If you are about to enter the dropshipping industry, it is important to understand the start-up costs or the budget to start a dropshipping business.
As a matter of fact, before you can make money, you have to spend money.
To begin with, each type of business has its own financing needs. Luckily, certain types of businesses, including dropshipping businesses, have lower financial entry barriers.
But this does not mean that you do not need to figure out how much initial cash you will require.
By being familiar with your start-up costs, you can spend your money wisely and hopefully make your business more profitable.
So, today, we are going to talk about the budget you need to start dropshipping.
The budget to start dropshipping: How much money do you need to start dropshipping?
“What is the budget I need to start dropshipping?” – Most dropshipping beginners want to give an answer to this question. If you are one of them, read on!
Like most business models, the dropshipping business model requires a financial investment to start.
In general, the typical costs of establishing a dropshipping business include:
- Building an online store. Your online store will allow you to provide a source of information about your online business and find potential consumers. This includes the cost of creating your store on one of the e-commerce platforms like Shopify. Plus, this also includes the cost of getting a subscription to an extension/app for adding your dropshipping items.
- Adding additional functionality. Updating your store can cost money as well. Whether you are simply updating your website’s aesthetic appeal or adding a new feature to drive business growth, you may need to pay for that.
- Promoting your store. Promoting your store plays an essential role in acquiring new customers and retaining existing ones. However, this can be one of the priciest aspects of your business if you fail to do it correctly.
Is it possible to start a dropshipping business with no money?
As already mentioned, setting up a dropshipping business requires a much smaller investment than opening up an actual retail store.
To put it another way, as a new online vendor, you do not have to manufacture or store your products. The dropshipping supplier you are about to partner with will store and ship the products to your customers.
This means that you will not have to spend money keeping your products in stock.
All you need to do is to build your online store and market it. But is it possible to start a dropshipping business with no money?
Technically speaking, you can start dropshipping with no money. Namely, with the right combo of free trials/starter plans and marketing tactics, you can get your online venture off the ground with no money at all.
Check out our previous article to find out how to market your dropshipping business with no money.
Remember that you can start a dropshipping business with no money. But you will have to invest money in your business sooner or later. In a nutshell, you cannot run a profitable business without investing in anything.
So, now, we will focus on the minimum budget to start dropshipping with Shopify.
What is the minimum budget to start dropshipping with Shopify?
Shopify is an easy-to-use e-commerce platform that allows you to create a dropshipping store and sell your products online. Whether you are a total newbie or a tech expert, you will love it.
But what are the actual and unavoidable Shopify dropshipping start-up costs?
In this section, we will talk about the budget you need to start dropshipping with this e-commerce platform. In essence, these start-up costs or expenses are typically incurred during the process of creating a Shopify dropshipping store:
Shopify store building costs
Fortunately, this e-commerce platform offers a free 14-day trial, meaning that you can try Shopify free for 14 days. You can start your free trial here. Just bear in mind that your free trial starts when you first sign up, not when you begin to work on your store.
Sure, you can build your dropshipping store during the free trial. However, you should select one of the Shopify pricing plans before you begin to sell online.
In case you fail to choose a pricing plan after your free trial, you simply can’t continue to work on building your store.
As a new dropshipper, you can choose the Basic Shopify plan that costs only $29 per month. In addition, this plan is great for new dropshippers because it offers some basic features, allowing you to sell online with ease.
Then, you can buy a domain name that reflects your brand. And it costs $14 per year.
Store enhancement costs
How much does improving the functionality of your store cost? Can it have a great effect on your budget to start dropshipping with Shopify? Let’s find out, shall we?
Although Shopify offers some free apps/extensions, they may not help you meet the needs of your customers. Thus, you may want to install certain paid apps/extensions to add more specialized features to your Shopify store.
With numerous apps in the Shopify App Store to choose from, you can certainly improve the functionality of your store.
Do you want to get in-depth analytics? Or do you want to connect your Shopify store to Facebook? If so, there is surely a specific app for that purpose.
Every single app available on the Shopify App Store can add so much value to your dropshipping store. Just find the app that’s right for your online store and pay for it.
Also, it is important to note that with some Shopify apps, you get a free trial period just to test them. At the end of the free trial period, you can pay for the app if you like it. As you can see, the concept is very similar to that of Shopify.
Most of these apps cost around $9.99-$29. Of course, some are less expensive, whereas others cost so much more. When it comes to Shopify app pricing, it depends on the app and the features it offers.
According to Statista, the average conversion rate of online buyers worldwide is about 2.5%. To show you what we mean, we will give an example.
Let’s say you get 1,000 visitors to your online store within a day. You can expect 25 of them to buy something from your store.
But how can you get 1,000 visitors to your store? You can do so with marketing and advertising, of course.
Your chances to get more traffic and increase the conversion rate, i.e., to convert visitors into customers, are high if you promote your dropshipping business the right way.
But how much does it cost to market your dropshipping store and increase the conversion rate? Unluckily, it is not easy to give an exact answer to this question because you can either choose between paid and organic (free) marketing or opt for a combination of both.
It would be wise to integrate both paid and organic marketing into your dropshipping marketing strategy. For instance, you can develop an effective mix of marketing tactics to convert prospects into paying customers.
You can use some of these tactics: SEM (Search Engine Marketing), SEO (Search Engine Optimization), influencer marketing, Facebook and Instagram marketing, content marketing, and e-mail marketing.
Obviously, the way you choose to market your business will have an enormous impact on your budget to start dropshipping with Shopify.
In this article, we have discussed the unavoidable Shopify dropshipping start-up costs, i.e., the minimum budget to start dropshipping with Shopify.
Though you can start dropshipping with no money, you will probably have to invest money in your business at some point. If you go into business unprepared, you may end up hitting a financial wall.
Therefore, financial planning and mental preparation are prominent in establishing and growing a successful online business.