,000+ per month

For a detailed discussion on what costs you may come across when dropshipping, take a look at this article!

5. Learn about the tax rules of operating a dropshipping business in Australia

We know taxes are a boring subject.

But it’s critical to look into this topic before starting your Australian dropshipping business. It’s never fun when you unexpectedly find out that you must still pay some taxes!

Older man behind a laptop

If you are operating a dropshipping business out of Australia, you will have to take into account two types of taxes.

First, there is the individual income tax, which may take a certain percentage of your income and works the same way as if you were to work at a company, for example.

When scaling your online store, you may also become subject to GST tax, which is a 10% tax that is added to your sales of goods.

The good news is that you will only have to pay this tax once your dropshipping store reaches an annual revenue of $75,000.

Another great thing is that all products purchased online with a value of $1,000 or less are considered low-value products, which according to Australian border laws, are duty-free.

Remember, if you’re not sure how the taxes work for your dropshipping store, it’s best to contact a local tax authority. They should be able to help you!

6. Think about getting an Australian domain for your business

Register a business website in Australia

Our last tip will help to increase your visitor’s trust!

Most dropshipping businesses operate on the popular and recognizable ‘.com’ domain.

However, if you are targeting a country outside of the US (like Australia), it may be worth getting a local domain for your business.

The official domain for Australian businesses is the ‘.com.au’ domain.

By getting an Australian domain, your visitors will know that you’re a genuine business operating from and for the Australian market.

To register a .com.au domain, you will need an Australian Business Number (ABN). This unique 11 digit number identifies your business to the government and community.

Luckily, you can register for an ABN for free!

Once you have an ABN, you can register your own Australian domain name here.

Dropshipping in Australia FAQs

Starting a successful dropshipping business in Australia can be complex, so it’s definitely possible that you still have some questions wandering around in your head!

To answer those (hopefully), we have created this frequently asked questions section about dropshipping in Australia.

Is your question missing? Don’t worry; just write it in the comment section below, and we may add it here too!

Is dropshipping in Australia profitable in 2022?

Yes, Australia is a great country to target as a dropshipper. It offers a high GDP per capita of $51,812, a high spend on ecommerce purchases of around $1,764, and Australia’s ecommerce market is expected to reach an annual growth rate of 4.2%! (Source)

How do you register your business in Australia?

What is Australian Consumer Law?

How much money do I need to start a dropshipping business in Australia?

From our fourth tip, you’ve already learned a bit about the expenses you can expect from a dropshipping business in Australia.

Generally, the costs of starting a dropshipping business are relatively low at the start and increase when scaling your store. To start a dropshipping business in Australia, we recommend having a starting budget of at least $300.

How do I find dropshipping suppliers in Australia?

Is dropshipping legal in Australia?

Yes, dropshipping is a legal business model in Australia. As a retailer, you aren’t obliged to have a product you sell in stock or possession.

Still, remember to always comply with all Australian laws and tax requirements. For example, if you’re running your dropshipping store as a business in Australia, you will need to register for an Australian Business Number (ABN).

How do I find a good niche for my Australian dropshipping store?

We recommend picking a dropshipping niche that interests you or that you are passionate about.

If you want to get some inspiration and see the possibilities, check out our 25 best dropshipping niche ideas here!

How do you start dropshipping in Australia?

Conclusion

Congratulations! You’ve made it to the end.

After reading this article, we hope that you will be ready to start your own dropshipping business in Australia!

Targeting the Australian market really is a great opportunity for dropshippers as Australians have a relatively high disposable income. Meanwhile, you will face relatively less competition compared to when targeting the US, for example!

A final tip from us is not to go too far in your research before actually carrying out the initial steps of creating your dropshipping business.

In short, learn as you go!

Covering all the information you need to start a dropshipping store in Australia from start to finish is way too much to cover in one article.

Therefore, we advise you to follow our step-by-step checklist. By doing so, you will learn everything much quicker!

If you have any questions left, just leave them in the comments below.

Good luck with starting your Australian dropshipping store!

Want to learn more about dropshiping?

Ready to move your dropshipping store to the next level? Check out the articles below:

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