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The sky’s the limit! You can live the dream and make your fortune in no time!
That’s what the latest stats on dropshipping tell us.
- The industry is currently worth nearly $150 billion according to in-depth research on dropshipping’s market size.
- And it’s still growing. For the next 5 years the dropshipping industry is predicted to continue growing steadily.
And just look at these forecasts for the Asia Pacific region.
Clearly, now is a great time to open your first dropshipping store. So dream big, be ambitious and seize the moment.
To be successful, one of the key questions new entrepreneurs need to answer is:
How much does it really cost to start dropshipping?
In this article, we’ll tell you.
First, we’ll look at why dropshipping is still profitable (if you do it right).
Then we’ll share some tips on how to start a dropshipping business spending literally nothing (though this approach has its downsides).
But the main bulk of the article focuses on the typical costs of starting up a dropshipping business.
- The fundamentals. This includes the cost of setting up your dropshipping store on an e-commerce platform and getting a subscription to an app/extension for importing products.
- Sampling your products. There’s no better way to ensure the quality of a product than by checking it yourself. But how much does it cost?
- Adding additional functionality. Investing a small amount into additional software can make your dropshipping business run much more smoothly. We’ll take a look at a few non-essential but useful functions you can add to your e-commerce store.
- Marketing. Competing for eyeballs online is arguably the most challenging aspect of dropshipping. And it can be very expensive if it’s not done correctly. We’ll show how much money you’ll need to do it right.
Overall, we estimate that a realistic figure for starting a dropshipping business is $280.
Before we get into a detailed breakdown of what you’ll need to spend, first let’s take a quick look at how dropshipping is expected to change and evolve in 2021.
Is dropshipping still profitable in 2021?
Research institute Grand View Research shows that dropshipping is still profitable in 2021. In fact, it predicts that the global dropshipping market size will grow by 28.8% every year until 2025. This means it will be a $557.9 billion industry by 2025. Now that’s a pie you want to get a piece of.
So why is dropshipping set for another boom? Here are a few key reasons:
- Growth of e-commerce on mobile. Research on mobile retail by Statista shows that nearly 54% of all e-commerce sales are expected to be made on mobile devices by 2021. This is up from 34.5% in 2017. So if you’re running a dropshipping store with a responsive and mobile-friendly site, you’re well set to make money.
- Warehouse expansion. The network of warehouses used for storing inventory has been expanding in both the US and in Europe. This has made dropshipping operations more secure. In addition, the ability to draw from a greater number of locations has improved delivery times 6-fold in some cases. This helps individual dropshippers compete with giants like Amazon.
- More internet access and purchasing power in developing regions. As a dropshipper, you’re not limited by geography. You can sell in any market you like. So the fact that internet access in developing regions has jumped by nearly 15% in the last 5 years is good news. The more internet users there are, the more potential customers you can target. As you become established in your home market, you might want to consider expanding abroad. Once you’re ready to spread your wings, check out this guide to the best practices for doing e-commerce internationally.
The message is clear. Now is a great time to start off on your entrepreneurial journey. But what about the startup costs? Let’s take a look, starting with the possibilities of starting out on a budget of literally $0.
Can you start dropshipping with no money?
With dropshipping, we know you don’t need to spend money holding your own inventory. But what about everything else? Can you build or acquire an online store free of charge? What about marketing? Could you get away with, say… no money at all?
The answer is an enthusiastic… sort of!
Starting a dropshipping business with a budget of zero is certainly possible, though you will have to spend money at some point. And the complications and hassle might not be worth it.
If you fancy the challenge of starting your online business on the cheap, here are some tips on how to minimize costs.
1. Extend your Shopify trial. While this is not advertised upfront, you can actually contact Shopify and request an extension of your free trial! Needless to say, you can only do this once. But getting that extra bit of time before you make your first sale could really help.
2. Preparation is a must. Whether you extend your free trial or not, you want to make the most of this period. In an ideal world, you set up your store for free, make a few sales, and the money from these can pay for your Shopify subscription. To achieve this, you should prepare as many things in advance as you can. Create a brand name and logo for your store. Write up FAQs and some standard copy for your pages. Learn about pricing, marketing, and payment gateways. This way, you’re ready to go when your free trial begins.
