What Is Reverse Dropshipping? [Ultimate Guide]

I've been dropshipping for nearly a decade. As such, I thought I knew all the ways to make money from it.

But little did I know a profitable business model exists beyond the usual: reverse dropshipping.

I started reverse dropshipping as soon as I learned about it. And it had a positive impact on my overall income.

Now, I want to help you benefit from it too. I'll share what I learned and how you can start a reverse dropshipping business.

Key takeaways

• Reverse dropshipping refers to selling high-quality goods in less developed markets.
• It’s a business model with higher margins, as people pay more for premium items.
• There’s less competition because reverse dropshipping is a new business idea.
• Marketing is cheaper in countries like India, the Philippines, and Mexico.
• China and Indonesia offer big markets with growing middle-class populations.
• Selling premium brands helps build strong store recognition.

What is reverse dropshipping?

Reverse dropshipping involves two steps:

1. Buying products from suppliers in developed markets.
2. Selling them to customers in emerging and less developed ones.

You find a fancy skincare product made in France. You get it from there and sell it to people in places like India or Brazil.

Many people are taking interest in reverse dropshipping as they look for new ways to profit from ecommerce. A look at Google Trends confirms this, with searches for the term rising over the past few months.

How does reverse dropshipping work?

Reverse dropshipping works like regular dropshipping, except the suppliers you work with are based in developed nations.

These suppliers provide high-quality goods that aren't easily available in less developed economies.

To get a clearer picture of how reverse dropshipping works, here's a breakdown of its workflow:

• Choose an emerging or less developed country to dropship your products to. 
• Partner with a supplier from a developed nation. 
• Source a high-quality product that isn't easily available in the target country. 
• Build an online store to promote that item to people in your chosen market. 
• Sell and wait for the supply partner to fulfill your orders.

What is the idea behind reverse dropshipping?

The idea behind reverse dropshipping is simple: high-standard manufacturing is rare in many underdeveloped nations. Their residents often do not get to consume premium, high-quality goods like people in western countries do. With reverse dropshipping, you can cater to the domestic demand for top quality items and build a profitable business.

Pros and cons of reverse dropshipping

Let's look at the good and bad sides of reverse dropshipping. Here are some reasons why you might or might not want to try it.

Pros

Better margins

The margins in reverse dropshipping are usually higher. That's because people in less developed countries are willing to pay more for premium products.

They are already used to paying higher taxes, tariffs, and shipping costs for foreign goods. Adding a little extra margin usually doesn't bother them.

You can take advantage of this when building your reverse dropshipping business. Identify in-demand products that fill a gap in a less developed market and sell it to earn a profit.

Less competition

There's far less competition in reverse dropshipping than in traditional dropshipping.

In traditional dropshipping, everyone knows what to do and how to start. This makes the market crowded and tough to break into.

But reverse dropshipping is still new. How many entrepreneurs have you seen talking about it on their socials? With little attention paid to this model, there's a great opportunity for you to reverse dropship and find success.

Affordable marketing

Selling in countries like India, Philippines, and Mexico means cheaper marketing costs. In these places, digital advertising costs are much lower than in the US and Europe.

Consumers in western nations have more disposable income, so marketing there is pricier. PPC and SEO are less competitive in export countries. This is great for running your reverse dropshipping campaigns.

China is a bit different. Google doesn't work there, and Baidu is the main search engine. Baidu has lower cost per click, but the up-front payment for ads is high. Still, China’s market potential makes it worth considering.

Huge market 

Those involved in reverse dropshipping have a huge market to tap into.

Consider China. It leads the ecommerce market with $1.3 trillion in revenue. China has a tech-savvy generation demanding high-value products.

Then there's Indonesia, home to a booming middle class that loves to spend on premium goods. Tapping into this market can be very profitable.

Don't forget other countries like Brunei, Sri Lanka, and Bangladesh. People in these countries are just as eager for quality products as in other bigger Asian nations.

Business recognition

Reverse dropshipping lets you position yourself as a premium store. 

Offering premium, brand-name products helps build your brand identity. People recognize and remember your store because you provide something special compared to common stores.

Selling famous brands also reduces the marketing effort on your part. The brand’s reputation does most of the work, pulling in customers who already trust and desire those brands.

