Since the COVID-19 pandemic, worldwide interest in ecommerce has grown. One trending online business in Thailand is dropshipping. This business model can make starting a business easier: it requires low capital and involves fewer steps and processes compared with traditional business models. Dropshipping has become an attractive option for entrepreneurs looking to generate income from the ecommerce market.

In this article, we explain dropshipping, including its advantages and challenges. We also outline how to start earning income from a dropshipping business in Thailand.

What’s in this article?

• Get to know the dropshipping business
  
• Advantages of dropshipping
  
• Challenges of dropshipping
  
• How to start a dropshipping business
  
• How Stripe Connect can help
  

Get to know the dropshipping business

Dropshipping is an ecommerce business where the seller does not need to invest in inventory. Instead, sellers focus primarily on marketing and customer service. When a customer places an order, the seller—or dropshipper—acts as an intermediary and forwards the order information to the supplier after receiving payment. The supplier ships the product directly to the customer. The dropshipper’s income is the difference between the selling price and the supplier’s product cost.

Currently, there are various ecommerce and social media platforms that are key tools for promoting and selling products for dropshipping businesses in Thailand. These include Facebook Marketplace, Instagram, Lazada, Shopee, and TikTok Shop. Suppliers that support the dropshipping market both domestically and internationally include AliExpress, CJdropshipping, EPROLO, SiamDropShip, and Zendrop, among others.

The flexibility of the dropshipping business model makes starting an online business easy and low-cost. In addition, the continuously growing Thai ecommerce market is expected to expand almost 11% on average per year and reach a market value of over $32 billion USD by 2029. These factors show an opportunity to generate income for those looking to start a dropshipping business in Thailand’s rapidly growing online market.

Advantages of dropshipping

Dropshipping helps reduce many barriers to starting a retail business and has the following main advantages:

• Low cost: Sellers don’t have to bear the risk of investing in inventory in advance. This means they need little capital and can start a business with just a laptop.
  
• High flexibility: Entrepreneurs can work from anywhere with an internet connection. This makes dropshipping suitable for those who want a highly flexible job or are interested in earning extra income. Sellers can run a business from home or while traveling.
  
• Easy management: Business owners don’t stock, pack, or ship products. This can save time, resources, and workflow steps. Instead, they can focus on marketing and customer service.
  
• Best-selling products: With dropshipping, business owners can sell a variety of products to find bestsellers without investing up front or bearing inventory risks. Then, they can focus on marketing the products that sell well.
  
• Adjustment according to trends: The business can offer new products and easily follow trends to boost sales without leftover stock.
  
• Rapid expansion: Dropshipping businesses can easily scale up sales with minimal additional investment by choosing suppliers that can handle larger order volumes.
  

Challenges of dropshipping

Although dropshipping has many advantages, it also comes with the following challenges that entrepreneurs should consider:

• High competition: Starting a dropshipping business can be easy and requires little investment. Therefore, many people are interested in starting this form of ecommerce business.
  
• Low profit: There are many sellers in the same market, so they often compete on price. This can result in low prices and small profits.
  
• Quality control: The quality of products depends on the supplier, so choosing a reliable supplier is important. To ensure product standards, entrepreneurs sometimes need to purchase actual products to test them before investing in marketing.
  
• Delivery time: Delivery speed depends on the supplier and other uncontrollable factors. For example, if a customer orders from multiple suppliers, the items might arrive at different times. It’s important to manage customer expectations by providing clear information and regularly updating the delivery status.
  
• Customer service: Even though product quality or delivery delays cannot be controlled, businesses must take responsibility for directly managing customer issues, including their expectations and feedback.
  
• Inventory management: One advantage of this business model is that there is no need to invest in inventory. This means entrepreneurs have no control over inventory, so product quantities can fluctuate. It’s important to regularly update and hide out-of-stock items.
  

