What amount of cash do you need to get into Dropshipping?
One of the most important factors, when it comes to Dropshipping business, is the cost it takes to start the store. People often wonder that if they need 50 dollars, or 100 dollars or 500 dollars. The inquiry that how much money is needed to start a Dropshipping business is extremely regular in this field of Dropshipping. Individuals often ponder what measure of cash do they precisely need to start Dropshipping. Today, in this article we will be very honest about how much money you need for starting a Dropshipping store.
Heaps of Dropshippers have just discussed this inquiry however they all pass up something which we will discuss in this article. We will likewise give you a few hints to keep your cost low around here.
The three noteworthy costs that you need to start your Dropshipping business are:
1.Start-up cost (that you need for your store)
2.Marketing budget (that will make up the majority of your expenses)
3. Purchasing items from that customers buy from you
Without delaying any further let’s talk about all the three costs that you need to build your store:
1 – What amount does it cost to construct a store?
You may pick WooCommerce or Shopify to manufacture their Dropshipping store. On the off chance that you are utilizing Shopify, your month to month start-up cost is only twenty-nine dollars for the Shopify plan and fourteen dollars for the area name. That makes a total of forty-three dollars starting cost for your Dropshipping store. Additionally, you do not need to purchase Shopify themes as they are accessible for nothing.
There are two optional expenses that you may go for are:
1 – Logo from Fiverr: You may make a logo for nothing for your store yet in the event that you want an exceptionally decent logo you need to get it planned professionally. Fiverr is a decent choice for getting a professionally planned logo in shoddy cost.
2 – An up-sale Shopify plugin: You might want to put resources into many premium plugins later on in any case, you may go for an up-sale plugin in the starting when you don’t have enough budget to spend on the premium plugin. You can get upsell plugin at the cost of around forty-seven dollars per month.
One thing that you need to keep in mind about up sales is that it may cost you a little bit too much if you are on a tight budget in the beginning. However, it is tor=tally worth it. So, you can also go without getting this.
In the case you don’t have extra budget for plugins, we recommend you to go ahead and set your store with Shopify and then you add and advertise your products to your store without purchasing the plugin and when you find your winning product and an ad that engages with your audience very well, your sales start to increase at a high rate that’s when you buy the plugin. You can then use that plugin to add an up-sale to the winning product. This will help you to get back all the money that you have invested in buying plugins for your Shopify store. Basically, you don’t have to buy a plugin at the beginning that is when your sales are not that high. You should buy a plugin when your sales are very successful.
So, the cost of your start-up will be somewhere between forty-three dollars and ninety-five dollars and fifty cents. Isn’t it pretty good?
2 – How much money do you need for marketing?
It is a fact that 80 to 90 percent of your whole start-up cost is going towards marketing. We will talk about Facebook ads in this article.
Free traffic methods come in rescue when you don’t have enough budget for your marketing. It is totally possible to make money through free traffic but you need to remember that free traffic is slow. We are definitely saying that you can make money out of free traffic but one the other hand we will also point out that it isn’t the best option to go ahead. You will make relatively far more money if you use paid traffic instead.
Facebook ads and Instagram shoutouts are most user-friendly for beginners. Before getting into the amount of money it will take for Facebook ads, we will talk about testing products on Facebook.
What exactly is testing products?
In the Dropshipping industry, when we say “test the products”, we basically mean that we add the product to the store and then we run low cost Facebook ads for that product. You must keep your per day budget for testing a product for only 5 dollars. We recommend you to run your ad for four days. Then you wait to see if you are making any money from advertising that product. In case you make money from that product, you must increase the ad budget which will result in more sales and ultimately reap you more and more profit. The product which is causing sales here is known in the “winning product.” So, winning product is basically a product that results in profit when you advertise it on Facebook. Whereas, when the products don’t get you profit, those products are called as losers. You need to keep in mind that most of your products are going to be losers.
