In the article “What is dropshipping”, we take a deep dive into the pros and cons of running a dropshipping store. One of the advantages mentioned in the article is the low entry cost. It leads us to a frequently asked question that people are always wondering about: How much money does it cost to start a dropshipping business?
Before answering this question, you have to understand there are many ways to start a dropshipping store. Most dropshippers decide to open their stores between Shopify, WooCommerce and Wix. The costs on each platform are different. In this article, we will take a closer look at the budgets for people to open a dropshipping store on each platform.
Cost of starting a dropshipping business
You will need some basic capital in order to start your business, for the store itself, the domain name, hosting service, dropshipping tools and advertisement.
The cost may vary depending on the platforms you use, but here is a breakdown of the startup costs:
You need to find and pay for a platform on which to create your online store. There are different platforms on which you can create a store, such as Shopify, WooCommerce or Wix. Don’t rush into making a decision without knowing much about those platforms. Take your time to do some research and learn about the pros and cons of running a store on different platforms. It is imperative to choose the right platform that suits your needs and demands.
Shopify is an e-commerce platform that allows anyone to easily sell online. Technically speaking you can start a store on Shopify without any cost as it offers a free 14-day trial. After that, the minimum cost for a monthly subscription will be $29 if you choose the Basic plan. The Basic plan should provide enough features for a startup store including unlimited products, manual order creation, free SSL certificate, secure online payments, etc.
Opening a store on WooCommerce is a lot different compared to Shopify and Wix. WooCommerce is an e-commerce plugin that is designed for online merchants who are using WordPress. WooCommerce and WordPress are both free, but don’t get so excited just yet, unlike Shopify and Wix, you need to pay for the domain and web hosting fees if you want to start your business there.
The WooCommerce pricing can easily add up if you purchase paid themes and plugins, and even hire a professional tech person to enhance your store. One thing that we really want to emphasize is that customizing your WooCommerce store and WordPress site requires lots of time and efforts and more IT skills than running a store on Shopify.
Wix is a website builder that provides cloud-based web development services. As the platform sets its foot into the e-commerce business, online merchants can also choose to run their stores on Wix. The Business Basic plan that Wix provides comes with a cost of $23 per month with all the essentials that a beginner needs to start a new store including custom domain, free domain for a year, secure online payments, etc.
A good store is a brand store. Your domain name is as important as your products; it is part of your identity and will help your customers feel closer to your brand. It is the unique address of your website that lets customers find your site on the internet. A professional domain name can also boost your credibility. You can ask your friends for suggestions or use a name generator, but make sure that you and other people will enjoy the domain name!
Purchasing a domain name is optional if you are running your business on Shopify since you’ve already been given one when you created the store. However, such domain name ends with myshopify.com. We understand you want to avoid some unnecessary costs when you just started an online store. But we highly recommend you to get a domain name as it helps your store looks more professional and credible. More importantly, a professional domain name will greatly improve your store SEO so that new visitors can easily locate your store.
There are many websites that specialize in this such as GoDaddy, Hostinger and Bluehost. The cost of registering a domain varies based on the name and service provider you pick. It usually ranges from $6-$15 the first year while the cost in the second year will slightly increase. Let’s take GoDaddy as an example, a domain name that ends with “.com” will cost $12.17 in the first year, which in turn will bring you more orders and sales.
Buying a domain name is a must-have if you want to launch your store on WooCommerce. You may want to reference the numbers from above to estimate your budget for purchasing a domain name for your WooCommerce store. Hostinger offers relatively cheaper prices compared to other web service providers. The cheapest domain name you can get from Hostinger is $0.99/yr and ends with “.online” or “.xyz”.
Note: It is possible to purchase your domain name and hosting service separately from two different service providers. But we suggest you purchase them from the same provider to save the trouble of transferring domains.
Wix (Not necessary)
As one of the most popular website builders, Wix offers the feature to customize domain names the way you desire. The cost of doing so is already embedded in your subscription plan. Therefore, there is no need to register a domain name from a third-party web service provider.
The next step for you to start a dropshipping store is hosting. To put it in simple, you need a server for your website. Similar to domain names, you can easily find many web hosting providers if you search on Google. Some of the big names we recommend are GoDaddy, Hostinger and Bluehost.
Shopify & Wix (Not necessary)
Since Shopify and Wix both include hosting services in their subscription plans, you don’t need to invest extra money on it.
Unlike Shopify and Wix, you need to self-host your WordPress website and your WooCommerce store. The hosting cost really comes down to what hosting service you pick. It can cost you as little as $2 to thousands of dollars every month depending on your needs.