How to start a dropshipping business

Starting a dropshipping business can be easy. However, there are several initial steps to consider:

Select products

Selecting products can have a significant impact on success. It’s important to choose them based on these factors:

• Bestsellers: These include products that are popular and in continuous demand. Examples include fashion items, household goods, mobile accessories, or specific product categories, such as sports equipment or pet supplies. Selecting these products can help dropshipping businesses create a clearer target audience.
  
• Price: To generate sales, businesses should sell products with medium to low prices. This can make it easier for customers to purchase them.
  
• Delivery: If possible, choose products that are lightweight, easy to ship, and not easily breakable.
  

Before the business is well-known, it is important to choose products with little competition and avoid having too many product categories. Additionally, it’s important to study the overall market, including examples of both successful and unsuccessful dropshipping businesses.

Choose a supplier

Find suppliers that carry the products the business will sell. Before choosing a supplier, consider these criteria:

• Product quality: It’s important to read reviews and check product quality in person, particularly for high-priced items and the main types of products the business will sell.
  
• Fees: Review hidden fees, such as handling and packing fees.
  
• Delivery time: Confirm delivery timelines, and read reviews about delivery quality.
  
• Product policy: Check the minimum order quantity (MOQ) and the policies for returns, exchanges, product warranties, and other requirements.
  
• Quality of communication: This includes the supplier’s response speed. Also consider how time zones, language differences, and holidays or festivals impact communication.
  
• Connectivity software: Suppliers should use software that connects to an ecommerce system or store website. This is for convenience and to reduce operational time. These systems can automatically update product stock, forward orders to suppliers, and update tracking numbers when making shipments.
  

Review taxes and legal regulations

Before starting a dropshipping business in Thailand, entrepreneurs need to understand taxes and relevant laws. Here are some key topics they should know:

• Relevant taxes: Taxes to consider include value-added tax (VAT), personal income or corporate tax, withholding tax, and import and export taxes for cross-border sales.
  
• Business Operation Law: All online businesses must register for ecommerce with Thailand’s Department of Business Development (DBD).
  
• Electronic Transactions Act: Comply with the Electronic Transactions Act and maintain evidence of transactions, receipts, purchase orders, emails, and customer information.
  
• Personal Data Protection Act (PDPA): Protect customers’ personal data in accordance with the PDPA.
  
• Consumer Protection Act: Product information, prices, sales conditions, and return policies must be clearly displayed in accordance with the Consumer Protection Act. This act prohibits advertising that is exaggerated or misleading.
  
• Accounting: Keep an accurate record of income and expenses for tax filing purposes.
  

Choose a marketplace or create an online store

For beginning dropshippers in Thailand, there are three main platform options:

• Social media marketplaces: Marketplaces on social media platforms include Facebook Marketplace, Instagram Shopping, MyShop by LINE, or TikTok Shop.
  
• Ecommerce marketplaces: These include Lazada and Shopee.
  
• Online stores: Create an online store on websites such as LnwShop, MakeWebEasy, Shopify, Wix, or WooCommerce.
  

Entrepreneurs can start dropshipping from social media marketplaces to build an initial customer base and then expand to ecommerce platforms. These platforms already have a large number of customers and ready-to-use payment and shipping systems.

Once an entrepreneur has a stable customer base and income—or if they already have some capital—they can create an online shop to build their brand and give their store a unique identity.

The website should be designed to match the brand identity and products. Importantly, the backend system should have features that help sync stock information, automatically forward orders, and easily connect with suppliers. Additionally, there should be tools or plugins for search engine optimization (SEO), social media marketing, and promotion of marketing campaigns, among others.

Choose a payment system

Choose a marketplace that has a high-security payment system that is easy to use and supports multiple currencies. It should offer payment methods that customers commonly use. For example, Stripe Connect allows for easy and fast integration of payment systems between sellers and agents or dropshipping platforms. It also supports various payment options—such as PromptPay, credit and debit cards, digital wallets, and payment links—which helps automatically split revenue among sellers, suppliers, and fulfillment services through an escrow or split payments system.

When they are ready to create a store website, entrepreneurs can use payment gateways to set up their desired payment channels.