It is very difficult to know which product is going to be your winning product. So, in order to find out your winning product, you must test a lot of products on your store. According to Fred Lamb, it mostly takes 10 product tests to find that one winning product and that product has a high success rate. However, it can also take 20 product tests for finding one winning item. We can’t guarantee you how much time or products will it take to find one winning product. All you have to do is to be consistent in testing products because one winning product can give you even over $100,000 a month but you have to first find that item.
You need to at least test 20 products with Facebook. Mathematically, we will be spending 5 dollars a day for four ads to test a product. So, the total cost will be around 20 dollars to test one product. But here we have to test 20 products to that will 400 dollars ($20×20) on our ads for testing our products.
You are going to make money along the way by selling your products even if they end up being losers. So, it will not actually cost you 400 dollars but its important to keep an exact budget anyway.
We basically recommend you to spend at least 450 dollars to 500 dollars on building your store and its marketing both. Some of you must be thinking that 500 dollars are a lot of start-up cost or 500 dollars might be very low money to spend. You need to be willing to invest money if you actually want your business to be fully fledged. There is no way of turning 100 dollars into 10,000 dollars, you need some real money or actually producing more money.
Talking about AliExpress Dropshipping, paid traffic is fast while free traffic is slow. If you want to take advantage of paid traffic, you must invest some money. We understand that not everybody has 500 dollars at the start of their business. So, if you are one of them who are on a low budget, we have two tips for you:
Use side hustles to save up the extra cash
You can use different side hustles to earn extra money that you can reinvest into your business. Side hustles don’t pay well as most of them require you to exchange your time for money and that’s not a good exchange. We suggest you take the money that you earn from side hustles and invest them in a business that scales from you investing money rather than your time. This is how you become rich.
You don’t need all of this money at once
500 dollars at one look might be seen as a big amount but you don’t have to worry because you don’t need a whole 500 dollars at once. You can split 500 dollars in two months. You can test 10 products in one month and the next 10 products in the second month. If you are too lucky, you might get your winning product in the first month only without even testing other 10 products.
3 – Purchasing items from that customers buy from you
You don’t get any money instantly for the products that your customers buy from your store. In case you have Shopify payment set up that runs through Stripe and payment is done every seven days. If the customer bought it from PayPal then PayPal will at least hold your money for three weeks until they trust you.
For example, your budget is 500 dollars and you have already spent it on setup and marketing. Then one of your customers buys any product from your store for 20 dollars. It takes about 9 dollars to buy that product from the supplier and if you don’t have 9 dollars and you have to wait for one to three weeks to receive the money from the customer. However, you need to order the product right then. What will you do in that case? Well, there is nothing much that you could do. This cash flow problem becomes one of the major reasons behind the failure of new businesses. So, if you don’t want to end up in that category make sure that you have a plan in advance.
The two solutions to this problem are:
1 – Use credit cards
It is one of the easiest ways to solve the above problem. You have about five weeks to do payment of the money you spent on a credit card. So, if you have to wait one week for the payment by Stripe of 20 dollars that are paid by the customer who bought a product from you. That is totally fine because you already have the time of five weeks to pay off the 9 dollars that you have spent on your credit card. PayPal payments will also not cause you any trouble even if it takes three weeks for PayPal to pay you the money that customer paid for your product. You will have five weeks to pay off the money that you spent on your credit card. You also get good deals and bonuses such as cash back when you use credit cards for your payments.
2 – Have $200 to $300 saved in advance
Saving some money beforehand can be very useful if you don’t have access to a credit card. This money should not be included in the money that is used to pay for expenses such as Facebook ads. This money should only be used in the time period when you are waiting for customer’s money to reach you. This money will not be spent in the same way as the other expenses. This saving will be helpful to regulate the cash flow.
So, the final answer to the question that how much money you need to start your Dropshipping store is $400 to $500. It may seem like a lot of money for some of you out there but to be very honest it is nothing in comparison to the cost that it took to start an actual physical store some time ago. Additionally, there is a huge cost of lease and inventory that you have to invest for setup your store. We are lucky to live in a time where we don’t have to spend thousands of dollars to start a business.
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