Selling physical products requires more upfront investment than a service business, but offers the potential for higher margins and scalability. Success depends on getting the fundamentals right before you launch — reliable sourcing, proper labelling, and safe products.
Finding and vetting suppliers
Your supplier is your most important business relationship. A reliable supplier delivers consistent quality on time. An unreliable one can destroy your reputation and cash flow.
UK suppliers cost more per unit but have shorter lead times, make quality control easier and carry no customs duties. Search trade directories and go to trade shows to find them. Overseas suppliers cost less per unit, but lead times are longer (4 to 12 weeks from Asia) and you have customs duties and UKCA or CE marking to deal with.
Whoever you use, get samples, check references, start with a small trial order, agree payment terms in writing, and confirm they can scale up if demand grows.
Storage and fulfilment options
- Storing stock at home is free but limited. Check your home insurance covers business stock and that your council allows a home-based business. It is not suitable for food or hazardous products.
- Self-storage units cost £50 to £300 a month depending on size and location, with flexible terms that suit small to medium volumes.
- Fulfilment centres store your stock and ship orders for you, charging per item stored and shipped. They are cost-effective for online sellers with high order volumes. Amazon FBA is one option.
- Some makerspaces and shared workshops offer storage alongside production space.
Pricing your products
Many new product businesses underprice. Before setting prices, add up your true cost per unit:
- materials, components and packaging for each unit
- your time or your employees' time to make and pack each unit
- a share of overheads such as rent, utilities, insurance and software, divided across the units you expect to sell
- postage, packaging materials and courier fees
- marketplace commissions (Etsy 6.5%, Amazon 8-15%, eBay 10-13%)
- 20% VAT on sales, if you are VAT registered
Add your profit margin on top. Research what competitors charge for similar products. If your costs mean you cannot compete on price, you need a differentiation strategy (quality, branding, niche targeting).
Label your products
As the producer, or the importer if you bring products in from abroad, you must mark your products so they can be traced if a safety problem arises.
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Source and test samples
Find 2-3 potential suppliers and order samples. Compare quality, lead times, minimum order quantities, and pricing before committing to one supplier.
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Calculate your true cost per unit
Include materials, labour, packaging, shipping, platform fees, and overhead. Only then add your profit margin. If the final price is uncompetitive, rethink your supply chain.
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Check product safety requirements
Ensure your product meets UK safety standards. Check if your product category has specific regulations (toys, electrical, cosmetics, food). The Office for Product Safety and Standards (OPSS) provides guidance.
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Set up stock tracking from day one
Use a simple spreadsheet or inventory app to track stock levels, reorder points, and sales. This prevents stockouts and overordering.
Legal basis
Primary legislation and key regulations
Browse UK legislation (opens in a new tab) legislation.gov.uk