Set up shipping

Dropshipping businesses rely on suppliers to ship products. However, shipping costs directly affect the business’s profits. While free shipping is a popular option with customers, entrepreneurs should set shipping fees appropriately and balance customer satisfaction with product costs. Entrepreneurs should take the following factors into consideration:

• Product type: The weight, size, and type of the product can affect shipping costs.
  
• Supplier’s shipping cost: Business owners should check the supplier’s shipping and packing service fees. They can set a minimum shipping cost or charge extra at a reasonable rate.
  
• Orders from multiple suppliers: When customers order products from multiple sources, the business might have to cover separate shipping costs for each item, which could reduce profits.
  

In addition, a portion of the shipping cost should be included in the product price, and the shipping fee should be set within a standard market range.

Invest in marketing

An online marketing strategy can help sell products and generate continuous revenue. While dropshipping businesses might not compete on products, they do compete on their ability to reach customers:

• Create a brand that stands out
  Even if stores offer the same products, those with clear branding are more memorable. This can include logos, color schemes, and communication styles that fit the products being sold.
  
• Use social media
  Social media platforms—such as Facebook, Instagram, TikTok, and YouTube—are important for promoting products. It’s important to consistently post content and use product review videos or short clips to attract attention and reach the target customer group.
  
• Use reviews from real customers
  Sharing reviews—with customer consent—can help promote products. Entrepreneurs can share store links with friends to test the functionality before actual sales and build credibility with reviews from real customers.
  
• Run promotions
  These can include free shipping for orders over ฿500, 10% off for new customers, free shipping during certain periods, or special discounts for posting reviews.
  
• Join a festival campaign
  Participate in campaigns for festival promotions and focus on high-margin products or trending items. Campaigns can include Singles’ Day, Double 12, Valentine’s Day, New Years, or end-of-month promotions.
  
• Use targeted advertising
  Use advertising tools on popular social media and ecommerce platforms, and track results through analytics to adjust budget and strategies accordingly.
  

Prioritize customer service

Customer service is important for dropshipping businesses because it can set a store apart from competitors. Entrepreneurs should prioritize service in the following ways:

• Respond to customers quickly
  Respond to customer inquiries as quickly as possible to demonstrate attentiveness and professionalism. This can increase customer confidence and encourage them to make a purchase.
  
• Communicate effectively
  Customer service representatives should be knowledgeable about products and provide accurate and complete information. They should also communicate in a polite and friendly manner.
  
• Provide shipping status
  Delivery time is very important to customers. Delivery status should be updated immediately when the supplier ships the goods. It should also be updated regularly, especially in case of delays. If possible, use a tracking system for customer convenience and to reduce the burden of answering inquiries.
  
• Handle problems professionally
  If problems occur—such as damaged goods, wrong deliveries, or delayed shipping—quickly contact the customer, apologize, and offer appropriate solutions. These can include providing the latest product status, issuing a refund, replacing the product, or giving a discount on the next purchase.
  
• Build a customer base
  Use a loyalty program or referral program and follow up after sales. This includes asking about customer satisfaction, giving discounts or gifts for reviews, or inviting customers to follow the brand’s social media channels.
  

How Stripe Connect can help

Stripe Connect orchestrates money movement across multiple parties for software platforms and marketplaces. It offers quick onboarding, embedded components, global payouts and more.

Connect can help you:

• Launch in weeks: Use Stripe-hosted or embedded functionality to go live faster, and avoid the up-front costs and development time usually required for payment facilitation.
  
• Manage payments at scale: Use tooling and services from Stripe so you don't have to dedicate extra resources to margin reporting, tax forms, risk, global payment methods or onboarding compliance.
  
• Grow globally: Help your users reach more customers worldwide with local payment methods and the ability to easily calculate sales tax, VAT and GST.
  
• Build new lines of revenue: Optimise payment revenue by collecting fees on each transaction. Monetise Stripe's capabilities by enabling in-person payments, instant payouts, sales tax collection, financing, expense cards and more on your platform.
  

Learn more about Stripe Connect or get started today.