Over the past few years, dropshipping has become a popular option for many people to make money. Dropshipping is a kind of business model where you do not have to be fully stocked with inventory, launch a brick-and-mortar store, and have face-to-face interaction with your customers.
To start a dropshipping business, you just have to open an online storefront, find reliable suppliers, add their products to your store, set your profit margins, design your store to make it appealing to your customers, and start selling your products. If you are still unsure about what dropshipping is, you can learn more about it here.
Now, let’s talk about the expenses of starting a dropshipping business. How much does it really cost to start a dropshipping business?
Dropshipping start-up expenses
The actual costs of starting a retail store vary somewhere between $3,000 and $100,000, depending on the type, size, and location of the retail business. On the other hand, starting a dropshipping business will not cost you that much. In today’s digital age, you can actually start with a little capital. This does not mean that you should underestimate your expenses.
Before you begin the dropshipping journey, there are a few things to do. For example, you need to choose a dropshipping business idea and identify who your competitors are. Finally, you’ll need to analyze them, and then start building a dropshipping website.
The initial costs needed to start a dropshipping business are divided into four categories – website building costs, e-commerce platform costs, dropshipping automation app costs, and marketing costs.
Website building costs
You can build a website in three different ways: by hiring a web designer; by using WordPress; or by using a website builder. Hiring a professional web designer is definitely the priciest option. WordPress is an extremely flexible and free content-oriented site builder, i.e., content management system (CMS), but you have to pay for hosting, plugins and themes. Using a website builder is one of the cheapest ways to create a website. However, with it, you do not get the same control level as you do with WordPress.
To create a website, you should have a budget for your domain name and web hosting. For those who do not know, a domain name is what a person types into their web browser to find your website. It is actually the permanent address of your website on the Internet. When it comes to the cost of buying a brand new domain name, it will cost you anywhere between $10 and $15 annually. But, the cost depends on the length of your registration contract and the registrar you choose.
In addition, web hosting is the space on a web server where your website stores its files. It is what makes the files comprising your website available for viewing online. There are various pricing options, with web hosting costing from as little as $3 to more than $800 per month. It is of the utmost importance to find the right combination of a reputable hosting provider, reasonable price, and features your website needs.
As you can see, how much your website will cost depends on the method you choose to build it.
E-Commerce platform costs
You need some kind of software that can help you turn your website into a dropshipping store. Fortunately, there are various e-commerce platforms that you can use to start your dropshipping business. We’ll mention the most popular ones, but you can feel free to browse the Internet for more e-commerce platforms, suitable for your business.
WooCommerce is one of the most commonly used e-commerce platforms worldwide. This platform may be an ideal option for you if you just need basic functionality, simplicity and ease of use. WooCommerce is built on WordPress, giving you greater flexibility and control over your store.
You can easily install this platform on WordPress and launch your business with just a few clicks. You should simply create a WordPress website and install the WooCommerce plugin on your store. As a plugin of WordPress, this platform is completely free to use. If you want to upgrade your store, there are many plugins, extensions, and store themes for you to choose from, some of which are free and some you have to pay for.
They offer a 14-day free trial period. Once it expires, you can choose between one of its three monthly pricing plans. They include Basic Shopify – $29, Shopify – $79, and Advanced Shopify – $299. Choose the one that fits your budget and business needs. In addition to these monthly pricing plans, you may need to buy a theme for your website. While there is a wide array of Shopify themes for you to choose from, only a dozen of them are free of charge.
A powerful yet complex e-commerce platform, Magento requires at least basic programming knowledge and therefore it is not suitable for beginners who do not possess basic programming and computer skills. This platform has several plugins for dropshipping entrepreneurs as well as an official forum where Magento officials, designers, and developers are available to help beginners. Magento has two editions but the free, open-source one is just enough for starting a dropshipping business.
BigCommerce is a powerful e-commerce platform, which provides available tools that allow you to be successful, regardless of your industry or niche. When it comes to pricing, the lowest monthly plan costs $29.95. But keep in mind that this monthly plan enables you to do only $50,000 in sales per year. And as a new BigCommerce user, you will get a 15-day free trial.
This is a fast-growing e-commerce platform that allows you to upgrade your store to full e-commerce functionality for $24 per month. It boasts a variety of free themes, amazing product galleries, promotions and gift cards, and easy order management and shipping. Although it does not allow you to do as much customization of your store as the other platforms do, Wix can be a great platform to start a dropshipping business.
Dropshipping automation app costs
This is a dropshipping automation app that works exclusively with one platform like Shopify and one dropshipping site like AliExpress. It makes it easy for you to find products from Oberlo Marketplace or AliExpress and add them to your Shopify store. The app has three monthly plans: the Starter plan is free of charge, the Basic costs $29.90 and the Pro costs $79.90.
Dropified is a dropshipping automation app, which easily integrates with WooCommerce, BigCommerce, Shopify, and other platforms. It allows you to import products from sites such as Etsy, eBay, Amazon, AliExpress, and more, into your online store. Dropified offers a 14-day free trial period. But after that period, you will have to pay a different sum of money, depending on the plan you choose: the Import plan for $17 per month, the Private Label On-Demand plan for $97 per month, and the Dropified Black plan for $297 per month.
If you have a Shopify or WooCommerce store, you can use DSers. The basic version of this automation app is completely free to use. It also has three monthly pricing plans: the Standard plan for $1.99, the Advanced plan for $19.9 and the Pro plan for $49.9. The only downside of this app is that it is the official Aliexpress dropshipping app, which means that by using it, you can only add products from AliExpress to your online store.
Unlike marketing, things we have listed above have had specific price tags attached to them. Therefore, it is difficult to say how much money you need to spend on driving more traffic to your dropshipping website. But it will not probably break the bank. Now is the time for you to choose the right marketing strategy to make your online store visible, engage customers and increase sales.
Add customer reviews, testimonials, and ratings to your website
In the early stages, buyers may be skeptical about the quality of the products you are selling. In order to build customer trust, you need to add customer reviews, testimonials, and ratings to your online store. Thankfully, this is a free way to motivate a potential buyer to order a product from your store.
This is another free method to promote your business. Although trying to increase organic traffic to your site isn’t the fastest way to attract new customers, with consistent effort, it will become the best long-term investment. If you want to learn more about how to perform a complete SEO audit for your dropshipping store, you can find it on our website.
Due to its wide reach and variety of users, Facebook is one of the most effective advertising tools to promote your business. The most important thing you need to do before creating the ad is to define the target audience for your dropshipping business. Your bidding model, such as cost-per-thousand-impressions (CPM) or cost-per-click (CPC), is what makes up the cost of Facebook ads. On average, Facebook advertising costs $7 per 1,000 impressions and $1 per click, whereas Facebook ad campaigns cost $5 per download and $1 per like.
Google Adwords or Google Ads is a powerful Google advertising platform, as Google is definitely the most popular search engine worldwide. You need to do some preliminary research and focus on your target audience and the right keywords before creating an effective ad campaign. With this advertising platform, you will pay Google to get on top of the search results. The cost of this kind of advertising depends on several factors, like the maximum amount you want to pay per click, the relevance and click frequency of ads and ad extensions, the keywords being bid on, etc.
These are the unavoidable costs that cover almost all aspects associated with the creation of a new dropshipping business. Remember that it takes money to make money. So, estimating your start-up expenses is crucial to getting off the ground and meeting your future goals. Also, it is a good idea to have some extra money set aside, just in case you deal with any overlooked or unexpected expenses.