There are many different advantages to be found when starting a business in Singapore, especially with the rise of e-commerce revolutionizing businesses and opening up an entirely new market and demand. One business model that has grown in popularity over the past few years is dropshipping, wherein the entrepreneur advertises and sells products online without actually having a physical stock or inventory, instead relying on suppliers or manufacturers to package and ship the products directly to the buyers.
With the low initial investment and flexible operation that it offers, dropshipping is becoming an exciting business venture for many aspiring entrepreneurs, and there’s no better place to start this business than in Singapore, with its strategic location, skilled workforce, easier processes, favorable tax conditions and much more.
The Difference Between Dropshipping and E-Commerce
With both business models operating within the online space, many people often confuse the two, but it’s crucial to understand the difference between dropshipping and e-commerce as they both operate in very distinct ways. Here are the key differences between the two:
- Inventory: The main appeal of dropshipping is that it doesn’t require business owners to hold the products they’re selling in inventory, whereas e-commerce requires owners to purchase, store and manage their items.
- Initial Costs: The absence of inventory also means that dropshipping comes with a much lower initial cost compared to e-commerce, which may force business owners to set aside some financial resources for inventory management. Consequently, dropshipping also comes at a much lower risk as opposed to traditional e-commerce.
- Order Fulfillment Methods: With no actual inventory of the products that are being sold, dropshipping relies on suppliers and manufacturers to package and ship the products directly to customers, while e-commerce handles all of these logistical processes in-house.
- Growth Potential: As dropshipping isn’t limited by its inventory capacity, the business can grow at a much greater rate, whereas e-commerce businesses will have to assess their inventory levels and potentially look to expand these with the growth of their business.
How to Start a Dropshipping Business
Step 1: Initial Preparations
Before proceeding with the technicalities involved in starting a business, it’s important to prepare yourself for the demands that a dropshipping business will entail. Apart from weighing the pros and cons of the business model, take the time to ensure that your dropshipping model has a high growth potential and a sustainable demand by conducting some necessary research like competitor analyses and market research.
Apart from that, you should also start looking for potential dropshipping suppliers as these are integral in the success of your business. Make sure to look for reliable and reputable suppliers that provide satisfactory customer service and have trustworthy processes. You may also want to entertain the idea of backup suppliers should you need them in the future.
Step 2: Incorporate Your Business
After doing your due diligence and establishing that you want to proceed with your business, it’s time to incorporate your business with the Accounting and Corporate Regulatory Authority (ACRA) of Singapore. Even with an online venture like dropshipping, all companies and business owners intending to carry out profit-generating activities are required to register their business in Singapore, regardless of the medium they operate in.
In order to proceed with incorporation, you will need to prepare the following information and requirements:
- Company name
- At least one resident director
- At least one shareholder
- A qualified resident company secretary
- At least SGD 1 in capital
- Registered address of the company in Singapore
- Brief description of business activities
You can register your company easily through ACRA’s online portal BizFile+. After submitting your application, it’ll take one to three days for ACRA to process all your documents should there be no complications or additional information requested. Once your company has been successfully registered, you’ll receive an email notification with your company’s registration number, which will serve as your business’ Unique Entity Number.
Keep in mind that foreigners looking to start a dropshipping business in Singapore will also need to appoint a Nominee Director. The Nominee Director is a Singaporean citizen or permanent resident who will ensure that the business is operating in complete legal compliance, as well as assist with administrative tasks. A Nominee Director may also be appointed as the company’s director during the time of incorporation.
Step 3: Build Your Dropshipping Store
Once you’ve successfully registered your business, you can now proceed with the creation of your online dropshipping store. This includes purchasing a relevant domain name, building your website, establishing credibility, launching online promotions, communicating your brand identity and much more. Should you wish to build a bigger operation, you can also choose to hire employees.
Depending on the nature of your business and the products that you’re looking to sell, you may also have to apply for relevant trading licenses and permits, which will greatly vary depending on the business sector you fall under. Take the time to research the permits and licenses you’ll need to properly run your business as failure to comply with these may result in fines and risk the growth of your business.
Starting a Business Made Easy with WealthBridge!
The business landscape is rapidly expanding to accommodate a wider range of ventures and ideas, especially those rooted online, but this might make starting a business from scratch that much more difficult and intimidating. Fortunately, WealthBridge is here to help you through the entire process!
With years of experience incorporating businesses in various industries in Singapore, our representatives are equipped with years of training and experience to help you with different corporate services such as incorporation, accounting, finance, nominee director election, and much more. Let WealthBridge handle the administrative work so that you can focus on turning your dreams into a reality.
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