Less complicated returns

How many times have you suffered a loss because your supplier wouldn't accept returns or the process was too complex? I've experienced this many times, and it's a hassle.

But with reverse dropshipping, you're unlikely to face such scenarios. Suppliers from the US or Europe often have better return policies. They make the process smoother and less time-consuming.

You don't want to waste time on complicated returns. Easy returns save time and keep customers happy.

Cons:

Complex regulations and environment

Asian markets might be profitable, but they also have different import regulations and legal practices. You'll need to understand these in order to operate legally, which can be both costly and time-consuming.

To avoid any issues, consider teaming up with a specialized lawyer familiar with your target market's regulations. They'll handle the legal specifics and help you start exporting faster than you could alone.

Shipping delays and tariffs

Exporting to countries less familiar with imports means dealing with more paperwork and potential delays at customs. 

Delays and high import tariffs can eat into your profits and frustrate customers. These tariffs and regulations can also shift based on international relations, adding uncertainty and cost.

Understanding the exact needs and having local experts or legal support can make the shipping process smoother. You can also check if the country you're exporting from has a free trade agreement with the import country. (If it does, the tariffs on your goods may be reduced or eliminated altogether.)

Language barriers

Language differences between Asia and the US can cause problems for dropshippers. Understanding legal rules and business regulations is hard if they are in another language.

Moreover, Asian consumers often prefer to buy online when product descriptions are in their language. It makes them more comfortable with their purchases.

To overcome this, use a bilingual translator or a trusted translation app like iTranslate. Accurate translations help in reaching a wider audience.

Cultural aspects

Culture is another aspect to consider before starting a reverse dropshipping business. Different customs and preferences can impact your strategy.

For example, Japanese culture values quality and craftsmanship. They like products with great attention to detail and high-quality materials.

Research these cultural differences carefully. Knowing and respecting them will help you succeed in those markets.

Reverse dropshipping vs. traditional Dropshipping

Although I have explained the benefits and drawbacks of reverse dropshipping, let's compare it with traditional dropshipping for better clarity.

In standard dropshipping, we buy cheap products from China and other Asian countries like India and Bangladesh. We then sell these products to the EU, US, and Australia.

Reverse dropshipping is the opposite. We source high-quality, expensive products from the EU, US, and Australia. Then, we sell these to China and other Asian countries.

That's why it's called reverse dropshipping. The source and price of products are reversed.

Reverse dropshipping involves more expensive and higher-quality goods. This approach targets markets willing to pay more for premium products. Traditional dropshipping, however, prioritizes affordability and mass-market appeal.

How to start a profitable reverse dropshipping business

See the potential in reverse dropshipping and want to give it a shot? Here are the steps needed to build a profitable business. 

1. Pick a target market

The first step to reverse dropshipping is choosing an underdeveloped market. You'll want to focus on countries with high spending power and a growing middle class. 

China is a great choice due to its large population and strong ecommerce market. South Korea, Japan, and India are also worth considering for their growing markets. 

If you have local knowledge or a friend in a specific Asian country, that’s a big plus. You can tap into their insights and connections. Alternatively, consider markets where you speak the language or have previous business experience. 

Once you've chosen your market, consult with local experts to ensure your business complies with all regulations.

2. Find products to sell

With your target market identified, it’s time to find products to sell to consumers there. I recommend using the following resources to save time and find relevant products for your business:

Dropship.io: No, I am not mentioning this tool because I am affiliated with the company. But because it is a feature-rich software for finding top products. It’s also the biggest product research tool out there. 

You can filter results by price, sales, and revenue to find high-ticket options. Save hours using its Sales Tracker and Competitor Research features that analyze sales revenue to highlight lucrative opportunities. 

Online selling platforms: Check out best-sellers on Alibaba, eBay, Etsy, and Amazon. These platforms highlight what’s popular and in demand.

Social media: Use TikTok and Instagram to spot trending products. Consider if a product will stay popular or if it’s just a short-term trend.

Niche research: Think of a niche that interests you and search for products within it. For example, if you’re into tech, look for high-quality gadgets or accessories.

Market gaps: Identify gaps in the market by looking at customer feedback and finding issues to solve. Look for products available elsewhere but not in certain locations. See if you can bring them to those markets and offer better shipping, return, refund, or warranty policies.

