How Much Does it Cost to Launch a Dropshipping Store?- Let’s take a look at a common dropshipping question: What is the cost of starting a dropshipping business?
Dropshipping can be started for less than $100 technically. A little investing is all that stands between you and a dropshipping store with the proper blend of free trials and beginning plans—and a willingness to look the other way and hope for the best when it comes to the quality of your products.
But, as the Big Book of English Expressions puts it, “just because you can” doesn’t mean “just because you should.”
This article will outline the unavoidable expenses that any (legal) dropshipping business would face in order to get off the ground. If you read all the way to the conclusion, you’ll get an itemized summary of your dropshipping launch costs, as well as advice from entrepreneurs who know what to expect.
How much does it cost to start dropshipping?
Dropshipping has undoubtedly cut the entrance hurdle to launching a business. You may work with suppliers all over the world and sell their items without ever having to keep inventory. It’s a fantastic setting.
So fantastic, in fact, that individuals sometimes get carried away, fantasizing about a six-figure business that requires no capital.
The truth is that launching a successful business has never been easy, and it continues to be so. Even if you’re using dropshipping.
What is dropshipping?
Dropshipping is an eCommerce business concept that allows entrepreneurs to open an online store and sell things without first purchasing inventory. You pay your supplier only after you’ve made a sale, and they then send the merchandise directly to your buyer. You may connect your business to thousands of vendors and find products to dropship using a platform like DSers.
You won’t need a second mortgage, but you will need to invest some money in your dropshipping firm before it can pay you.
The cost of starting a dropshipping business
The most stripped-down version of a dropshipping store would include:
- A Shopify subscription
- A DSers subscription
We’ve chosen Shopify because it’s the most widely used eCommerce platform. We’ll utilize DSers because it’s the greatest AliExpress dropshipping tool.
There’s good news! Shopify offers a 14-day free trial. It will cost $29 each month after that, but you can get started for free. As a result, Shopify takes care of the storefront. Now it’s time to talk about dropshipping.
The base plan for DSers is free. There’s a 3,000-product limit, so you won’t be able to scale with it. But before you hand over your credit card, you may at least get yourself set up. To use features like automatic inventory updates and bundle mapping, you’ll need to subscribe to the $19.90 Advanced plan.
If you’re serious about drop shipping, you’ll also need a domain name. You may easily purchase a new domain through Shopify for $14 per year (you’ll be asked about it throughout your trial).
So, if you do it on the cheap and filthy, the costs of opening your store will be as follows:
Free Shopify 14-day trial + Free DSers plan =
After that, with a little tidying up, we have:
$62.90 Basic Shopify + $14 Domain + $19.90 Advanced DSers = $29/month Basic Shopify + $14 Domain + $19.90/month Advanced DSers
After that, the ongoing Shopify and DSers expenses, minus the $14 domain, would be $48.90 each month.
Dropshipping product validation costs
This is where you “eat your vegetables” when it comes to starting a dropshipping business: Nobody will compel you to order your dropshipping products for yourself, just as no one will force you to eat your daily vegetables.
However, you should still go ahead and do it – Launch a Dropshipping Store.
The best part of dropshipping is that you never have to touch the merchandise you’re selling. While this may solve one of commerce’s main problems (having cool items to sell), it also brings a new set of issues: you have no control over the product quality, shipping timeliness, or packaging appearance.
That’s why we advise you to set aside some time (and money) to order the items you’ll be selling in your store.
This gives you the opportunity to look into the vendors. You can, for example, follow up after placing your order and inquire, “When can I anticipate my order to arrive?” And once it arrives, you may decide if it matches your expectations. Is there anything wrong with it? Would you be interested in purchasing it?
You can use your products to increase interest in your store after you have them on hand. Make a show of them. Take photos of people who are holding them. Inquire with your pals about their opinions (and how much they’d be willing to pay).
So, how much would it cost you to eat your usual vegetables? You don’t have to buy every variety of every product, after all. You can definitely get away with ordering just one color if you sell yellow, red, and blue gowns from the same source. However, ordering at least one sample from each supplier whose products you wish to sell at your business is a good idea.
Let’s say this will set you back $75.
Because this is primarily a one-time expense when we combine it with the costs of store infrastructure outlined before, our dropshipping business balance sheet looks like this:
Dropshipping store enhancement costs
Your $140 website investment will only go you so far. You may need to download apps to acquire all of the features you desire. For example, Shopify and DSers don’t have a built-in option to give bulk purchase discounts.
Sure, there are workarounds. You can sell a “product” that is actually five goods combined into one at a lesser price than buying five separate items. However, you don’t want to rely on workarounds to grow your company. You want your store to be simple to use for your customers and simple to run for you.
The greatest solution is sometimes to spend the money and install Shopify apps.
There are apps for just about every modification, improvement, or update you can think of in the Shopify App Store. Let’s take a look at a few of the most frequent features that business owners demand, as well as a few of the programs that can help them get them.
Cross-selling and upselling – Launch a Dropshipping Store
Cross-selling is recommending a product or service that is similar to one that the consumer has already purchased, whereas upselling entails persuading customers to purchase a more expensive version of an item they have already purchased. These methods are intended to raise a merchant’s average order value (AOV).
