Realistic Dropshipping Startup Budget for 2019


In this video, we’ll share a realistic budget
for starting a dropshipping store. We got these numbers from successful dropshippers
who shared their startup costs with us. These dropshippers didn’t have identical
budgets, but that’s why we interviewed them. We wanted to know what new dropshippers could
do with a lot, or just a little money. By the end of today’s video you’ll have
an itemized list of startup costs, and insights into how much you should spend to reach your
ecommerce goals. Ready? Let’s start budgeting. ______________ Hi everyone it’s Jessica from Oberlo and
today we’re talking about dropshipping budgets. Before we crunch the numbers, consider hitting
subscribe. The Oberlo YouTube channel has helped a lot
of dropshippers get up and running. Subscribe and you’ll never miss a video
from us in the future. Now back to the question at hand: How much
does it cost to start a dropshipping business? Let’s be clear: There’s no right answer. Every dropshipper has different goals, and
those goals require different budgets. If you want to quit your job and live off
dropshipping, be prepared to budget big. If you just want to make $100 extra a month,
your budget can be much more modest. You’ve all got different goals, and different
plans for achieving them. Today we’ll focus on the more modest budget. That is, we’ll discuss the bare minimum
budget for getting started with dropshipping. We recommend using a budget if you want a
shot at making sales, but don’t want to break the bank. So what’s in the bare minimum dropshipping
budget? We’ll cover the costs line by line. The first line item: a Shopify store. 1. Shopify Shopify is an ecommerce platform. With Shopify, you can build the website for
your online store and take payments from customers around the world. It’s the most popular ecommerce platform
around, and you can start using Shopify with a 14-day free trial. But let’s be realistic, you’re not going
to make your dropshipping fortune in two weeks, so the real cost here will be the Shopify
monthly charge once your two week trial ends. That cost is $29.99 a month. All right. That’s the store covered. How about the dropshipping part of the equation? 2. Oberlo This is where Oberlo comes in. Oberlo is a platform that helps you find great
products to sell online, import them to your Shopify store, and set your own prices. When a customer buys your products, the supplier
ships the products directly to your customer. You never have to worry about carrying inventory,
making this a low-risk business model for new entrepreneurs. if you’re just starting out, the good news
is: Oberlo is free! Oberlo’s forever free plan is ideal for
first-time dropshippers. It gives you all the functionality of Oberlo,
plus first-class customer service., You only have to pay for Oberlo once you make over
50 sales per month. Until then, you don’t pay a dime. So Oberlo is free, which keeps our bare bones
dropshipping business budget at 29.99 a month for now. Now if you want to make sales, you need to
earn your customer’s trust. To do that, you need to look like other trustworthy
online businesses. And there’s one thing they all have in common:
They all have their own domain name. When you get started on Shopify, you get a
free domain that ends with dot my-shopify dot com. but we recommend getting your own
dot com domain name as it strengthens your brand and legitimises your business in the
eyes of your customers. You can purchase a custom domain through Shopify. It will only cost you $14 per year. Let’s add that to our budget. [blue text slide:
How much does it cost to launch a dropshipping store? We’re almost at 50 bucks, and we’ve bagged
ourselves a slick online store with Shopify, the means to find and sell products online
– for free – with Oberlo, and a professional domain name. Not bad. What do we spend our money on, next? Pro dropshipper Tim Vangness has this to say: You don’t need to spend your money on custom
photos, logos, and website design. Besides, Shopify can take care of all of that
for you! With Burst, you can find and use beautiful
stock photos for free. And with Hatchful, you can create a custom
logo in minutes. I’ve left links to Burst and Hatchful in
the description below. 3. Sample products Once you have a custom domain, the next line
item on your budget is the cost of sample products. This line item is extremely important. Here’s why: Dropshipping is great because you don’t
have to stock an inventory of products. But that also means you don’t control the
quality of the products you sell, nor the delivery times, or the packaging It gives you the chance to investigate suppliers
and go on the customer journey yourself. If you’re happy with the shipping times,
the packaging, and the quality of the product, then chances are your customers will be too. If you’re not, you can use Oberlo to contact