3. Look for a Western supplier

Another important aspect of starting reverse dropshipping is finding reliable Western suppliers. They often deal in premium brands and can ship to most countries in Asia.

When choosing a supplier, make sure to consider these points:

• Check if they have a broad product catalog. Having one supplier makes returns and exchanges easier.
• Ensure they ship to your target country. This avoids complications later.
• Pay attention to product trends. In China, for example, top products include cosmetics, luxury bags, clothes, shoes, fashion accessories, and premium furniture.

When it comes to finding a supplier, I recommend using:

Modalyst: They offer products from brands like Calvin Klein and Dolce & Gabbana. High-quality and trendy.

Printful: Great for custom products. They handle printing and shipping, ensuring high quality.

Spocket: They provide a wide range of products from US and EU suppliers. Fast shipping and reliable service.

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Choosing the right supplier is key to success in reverse dropshipping. Make sure they meet your needs and can provide the products your market demands.

4. Choose a sales channel

Asian consumers rarely use American retail websites. Instead, they prefer marketplaces like Alibaba. But you can also use Shopify to set up your store and display your products.

Shopify lets you sell in many countries worldwide with local payment options like Cash on Delivery (COD) and others. You can also localize your Shopify store by adding languages and setting up currency conversion to better serve your customers.

Ideally, you'll want to sell through your own store and marketplaces like:

• Alibaba & AliExpress: Alibaba and AliExpress allow you to sell globally. These platforms are ideal for both B2B and B2C sellers, offering extensive reach and exposure.
• Tokopedia: Tokopedia is a leading Indonesian marketplace with extensive logistics coverage. It's ideal for selling a wide range of products, from electronics to fashion.
• Daraz: Daraz is a popular marketplace with a presence in Pakistan, Bangladesh, and Sri Lanka. You can sell a variety of products, including premium items, on this platform.
• Tmall: Tmall is a major Chinese marketplace known for electronics and food. Leverage its warehousing and payment processing to streamline your reverse dropshipping operations.
• Shopee: Shopee is widely used across Southeast Asia, including Indonesia. It’s perfect for selling a diverse range of products to a broad audience.
• Flipkart: Flipkart is India's largest ecommerce store. Registration requires a GST number, and fees depend on product type and shipping dimensions.

5. Make legal considerations

Reverse dropshipping is legal in most countries. However, there are a few points to consider before you officially start.

First, ensure your business complies with local payment regulations. Some countries may not allow certain payment methods, so check the rules carefully.

Next, make sure to research copyright infringements. Reselling branded products may require special licenses, but buying from licensed distributors can keep you within legal boundaries.

You'll also need to clearly define your store's policies. This includes your Privacy Policy, Terms and Conditions, and Shipping and Refund Policies.

Lastly, be prepared for potential customer complaints. Excellent customer service and clear communication can help prevent legal issues.

6. Market your business

Marketing a reverse dropshipping business requires understanding how Asians use different platforms and consume content for ecommerce.

For example, Chinese consumers love user-generated content and influencer videos. Integrating such tactics into your marketing campaigns can drive conversions for your store.

If you choose a marketplace, check their advertising options. Look at yearly sales and promotional tools. For example, Lazada offers flexi combos, seller vouchers, and free shipping. Douyin in China offers the option to create low-cost ads targeting Chinese consumers.

Pro tip: Research shopping events like 11.11 Singles Day and Lazada’s 9.9 Sale. Participating in these events can drive traffic and boost sales with the right offers and discounts.

Source

15 reverse dropshipping products to sell

Looking for the best products to jumpstart your reverse dropshipping business? Here are 15 items perfect for this business type.

1. Gaming consoles

Gaming consoles are highly sought-after tech items in Asia. They are known for their cutting-edge performance and immense entertainment value. Find popular gaming consoles from well-known brands you can buy in the West and sell in Asia.

Best brands for gaming consoles:

• PlayStation
• Xbox
• Nintendo Switch

2. Speciality coffee machines

Coffee enthusiasts worldwide are eager to invest in machines that provide a superior brew at home. These products are not only highly desired but also very profitable due to their high selling price.

Best brands for coffee machines:

• Breville 
• DeLonghi 
• Nespresso

3. Premium laptops

Tech enthusiasts and professionals in Asia value high-performance laptops for work and entertainment. These products are in high demand and can be sold at a premium. 