3. Learn on your own. Overall, learning about dropshipping through online courses is a great idea. But if you’re strapped for cash, free resources will have to do. Youtube is a great option – so check out this guide to the best Youtube channels for dropshipping.
4. Advertise for free. Considering the fact that advertising is one of the priciest aspects of running a dropshipping business, try to generate organic traffic through SEO. For more information, we recommend you read through this SEO checklist from Shopify. Another way to boost visibility is by starting a blog, which could also expose you to more potential customers by showcasing your knowledge about the product. Just keep in mind that both of these strategies are long-term, so don’t expect results overnight.
5. Ship products for free. If you choose to go with the Basic package, the Oberlo app (more on that below) currently costs $29.90 per month. However, you can still use the app for free! The catch is that you won’t have much room for scaling – there is a product cap on the free version. But if you’re just starting out with your dropshipping store, that may not be a big issue.
Downsides to starting dropshipping with no money
As you can see, getting into dropshipping is possible even on a shoe-string budget. But sooner or later, you’ll have to start spending money to make money – there’s simply no way around that.
And you might even find that spending nothing at all to start your dropshipping store is not the right business model. Sure, you might save some money in the short term. But you’ll pay in terms of the time and effort you have to put in. Plus, you might leave yourself in a worse position for long-term growth.
Here are some of the problems you might run into:
- Lack of functionality in your e-commerce store. Most platforms do offer some free apps/extensions. But these probably won’t meet the user experience standards your customers have. Remember, you’re competing with Amazon. If you want to ensure a smooth user experience, and make your daily life as a dropshipper manageable in the long-run, paying for additional functionality might be your only option.
- Ineffective marketing. As we mentioned, SEO takes a lot of time. And, even if you are operating in a small niche, it’s very competitive. What’s more, existing stores will have an SEO advantage over you. There’s a good chance, especially at first, that your SEO simply won’t work, to begin with, and you’ll find you have little or no traffic.
- Limited avenues for establishing a strong brand. A good brand is key in dropshipping. Poor quality logos and images can really hurt your brand and will make shoppers mistrustful. So, choosing not to invest might do more harm than good.
Depriving yourself of the inexpensive tools used by most dropshippers will likely make the process painfully slow and frustrating. It might even do permanent damage to your dropshipping business.
So, though it is possible, spending nothing to start your business is probably not the smart option. So, let’s now take a look at dropshipping startup costs.
How much does it cost to start dropshipping?
When the time to part with some of your hard-earned cash arrives, dropshipping startup costs are really not that bad. Here’s a sample breakdown of the initial outlay. Some of these costs are per month, others are one-offs, per year or are based on usage. We’ll give more details in the descriptions below.
|Area of spend and what’s included||Cost|
|The fundamentals: – Shopify store $29- Oberlo basic package $29.90- Domain name $15||$73.90|
|Sampling:– Ordering and shipping samples of the products you intend to sell||$100 (this will vary based on the niche you are in)|
|Additional functionality:– Exit intent pop-ups: around $7.5- Bulk pricing app: around $7.5||$15|
|Marketing:– Budget for Google ads, Facebook ads, and Instagram ads||$100|
|Total dropshipping startup costs||$288.90|
Just keep in mind that you don’t strictly need all of the items listed below and that the numbers we’ve provided here are for reference. You might want to:
- add more additional features to your store,
- invest in a Shopify theme that’s perfect for your brand,
- or increase your ad spend.
All of these will increase your startup budget.
Let’s take a closer look at each of these budget areas.
Starting your dropshipping store: the fundamentals
Your online store: You’re going to need a store for your online business. Shopify is the most popular choice so we’ll go with that, though you can also try BigCommerce, WooCommerce, PrestaShop or any other platform you like. Most of them have fairly similar pricing schemes. With Shopify, you get a free 14-day trial, and then it costs $29 per month after that.
Your domain name: You’ll also need a domain name for your online store. You can register your domain name through Shopify, and it will cost you from $10 to $20 per year.
Your app for dropshipping products: You’ll also need an extension/app that allows you to import products from different suppliers and easily automate orders. Currently, the most popular option would be Oberlo, which has a forever-free option with a 500-product cap. If you want to scale, however, you’ll need to upgrade to the Basic package at a cost of $29.90. Other great options would be Dropified and Importify.
