Running an eCommerce business is less expensive compared to operating any brick and mortar store. The reasons are manifold. For example, you do not need any retail presence. Moreover, the need for expenses towards human resources will also be considerably less.
Dropshipping reduces the cost further.
It is because, in a dropshipping business, you do not stock products in your own inventory. Instead, you partner with reliable suppliers, who in turn, take care of the fulfillment process on behalf of your brand.
As a dropshipper, you only focus on:
- Running a robust online store.
- Partnering with quality suppliers.
- Attracting customers for your business.
- Managing customer satisfaction, support, and retention.
So the cost of starting any dropshipping business will depend on the initial expenses for each of these areas of focus.
Let us dig more into this to find out the startup cost to launch a dropshipping business. We will also discuss how you can minimize these initial expenses using various deals and offers.
Startup Costs for Dropshipping
Cost to build a dropshipping store
Every eCommerce business needs an online presence. It can be social media, a free online storefront, online marketplaces like Amazon, or a stand-alone eCommerce website.
By theory, you can start a dropshipping business using any free online store builder. In other words, if you can accept an order, you can sell. The initial expenses towards starting your dropshipping business will depend on your choice of platform.
In this article, we tried to be as exclusive as possible. You can skip to the relevant sections based on your choice of building your store.
The domain name of your store is the address of your online business. If you plan to run your dropshipping business using marketplaces like Amazon or Etsy, you can ignore this section. But if you want to run a standalone business, this section is for you.
While store builders like Payhip let you start a free hosted storefront without any custom domain – it is not recommended for establishing your branding. If you want to run a successful dropshipping business, have a custom domain.
Usually, under $10/year, a domain is the least expensive but the most important asset for an online business.
SSL certificates encrypt the data and keep them safe from online hackers. Every online shop must have an active SSL. Dropshipping is no exception.
Platforms like Shopify offers free SSL to all customers providing bank-like security. Custom SSLs can cost anything between $10 to $60 per year.
You can also generate SSL certificates for free using services like LetsEncrypt.
Both Shopify and WooCommerce are robust, feature-rich, and capable of running a successful dropshipping business. Both have a very mature eco-system of plugins and third-party apps to enhance the functionalities of the platform.
But they differ in the way their way of operation.
Shopify is a hosted platform, which means your storefront and data are stored on Shopify’s server. Shopify charges you a recurring monthly fee for using its resources.
Shopify’s plans start at $29 per month. We encourage you to refer to Shopify’s pricing plans on its website to check the latest offers.
WooCommerce, on the other hand, is a free plugin for the WordPress CMS. You can download the software for free from the official WooCommerce repository. However, you must self-host this software on a server. In other words, while the core software is free, you still have to pay for the server and hosting to install WordPress first.
When it comes to choosing a WooCommerce hosting, you have several options. Shared hosting is cheap but may have restrictions on bandwidth and resource usages. If this is a concern for you, you can upgrade to dedicated hosting or VPS. Of course, these limitations will not impact a new store. So, let us focus on the Shared hosting providers only.
Bluehost has an impressive shared hosting deal at $3.95 per month that comes with a free domain name, SSL, and 1-click WordPress install. You need to register for 36 months though.
Themes, Extensions, and Branding
Branding is important for the long-term success of any eCommerce business. Dropshipping, again, is no exception. So, you may need to spend dollars for branding your store.
Branding an eCommerce website starts right with the logo. While you can use platforms like Fiverr, Upwork, or any other logo designing tools to design your logo – the DIY approach works just as well.
If you wish to try the DIY way, check Gravit. It is a free tool.
Themes, for both Shopify and WooCommerce, are available in free and paid versions. While a paid theme can cost anything between $40 to $100, you can start with a free theme.
Moreover, if you are looking for a free and versatile Shopify theme for your dropshipping business, you can try out Debutify.
Like themes, extensions and plugins can add unique features and capabilities to your store. You can access and install different free and paid apps on your store. The expenses will vary based on your selection.
But, when you are just starting out, you actually do not need any premium app for your store. Use them as you scale up.
To run a dropshipping business, you can partner with individual suppliers. But, in practice, successful dropshippers partner with one of the several dropshipping platforms like Spocket, Oberlo, or Modalyst to run their business.
Dropshipping platforms let you choose quality suppliers for a monthly recurring fee. Moreover, you are not restricted to the catalog of any single supplier.
The expenses will vary based on your choice of dropshipping platform. Usually, you will get a substantial discount if you opt for an annual plan.
We recommend Spocket over Oberlo and Modalyst. It lets you start for free and allows you to sell quality products from suppliers based in the US and EU. You can read our detailed comparisons to find out their differences.
Social media is perhaps the best free way to attract prospective customers to your store. If you have a budget for this you can try out advertisement networks like Google Ads or Microsoft Ads to attract targeted visitors.
If you plan to run advertisement campaigns for your store, you can check the Adzooma platform. It is an award-winning Ad platform that can help you to optimize Google, Microsoft, and Facebook Ads in one place.
To make it more impressive, you can create your Adzooma account for free. Moreover, new users also get $125 credit in Microsoft ads on spending $25.
Another good strategy here is to implement a referral program for your store. An effective affiliate program can drive significant referral traffic to your store, which you can easily convert.
Platforms like PartnerStack can make affiliate management very easy and effective.
Retaining customers is probably one of the most important ingredients for your eCommerce success. The more loyal customers you have for your brand, the more will be your turnover.
Both SendInBlue and MooSend have generous free tiers. You can upgrade to one of the paid plans as you scale up.
Let us now try to calculate the minimum startup expenses for your dropshipping business.
|Domain||$10 per year||$10 per year|
|SSL||$0 to $60 per year||Free|
|eCommerce Platform (Annualized)||Free||$23 per month|
|Hosting (Annualized)||$3.95 per month||Free|
|Plugins (No premium extensions)||Free||Free|
|Themes (No premium theme)||Free||Free|
|Suppliers (Spocket)||$24 per month||$24 per month|
|Email Campaign (SendInBlue/MooSend)||Free||Free|
Note that this calculation is derived considering the least expensive services that you can use. Moreover, we considered the annual plans wherever it offered substantial discounts.
The minimum annualized cost for starting up a dropshipping business is approximately $50 per month.
The above cost is an indicative expense to launch your dropshipping business. Your actual cost will vary depending on the configuration and services you opt for.
I am sure that you now have a clear understanding of the startup costs needed for your dropshipping business.