Best brands for premium laptops:

• Apple 
• Dell
• HP 

4. Luxury watches

People in Asia have a keen eye for luxury watches. These timepieces are status symbols and fashion statements. Look for deals on pre-owned watches to find the best prices.

Top brands for luxury watches:

• Rolex
• Omega
• Tag Heuer

5. Skincare products

Western skincare products attract customers who are willing to invest in their beauty routine. These products are renowned for their high-quality ingredients and effective results.

Best brands for luxury skincare products:

• La Mer
• SK-II
• Sisley Paris

6. Designer handbags

Asian women (and men) love designer handbags. Visit a designer handbag outlet in the West and you'll almost always see it filled with Asian consumers. You can capitalize on this by offering popular, high-end brands that are in demand.

Best brands for designer handbags:

• Chanel
• Hermès
• Louis Vuitton

7. Branded outdoor gear

With all the mountain ranges and adventure destinations in Asia, there's a likely demand for high-quality outdoor gear. You can tap into this market by selling products like hammocks, hiking boots, and coolers that adventurers rely on.

Best brands for outdoor gear:

• The North Face
• REI 
• Garmin

8. High-end kitchen appliances

With the rise of modern kitchens in Asia, high-end kitchen appliances are in demand. Many Asian consumers seek these appliances for their durability and sleek design . You can capitalize on this trend by offering premium brands that add luxury to any kitchen.

Best brands for high-end kitchen appliances:

• Viking
• Wolf
• Miele

9. Premium pet products

The Asia Pacific pet care market is booming. Forecasts say it will be valued at $29 billion in 2024. So now's a great time to dropship premium pet food and other items. 

Best brands for premium pet products: 

• Royal Canin 
• Chewy
•  Ruffwear

10. Home workout equipment

A growing number of people in Asia are embracing home workouts. But high-quality home workout equipment is hard to find in underdeveloped countries. Set up an online shop where you can offer premium exercise machines to consumers in emerging markets.

Best brands for home workout equipment:

• BowFlex
• NordicTrack
• Exigo

11. Smart home devices

From smart thermostats and lights to security systems, smart home devices are changing how we live. People in less developed areas want these for their ease and high-tech features. Set up an online shop to sell these items to a growing market.

Best brands for smart home devices:

• Amazon
• Nest 
• Echo

12. Sustainable fashion

Think sustainable fashion is only popular in the USA and Europe? Think again. People in China, India, and Bangladesh are into it too. You can sell things like organic cotton shirts, recycled bags, and eco-friendly shoes to meet this growing demand.

Best brands for sustainable fashion:

• Patagonia
• Eileen Fisher
• Stella McCartney

13. Ergonomic home office furniture

As more and more people work from home, the demand for comfortable home office furniture is rising. There’s a lot you can sell in this niche, from ergonomic chairs to adjustable desks and monitor stands. Consider offering high-quality, durable items that enhance productivity and comfort.

Best brands for ergonomic office furniture:

• Herman Miller
• Steelcase
• Autonomous

14. Premium baby products

Many consumers in underdeveloped regions prefer imported baby products over locally-made ones. They feel these products are more premium and safe. You can dropship items like luxury strollers, high-tech baby monitors, and eco-friendly diapers to meet this demand.

Best brands for premium baby products:

• Bugaboo
• Owlet 
• Honest Company 

15. Luxury cosmetics

In Asia, more people want luxury makeup and perfumes. But since these items aren't easy to find and most vendors sell fakes, there's a big chance for you to sell real ones.

Best brands for luxury cosmetics:

• Yves Saint Laurent 
• La Mer 
• Guerlain

How to enter different foreign markets

When you reverse dropship, you must understand local regulations and market requirements.

Each market has its own rules and procedures. In some places, you'll need special permits or registrations before you can sell.

Here’s an overview of a few popular markets and how to enter them:

Entering the Chinese market

To sell in China, consider setting up a Wholly Foreign-Owned Enterprise (WFOE) for legal trading, which requires a local bank account. Alternatively, use Tmall Global to sell without a local setup (expect a deposit fee of $25,000 and annual service fees of $5,000-$10,000)

Entering the Indian market

To sell in India, you'll need to set up a local business entity or partner with an Indian distributor. Ensure GST registration for legal compliance. The Ministry of Commerce and Industry oversees online sales. For smooth operations, familiarize yourself with local regulations and taxation rules to avoid legal complications.