Starting your dropshipping store: sampling your products
For your dropshipping business to be successful, you need to make sure that your products are of high quality and delivered on time. Fail in this area and you’ll end up with bad reviews and zero return customers. This could put an end to your e-commerce store real quick.
The only way to be absolutely certain of the quality and shipping speed of your product is to order some yourself.
While there’s no need to sample every single version of every single product, if you can, order at least one product from each of your suppliers.
This should get you a very clear idea about delivery times, packaging, and quality. The experience you’ll get during this process will also reflect the experience of your future customers. This can help with customer support queries. In addition, having some products delivered to your home will allow you to take pictures and make custom videos, further improving your chances of generating traffic.
The cost of ordering samples can vary hugely depending on the dropshipping niche you are in. Since we do need a number, however – and assuming that you don’t plan on selling things like expensive jewelry or high-end camera equipment – let’s say this will cost you $100.
Starting your dropshipping store: additional functionality
Not all of the items we’re describing here are essential for dropshipping success. This is just a list of some handy apps that you might want to consider buying. There are thousands of apps on the Shopify app store to choose from, and which ones you go for will depend on your audience and business model.
We suggest trying apps for exit intent pop-ups and bulk pricing. Both of these apps will help you generate more sales in the early days.
Wheelio offers one of the best know examples of an exit intent pop-up: a spin wheel with different discounts
- Bulk pricing is when discounts are automatically offered when customers buy large quantities of products. This encourages visitors to buy more, and/or return to your dropshipping store in the future.
Bulk pricing apps like Big Discount help you to improve average order value, which is key for ensuring profitability
For exit intent pop-ups, you might want to look at something like Wheelio or Spin-a-Sale, and for bulk pricing, we recommend Discounted Pricing or Bold Quantity Breaks. While these are only available on Shopify, similar functionalities can also be found on other platforms.
The pricing on these apps varies from roughly $10 to $20 (and more for premium versions), so let’s go with the average and say that adding additional functionality to your store will cost you another $15.
Starting your dropshipping store: marketing
Unlike with the previous items listed, putting a specific number on your marketing is a bit trickier. This is because, in most cases, the more money you spend on getting your products in front of potential customers, the more traffic you generate. So it’s up to you how much you decide to spend on Facebook ads or Google ads. If those platforms are too expensive, try another Google Ads alternative.
But don’t worry – even a limited marketing budget can still be enough to break into the industry, provided that you use it wisely.
We recommend that you start with a nice round $100 – not too excessive, but still sufficient for initial traction.
Here are some tips on how best to use this budget:
- Set specific goals. Instead of something vague and unquantifiable like “I want to sell more,” create specific marketing goals that you can actually track like “I want to attract 300 unique store visitors this month.”
- Automate your ad setup. There’s a lot to learn when it comes to running ads. How do you create an audience for your ads? Which ads should you boost and how do you do this? So a smart move is to use an app for automating your ads on Facebook and other channels. These apps will ensure your first $100 in marketing budget is well spent.
- Think quality. The quality of your ads matters a lot. You can spend lots of money running poor quality ads and see little or no traffic. So, from visuals to copy to call to action, take the time and effort to craft high-quality ads. For an excellent primer on making eye-catching ads, check out this article by an e-commerce entrepreneur who has spent nearly $200,000 on Facebook advertising.
Takeaway – the sky’s the limit
So that’s it, your detailed breakdown of the money you’ll need to start your dropshipping business. In short, budget for around $290 and that should set you up for success.
Then don’t forget that as your business grows, you will have to keep spending money to stay afloat and turn a good profit. Once you make your first sales, reinvest the profit into building your dropshipping business. Here are some areas to consider investing in further down the line:
- Switching to a premium Shopify theme;
- Rebranding and investing in high-quality images;
- Launching retargeting campaigns via email, push notification, or SMS.
But the bottom line is that starting your own e-commerce empire is definitely within your reach financially. A few hundred dollars smartly spent, plus a lot of time and passion will see your dropshipping journey get off to a great start. Then you can enjoy all the benefits of being your own boss and making a great living from the comfort of your own home (or a sunny beach is that’s how you roll). All it takes is some time, effort, and a small initial investment.