Start a dropshipping business in Australia

Starting a dropshipping store in Australia is easy in one sense: you can have a website live in an afternoon. Building a business that lasts, keeps customers happy and stays on the right side of the ATO and the ACCC takes more thought. This section covers the foundations every new Australian online seller should understand before taking orders.

We start with the model itself: what dropshipping is, who does what, and the responsibilities you take on as the seller. Then we cover registrations (ABN, business name and structure), GST, income tax and the records you need to keep. Every guide links to the official sources, so you can check the detail and stay up to date as rules change.

What you'll find in this section

• What is dropshipping? How the model works, the real advantages and disadvantages, how it compares with wholesale and third-party fulfilment, and common myths.
• ABN, business name and structure When you need an ABN, registering a business name with ASIC, sole trader or company, trade marks and .com.au domains.
• GST for online sellers The $75,000 threshold, charging GST, tax invoices, GST credits, overseas suppliers and BAS.
• Income tax and record keeping Declaring business income, deductions, the five-year record-keeping rule and practical bookkeeping habits.

The groundwork in order

Every business is different, but a sensible order for most new dropshippers looks like this.

1. Understand the model and its duties

Before spending money on a store or advertising, make sure you understand that customers buy from you. Under the Australian Consumer Law, you are responsible for the consumer guarantees, honest advertising and delivery promises, even though your supplier ships the goods. If that responsibility doesn't suit you, it is better to know now.

2. Research your niche and products

Choose products you can describe accurately, that are legal to sell and import, and that aren't subject to safety standards you can't verify. Look at genuine demand, competition and realistic delivery times. Our find suppliers section explains how to vet suppliers and products.

3. Decide if you're in business

The ATO looks at factors such as profit intention, regularity, organisation and scale. Most people building a store with the aim of making money are likely to be carrying on a business, but check the ATO's guidance.

4. Register

Apply for a free ABN through the Australian Business Register, register a business name with ASIC if you trade under a name other than your own, and consider whether a trade mark is worthwhile. Decide on a business structure. Many people start as sole traders and change later.

5. Set up your money

Open a separate business bank account, choose a payment provider, and set up accounting software from day one. It is much easier to start organised than to reconstruct a year of transactions at tax time.

6. Plan for GST

Track your GST turnover every month. You must register within 21 days of reaching $75,000, current or projected. Price your products so they still work once one-eleventh of each sale goes to GST.

7. Write your policies

Prepare clear refund, delivery, privacy and terms pages that reflect Australian law. Our run your store section covers refunds, delivery promises, email marketing and privacy.

Realistic expectations

Dropshipping is often marketed with screenshots of big sales and promises of passive income. Be sceptical. Revenue is not profit: after supplier costs, shipping, platform and payment fees, advertising, refunds, software and GST, the amount left from each sale can be small. Many new stores lose money while they learn which products, suppliers and advertising work.

That doesn't mean it can't work. Stores that do well tend to:

• choose a focused niche and understand their customers;
• work with reliable suppliers who ship quickly and accurately;
• describe products honestly, with real delivery times;
• answer customers fast and handle problems fairly;
• watch their numbers closely and stop selling products that don't make money.

Use the margin calculator on our home page to test your own figures before you launch, and again whenever your costs change.

Costs to plan for

Your actual costs depend on your choices, so we don't publish typical figures. Common categories include:

Get real quotes and build a budget that assumes things will take longer than you hope.

Getting help

Free government resources are a good starting point:

• business.gov.au has guides, checklists and a free advisory line for small businesses.
• The ATO publishes guidance on starting a business, GST and record keeping, and runs small business webinars.
• ASIC handles business name registration and company registration.
• The ACCC explains your obligations under the Australian Consumer Law.

For advice specific to you, a registered tax agent, BAS agent, accountant or lawyer can help. Check their registration on the Tax Practitioners Board register or the relevant law society.

Mistakes we see often

1. Launching before testing margins with real fees and a refund buffer.
2. Advertising products as "fast shipping" or "Australian" when they ship slowly from overseas.
3. Writing "no refunds" policies, which conflict with the consumer guarantees.
4. Not tracking GST turnover, and registering late.
5. Mixing personal and business finances, making tax time painful.
6. Selling products that need safety compliance without checking.
7. Relying on one supplier with no backup plan.

Key points

Before you launch, understand that you are the legal seller, research products and suppliers carefully, decide whether you are in business, and complete your registrations. Set up separate business banking and accounting, track your turnover for GST, and keep records for five years. Be realistic about costs and margins, and use free official resources alongside professional advice.