Entering the Filipino market

In the Philippines, start by registering your business with the Department of Trade and Industry (DTI) or the Securities and Exchange Commission (SEC). You must comply with local tax laws, including VAT. To sell smoothly, provide clear product details and ensure reliable delivery

Entering the Bangladeshi market

To enter the Bangladeshi market, secure essential documents like GST certificates, export licenses, and specific certifications required for your product. Ensure compliance with local regulations and obtain necessary permits.

Entering the Indonesian market

To import goods into Indonesia, you'll need a Business Identification Number (NIB) from the Online Single Submission (OSS) system. Additionally, make sure to comply with Indonesian Customs Law and any relevant regulations. For certain products, you may need extra permits or certifications from the relevant authorities.

Shipping options for reverse dropshipping

Many shipping companies can send products from Western countries to other places. When you dropship, your supplier might use these services and include the cost in the product price or charge you separately. Here’s a simple look at shipping from the US to China: 

This should give you a good idea of what to expect for shipping costs and times.

Tips and best practices for reverse dropshipping

1. Understand customer preferences

Find out what your customers want. In China, they like Western brands for their quality. In other markets, tastes can be different. Always research and adjust your strategy.

2. Tailor your marketing

Don’t just campaigns—change them. What’s funny in one country might not work in another. Use local trends and culture to make your marketing relevant.

3. Build strong supplier relationships

Talk often with your suppliers. Good relationships help solve problems fast and get the best products. In some places, a personal touch is very helpful.

4. Leverage local platforms

Use local ecommerce sites to reach more customers. For example, in China, JD.com is important. Each market has its own favorite sites, so set up your store on those.

5. Adapt to local payment methods

Offer payment options that people in each market like. For example, use WeChat Pay in China or PayPal in Western countries. This helps increase sales.

6. Focus on quality control

Make sure your products are high quality. Problems with quality can damage your reputation. Check reviews and feedback to keep your products top-notch.

7. Monitor market trends

Watch what’s trending and adjust your products. Markets change, so staying updated helps you stay relevant. Regularly check trends and change your strategy as needed.

Reverse dropshipping FAQ

Is reverse dropshipping legit?

Yes, reverse dropshipping is legit. As long as you follow the laws for importing and exporting in the countries you’re dealing with and make sure your products aren’t violating any copyrights, you’re good to go. Just make sure your website has clear terms and conditions.

Why is it called reverse dropshipping?

In regular dropshipping, products move from exporting countries (like those in Asia) to importing countries (like the USA). Reverse dropshipping is the opposite. In reverse dropshipping, products are sold to exporting countries. Hence the name.

What are some challenges with reverse dropshipping?

Reverse dropshipping can mean higher upfront costs for premium products. Although there is less competition, some markets can still be crowded. Also, shipping from developed countries to emerging markets can bring challenges. You might face high shipping costs, long delivery times, and complicated import fees.

Can I work with multiple suppliers as a reverse dropshipper?

Yes, you can work with multiple suppliers in your dropshipping business. It’s useful if one supplier can’t offer all the products you need. Just send orders to each supplier separately. But remember, customers might get their items in separate shipments if they order from different suppliers.

How can I ensure customer satisfaction as a reverse drop shipper?

Deal in products that meet high-quality standards to avoid returns and complaints. Translate your website into the target country's language and adapt your content to local preferences. Regularly update your customers about their order status to keep them satisfied.

Is it hard to enter a foreign market?

Entering a foreign market can be challenging, but the difficulty will vary based on factors like language, import regulations, and local practices. For example, if you plan to reverse dropship to Kenya, communication might be easier because English is widely spoken there.

Final verdict

Whew, that’s a lot of info! But I’ve managed to share everything you need to know about reverse dropshipping.

To start, pick a few markets to focus on and research their needs. Then, choose your products and reliable suppliers who can deliver quality. (check out our lists of dropshipping suppliers in the USA, UK, Canada, Australia, and France.)

Once you’ve set everything up, you can start your reverse dropshipping business. 

For more inspiration and tips regarding dropshipping, check out our blog.