Dropshipping does sometimes feel too good to be true. You’re running a shop, making money but not handling any stock. It’s a great way to get into eCommerce.
The idea is that you manage a storefront but you don’t keep any stock. Instead, you send orders to a wholesaler or supplier and they ship directly to the customer.
It is a great way to get into commerce for people who don’t have the upfront cash to buy stock or the storage space to keep it.
For some stores, dropshipping is a low-cost, high-profit way of operating. The profit is made by charging slightly more than the wholesale price. Dropshipping startup costs are relatively low and overhead costs can also be kept to a minimum.
With the proliferation of mobile devices, dropshipping has become increasingly profitable. It’s projected to continue to be profitable for the foreseeable future.
If you’re ready to take the plunge and want to start your own dropshipping business, you’ll probably want a clear idea of the startup costs.
There are a lot of people out there who promote dropshipping as a zero cost business. This bit really is too good to be true! For an honest look at the costs associated with dropshipping, read on.
We will give you the truth about dropshipping start-up costs. So let’s take a look.
Do it for Free
Dropshipping isn’t some miracle money for nothing scheme. You will eventually need to put money into it to make it successful.
However, you can initially get away with using free trials to test the waters.
At the very bare minimum, you are going to need access to an eCommerce site and a supplier.
Shopify is the biggest and most popular eCommerce site on the market. It is used by hundreds of thousands of users across the world.
Luckily, Shopify offers a 14-day free trial. This means you can use their platform for two whole weeks without paying a penny.
Another option is WooCommerce which is a free plugin you can add to your WordPress site. This might be a good choice if you want to keep costs low.
In terms of product suppliers, there are lots of different companies and services you can use. Some of these offer free trials as well as always free options.
To help you choose a supplier, check out our article on choosing dropshipping suppliers. We’ll talk you through all the considerations and options you have.
Some of the most widely used supplier tools include Oberlo, Spocket, and Dropified. Except for Oberlo, all these tools can integrate with both Shopify and WooCommerce.
So, if we’re talking about prices, you can have the most basic dropshipping site up and running for free.. At least for a limited time.
Stepping It Up
After your first 2 weeks, you’re going to need to start paying. For Shopify, you’re looking at around $29 a month.
For dropshipping services, you’re going to need to look around for the best deal. Spocket is one of the cheapest options at around $19 a month.
Generally, you can look to pay about $30 a month for a dropshipping service. There are cheaper options and more expensive options available. You’ll have to weigh up the cost against the benefits of each service.
The final thing you’ll need is a domain name. This can be purchased through Shopify for $14 annually. Or you can use one of the plethora of domain name sites out there.
So for a basic service, you’ll be looking at $73 for the first month and then about $59 a month after that as you don’t need to pay for the domain every month.
Ok, let’s be real, basic services are only going to get you so far. You’ll need to splash out on some extras to make a go of your dropshipping business.
The first thing you should think about is purchasing some of the products you sell. Obviously, the idea behind dropshipping is that you don’t need to store the products. That’s not what we’re suggesting.
If you’re selling something you want to make sure that it’s good quality. Nothing can harm your shop more than poor reviews.
You don’t need to purchase every variation of the products in your store. If you sell in different colors or sizes you can just purchase one variation. The aim is to get a feel for quality.
Once purchased you can use these products to do a bit of advertising. Take photos of the product in use or get friends to do so. This kind of real-life application tends to help boost sales.
Depending on the size of your store and the type of products you offer, this could cost you a couple of dollars or hundreds of dollars. As we said, this isn’t an essential step and if you’re just starting you might not have the upfront costs for all of your products.
Our advice is to take it slow. Buy a few products each month and test them out. Next month you can focus on different products.
The other extras you might want to consider are apps that can enhance your store. If you’re using Shopify, you have lots of different app choices available. These apps are charged at a monthly rate.
You can find apps that help with cross-selling, bulk buying, and exit intent. Generally, these apps are between $9.99 - $19.99 a month. Again, our advice is to start small and work your way up. Don’t go for all of the apps in your first month. Add them as you need them.
Outside of Shopify, there are plenty of tools and services that can help boost your sales and profile. One of the neatest tools is Sell the Trend. It’s a tool that helps you identify the current selling trends across lots of different platforms.
It will set you back $39 a month so you’ll need to decide whether the cost is worth it for you. You can get away with using Google Trends initially, which is a free tool that lets you example trends.
Let’s pause for a second and check where we’re at cost-wise. We’ve already agreed on around $59 a month for your eCommerce platform and the dropshipping service. Now let’s say you add an extra app, for $19.99. This is a fairly small cost for an extra tool. Our monthly total now comes to $78.99.
The cost of quality control purchasing your products is going to differ vastly from store to store. Let’s say you spend a one-off $100 to check out your items. This takes your total initial costs up to around $200. This includes the cost of your domain too.
The final start-up cost you might want to consider is marketing. This is going to cost you more than the rest combined.
Most dropshipping stores use Facebook ads to encourage visitors and create sales. It’s difficult to predict how much you’re going to spend on marketing because it depends on imprecise numbers like click-through rates and conversion rates.
Most dropshippers spend anywhere between 50-80% of their budget on marketing. This is either through Facebook and social media ads, paying influencers, or other marketing campaigns.
So, if we’ve agreed that $200 is the general cost for the first few months, we need to at least double it for a successful marketing campaign.
Email marketing services like Mailchimp and Omnisend will allow you to send a certain amount of free emails per month. When you start pushing into the 20k emails a month, you’ll need to start paying for such services.
Ok, this is not a precise calculation of dropshipping startup costs. To be honest, it’s nearly impossible to give you a precise number. It is going to depend greatly on the services you use, the products you sell, and your marketing campaigns.
The takeaway should be that while dropshipping is a comparatively low-cost business, you will need to put money into it to make it a success. In this sense, it is very similar to any other sort of business.
That being said, there are plenty of tools and services out there that will help you build and boost your business. If you’re ready to take the plunge and are now looking for a possible supplier, check out our dropshipping suppliers guide.
Now that you have a solid idea of dropshipping start-up costs, you just need to create your marketing plan and then set up your eCommerce store. With this done, you’ll be ready to do business!