Shopify has some great apps for cross-selling and upselling:
Bulk pricing is simply discounted price available to customers who purchase big quantities of things before checking out. On your dropshipping site, you can offer bulk prices to entice customers to buy more and come back for more.
Bulk pricing is simple to create with some Shopify apps, such as:
- Discount Pricing ($19.99/month)
- Quantity Breaks ($20/month)
- Bulk Discounts & Sales Scheduled ($18.95/month)
Exit-intent is a clever behavioral technology that sends a tempting offer to a visitor who is ready to depart your website. It detects when a visitor’s pointer moves to the top of the screen to dismiss the browser window by tracking their mouse movements.
Exit-intent technology is available in various Shopify apps:
You don’t need any of this, but let’s assume you really want to be able to offer clients a discount if they buy ten things rather than just one. A bulk pricing app appears to cost roughly $20 per month, so let’s add that to our initial price.
Dropshipping marketing costs—the biggie
So far, everything we’ve looked at has had a price tag connected to it. Marketing isn’t one of them.
It’s impossible to estimate the amount of money you’ll need to invest in marketing. However, we can make certain assumptions to reach a ballpark figure.
In the world of eCommerce, the typical conversion rate is between 2% and 3%. That will vary depending on the niche and country, but let’s pretend the conversion rate is 2.5 percent. That means that out of every 200 customers that come into your store, you may expect five of them to make a purchase. And how are we going to attract 200 individuals to our store? Marketing.
Because Facebook is currently the most popular marketing medium for dropshippers, let’s look at how to get 200 visitors to your store through the platform. The average click-through rate (CTR) for Facebook ads is 0.9 percent, according to WordStream. Assume your advertising are effective and your click-through rate is 1%.
You’ll need 20,000 people to see your ad to get 200 people to come to your store. The cost of 20,000 impressions varies depending on who you’re trying to reach. Reaching Facebook users in the United States will cost more than reaching Facebook users in Singapore.
In Q4 2017, the average cost per thousand impressions (CPM) was $12.45, according to marketing software vendor AdStage. Let’s round that up to $12.50. We now have the formula to work with:
(20,000 divided by 1,000) multiplied by 12.50 equals $250.
Based on these figures, we can estimate that it will cost $250 in Facebook advertising to achieve five Facebook purchases.
Of course, there are levers you can pull to modify these figures and improve your earnings. First and foremost, create fantastic advertisements. The higher the quality of your advertisements, the more people will click on them, and the lower your cost per click will be (CPC). We’ve got you covered if you need to do some homework on generating high-impact commercials.
You can also choose nations with lower CPM rates as your target. Users of dropshipping have had success in nations other than the obvious ones; don’t feel obligated to target the United States, United Kingdom, Canada, or Australia.
Finally, there are methods you may do to boost your store’s conversion rate and average order value. One technique to attract customers to convert after they’ve been lured to your business is to design easy-to-navigate product pages. This would increase the 2.5 percent conversion rate we mentioned before.
Launch a Dropshipping Store – To raise average order value, you may also use cross-selling and upselling tools. These will be costly, but with a few goods upsells every month—not an excessively ambitious goal—they will pay for themselves.
Dropshipping website cost: Our verdict
Spending money to create an eCommerce store only hurts if (a) you expected it to be free and (b) you forget that you’re in it to earn money. Keep in mind that the money you spend to open your shop is an investment. And you invest in things because you expect a return, whether you’re purchasing stocks or opening a store – Launch a Dropshipping Store.
You’ll never stop injecting money into your store if you persist with eCommerce. You’ll want to purchase a cross-selling app after your price-break app has done its job. You’ll want to invest in marketing automation technology as your Facebook efforts grow. We haven’t even discussed email marketing, premium Shopify themes, logo design tools like Hatchful, or—well, let’s just leave it at that for the time being.
It’s difficult to predict how much money you’ll make or how long it will take you to recoup your investment. However, as your expenses rise from the double digits to the triple digits and beyond, keep in mind that there is no free lunch when it comes to starting a business. In any case, it’s not a good business.
Tim Vangness has one more nugget for us to end on:
You must strategically employ your profits once you begin to create sales. Set aside a portion of your total earnings to cover the price of returns—every large business has them!—and any other unforeseen expenses that may emerge. I would propose reinvesting as much of the remaining profits as feasible in building your company. This will be divided into two halves.
The first step is to improve your company’s infrastructure, which includes everything from your website design to your email marketing software. Some of these services are costly, but once you’ve established a profit, they can help you increase conversion rates and customer retention. This will save you money in the long run and allow you to be more aggressive with your paid advertising than your competitors because you will be able to assess the lifetime value of a customer vs the profits of a single transaction.
Launch a Dropshipping Store FAQ
Can you start a dropshipping store for free?
Yes, but only if you already have an eCommerce hosting account. You should be able to locate apps that connect you with suppliers and let you add a specific amount of products to your dropshipping store for free, depending on your source.
Is dropshipping still profitable in 2022?
It’s safe to claim that dropshipping is still a profitable business, given the positive market forecast. According to Grand View Research, the global dropshipping market will be worth $557.9 billion in a few years. This makes drop shipping a great option for anyone wishing to build a long-term business without the high costs of traditional eCommerce.
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