Let’s take Hostinger as an example. As you can see from the image below, the cheapest hosting service you can get from them is $1.99 per month but without free domain. With an extra dollar every month, you can get a more premium subscription plan that provides more features and a free domain from Hostinger. This is why we suggest you purchase a domain and web hosting service from the same provider.
The next thing you need is a dropshipping tool. In short, a dropshipping tool serves as the bridge between your store and suppliers. The tool not only helps you manage your products and import them to your store, but also assists you to place orders to your suppliers and synchronize their status for you. A great dropshipping tool can definitely save you a lot of trouble from managing your dropshipping store. Therefore, we highly recommend you to choose one carefully.
The cost of each dropshipping tool varies depending on the tool and the subscription plan you pick, and the platform they support. Here are the three dropshipping tools we recommend: DSers, Oberlo and AliDropship.
DSers (Shopify & Woo)
DSers is the only official partner of AliExpress that specializes in automating almost everything you need to run a dropshipping store on Shopify and WooCommerce. In the upcoming future, DSers will also become available for those who manage their stores on Wix. With DSers, you can easily import and manage products from AliExpress suppliers. What’s even better is that you can place more than 100 orders to AliExpress in just a few clicks.
DSers offers a large variety of different features to make your dropshipping experience more effective. You can easily find new products to sell with DSers’ Find Suppliers and look for a more reliable seller with their Supplier Optimizer. It is exactly the dropshipping tool you seek if you wish to save more time from the repetitive operations of running a dropshipping business, and would rather focus more on investing your time, energy and resources on things that matter more.
The best part about DSers is that it offers a forever free Basic plan. DSers’ Basic plan covers all the important features mentioned above including bulk ordering, Supplier Optimizer, Find Suppliers, automated synchronization, etc. It is more than enough to support any startup dropshipping store running until it scales up to a certain level and becomes very profitable.
Feel free to visit DSers’ pricing page to learn more about their subscription plans.
Oberlo (Shopify only)
Oberlo is a dropshipping tool that only supports Shopify. It helps dropshippers find products to sell online and facilitates the whole process of fulfilling their orders. All in all, Oberlo is one of the most popular Shopify apps that many dropshippers would go for.
Here’s a detailed breakdown of the plans that Oberlo offers. Click here to learn more details about it.
AliDropship is a dropshipping tool that works both on Shopify and WooCommerce but their strength lies in the latter. Essentially, AliDropship connects with your WooCommerce store and allows you to search and import products from AliExpress. With AliDropship, you can easily turn your entire WordPress website into a fully functional dropshipping store.
The cost of using AliDropship is $89 (one-time payment).
Advertising is where you might need to spend the most money. But as a startup, you can always take the advantage of some of the cost-effective marketing ways to promote your store such as improving your SEO and email marketing. If you wish to further expand your dropshipping business, you will need to advertise your products to get customers and orders. You can advertise on Google, Facebook, Instagram, or any other platform. The price of an advertisement will vary depending on the platform you choose, and your target. Make sure to research what platform is best suited for the type of products you sell!
Just to give you a reference on the budget of advertising on Facebook, you will need to pay $111.50 on average for an ad that can attract 100 new visitors to your store. Here’s how we got that number.
According to the data from WordStream, the average click-through-rate of Facebook ads is around 0.9%. To make our calculation easier, let’s assume it is 1%. In order to get 100 people to your store, you will need an ad that can reach 10,000 people (10,000 impressions).
Another data from Revealbot indicates that the average cost per 1,000 impressions (CPM) in 2020 is around $11.15. Therefore, here’s how we estimate the cost of an ad that is aiming to bring you 100 new visitors to your store.
(10,000 / 1,000) * $11.15 = $111.50
Last but not least, the time you spend on researching, opening and running a store, studying how to promote your online business, etc. is also a very major cost that shouldn’t be neglected. As we mentioned in What is dropshipping, dropshipping is never an easy way to make money out of thin air, rather it requires time and dedication, especially when you are trying to stand out from a highly competitive e-commerce world. Never underestimate the effort and the time you will put into dropshipping. You should always be prepared and actively learn more about it if you wish to become successful in dropshipping.
In this article, we’ve covered most of the costs to start dropshipping including Store creation, Domain, Web hosting, Dropshipping tools, Advertising and Time. Depending on the e-commerce platform you choose, some of the expenses are unavoidable, while some are optional. To simplify things and make sure you get the key takeaway, here is the minimum budget we would propose you for launching a new dropshipping store that comes with basic functions:
As you can see the startup cost of launching a new dropshipping store varies greatly according to the e-commerce platform you choose. But dropshipping is still one of the few business models that requires relatively low upfront cash investments to begin with.
We wish you the very best in starting your own online business!
You can always contact our customer service team if you have any doubts about how to dropshipping.