Are you wondering how to start Dropshipping business but don’t know where to start? Do you often hear that you can begin Dropshipping for free? Is it really true or it’s just an eye-catching headline. Today I’m going to introduce you guys what’s the actual expense of Dropshipping newbies.
Build A Website or Open A Store
First, to start a Dropshipping business, of course, you will need to have your online shop. It could be your website or online shops based on other platforms. Dropshippers often are Shopify users or Amazon, and eBay users. Dropshippers in Southeast Asia generally prefer to open the Shopee store or Lazada store.
Each platform usually will have a monthly subscription fee. Shopify costs $29.99$ per month, and that comes with a free 14-day trial. For Amazon, you could choose the 39.99$ monthly subscription fee or 0.99$ per item. We will round it to 40$ for easier calculation. eBay’s basic monthly subscription fee is 27.95$. Shopee doesn’t charge a monthly subscription fee, but they will charge a one-time of 315$ fee for registering with ACRA (Accounting and Corporate Regulatory Authority). And Lazada also doesn’t have a monthly subscription fee, but it requires a business license which raised the entry barrier.
Amazon, eBay, Shopee, and Lazada are all based on their own platform, unlike them, if you are a Shopify user. Although Shopify will provide one free Shopify domain name, if you want to build your brand and gain customers’ trust, having your domain name is a must.
You could purchase domain names on Shopify, or other websites like Godaddy. The price may vary from 0.99$ to 99.99$ per year on Godaddy and around 11$ on the Shopify store. We could go to 0.99$ per year.
Content Management System
After you have a domain name and linked the domain to your website, now we can build an actual website. A content management system will help you to fill context in. Shopify offers free web design features, or you could use other CMS apps like WordPress for a free basic feature.
Find A Supplier
Now you have built your website or opened your online shop on other platforms. It is quite a central part of finding your supplier. Aliexpress is the leading supplier source for dropshippers who are running the module of overseas suppliers.
It does have a lot of disadvantages like long shipping time, and unpredictable quality control for products. It takes many effects to communicate with suppliers. But don’t forget it is a low entry barrier. If you are newbies, you don’t have the experience of finding a reliable supplier, especially when you haven’t narrowed down your niche.
Dropshipping with overseas suppliers might turn to a good side as long as you have chosen the right supplier, like CJ Dropshipping. CJ Dropshipping has a low entry barrier like Aliexpress, but CJ will inspect every product before dispatching it and offers 7-15 days of shipping from china, and overseas local stocks are also available.
The best part is that CJ has excellent customer service, there is no need to worry about contacting several suppliers at one time. CJ will contact them for you, you will only need to contact your personal agent. It will save tons of time and energy. The best part is that CJ’s service is totally free.
Place A Test Order
Next, when you have found a supplier, but you haven’t built any trust between you and the supplier. You don’t know how well the supplier’s platform functions. The easiest and most direct way is to place a test order to see how your supplier will process and how long it will take—there is no need to order every variant for each product.
For example, ordering a dress, and selecting one size for one color is enough. Remember, you are only testing the product’s quality and the supplier’s delivery process and speed.
This cost will depend upon the niche, in different niches the test order cost will be different. We will say 50- 75$. With this budget, it can pretty much cover the cost of testing 3- 8 products. For a start-up cost, it is pretty decent.
Market/ Running Ads
The biggest expense in the Dropshipping field always is marketing/ running ads. Even if you have a beautiful website and high-quality products at reasonable prices, no one is visiting your website or your shop. All the efforts were in vain. Advertising can be on Facebook or Google, or you can find a blogger to help you promote your product.
Facebook or Google’s advertising is generally facing the entire network, and there are many price options. In general, you can set the targeting groups, advertising methods (picture, context, video, and picture side), and what’s your budget.
Google or Facebook will give you an estimated price based on your requirements and budget. Then adjust the price according to the actual conversion rate. And there are multiple placements for Facebook ads, like Facebook itself, Instagram feed and ins story, messager sponsored messages and messager story, and In-stream video.
Another type of marketing is to find individual bloggers like YouTubers or Instagrammers to help you promote products. This type of advertisement is more aimed at the fans of the blogger. The purchasing power of a blogger’s fans will pretty much determine your product sales, so finding a valuable blogger is a determining factor.
The promotion fee of bloggers depends on their actual number of fans and the ability to promote goods. The actual price needs to be negotiated with the blogger. Don’t forget you will need to mail bloggers product samples. See it as you will need to pay the double price of the test order cost.
In general, the one-time expenditure will be more expensive than Facebook or Google advertising price. However, the same short-term effect may be more direct than Facebook ads.
Good after-sales service is an indispensable part of the long-term Dropshipping business. Take well care of the after-sales service so that customers will not leave bad reviews for your store or your ads. Too many bad comments can easily lead to ads being blocked. The general return rate of Dropshipping is around 6-8%. Luckily, CJ has a good return and exchange policy. You don’t need to worry about this part loss.
Now we can summarize all the expenses: for Shopify use, it will be a 30$ monthly subscription fee plus a 1$ domain fee to set up a real website. CJDropshipping is free to use and the test order will take around 50- 75$. Let’s say 50$.
For running ads, it depends on your budget. Here I will say 100$ as a minimum price, and it will at least attract 1 customer for you. For the Shopify user, 181$ is a relatively basic start-up budget for Shopify users. And for the online shop- eBay, amazon, Shopee, and Lazada are having a much similar start-up budget.
- EBay is 40$monthly subscription fee+ 50$test order+ 100$marketing= 190$.
- Amazon is 28$monthly subscription fee +50$test order+ 100$marketing=178$.
- Shopee is 315$ACRA fee +50$test order+ 100$marketing= 465$.
- Lazada is 50$test order+ 100$marketing=150$, but don’t get Lazada requires a business license.
The minimum budget for Dropshipping start-up is 181$. With this amount of money you have spent, you may only get one or two orders. It seems doesn’t worth the cost. But this expense is to help you familiarize yourself with the operation of Dropshipping. From this, you can slowly familiarize the customers’ preferences and a suitable niche for yourself. That’s the biggest gain.