the supplier with your concerns, or you can sell other products. How much you budget for this depends on the
cost of your products. But, let’s say your products costs around
$15 each, and you order samples for five products. Then you’re looking at around $75 for this
stage of setting up a dropshipping business. Let’s get back to our tally, which now looks
like this: All right. We’re looking at a startup bill of under
$120. Where do you think dropshippers spend their
startup money next? The next line item on our budget: Apps. 4. Apps Think of apps like bells, whistles, and turbo-boosters
for your store. Apps can help your drive sales and run your
store more efficiently. The Shopify app store is brimming with apps,
and you can install them with the click of a button. Some apps are free, while others charge a
monthly fee. Take a look at the following three slides. Here, I’ve outlined for you a few of the
more popular apps for dropshippers. There are links to all of these apps in the
description below. None of these apps are must-haves. But they are definitely nice to have. Like product samples, the amount of money
you spend here will depend on your store and your goals. However, for the sake of this budget, we’ll
put aside $19 to spend on various apps. Now our budget looks like this: Our next expense is where you can splash the
cash, and make a more substantial investment in your dropshipping business. 5. Marketing It’s the biggie called marketing. Here are some marketing words of wisdom from
Artsy Wall founder Matiss Ozerskis. Matiss suggests dedicating the lion’s share
of your startup budget into marketing. Marketing doesn’t have a specific price
tag. However, there are some assumptions that we
can use to get a better idea of what you’ll need to spend. In ecommerce, the average global conversion
rate is somewhere between 2 and 3 percent. For the sake of this calculation, let’s
put it at 2.5%. This conversion rate means that if you get
200 people to your store, you can expect five of them to purchase something. And how do you get 200 people to your store? Marketing. One of the biggest marketing channels for
dropshippers is Facebook. So Let’s look the cost of driving 200 visitors
to your store from Facebook. On average, the click-through rate for Facebook
ads is 0.9%. Let’s round that up to 1% to make the math
easier. That means, to get 200 people to your store,
you’ll need your ad to reach 20,000 eyeballs. According to marketing software provider AdStage,
the average cost per thousand impressions is $12.45. Let’s round up to $12.50. Now we have an equation we can work with. The price for reaching 20,000 people on Facebook
in the USA looks like this: First we divide total impressions we want–20,000
eyeballs–by 1,000. That’s because cost per thousand impressions
is the industry norm. That leaves us with 20. Then we multiply 20 by the average cost per
impression, which is $12.50. The result: we arrive at a total cost of $250
for Facebook advertising if we want to reach 20,000 people, drive 200 people to our store,
and make five sales. Let’s add that figure to our ongoing tally. Which brings our startup costs for a dropshipping
business to $387.99. Now, I know what you’re thinking: If you
spend $250 to make 5 sales, you won’t break even. And you’re right. But most six-figure dropshippers don’t even
expect to make 5 sales the first time they invest in marketing. They expect to learn what their customers
want. They expect to analyze the data to decide
which products to promote, which audiences to promote them to, and which ads to use. Armed with that knowledge, marketing costs
go down and conversions go up. So if you want to start drop-shipping, the
question to ask yourself is: Are you ready to become a constant learner? If you’re able to invest these startup costs,
and you’re enthusiastic about investing your time in learning how to dropship, then
dropshipping could quite literally change your life. Now let’s talk math. I introduced a lot of figures in this video,
and I’m happy to put them in context. Leave me a comment and let me know what you
think of this budget. Is it realistic? Too low? Too expensive? If you want to share your startup budget,
I’ll let you know what I think of it. That’s all for today, but before you go,
do me a favor. If you found this video valuable, give it
a like and hit subscribe. And until next time: learn often, market better,
and sell more.

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100 thoughts on “Realistic Dropshipping Startup Budget for 2019

  1. This was by far one of the most valuable dropshipping videos I've seen thus far. There are too many youtubers out there who are going on amd on about how you can start a successful Shopify dropshipping business for less than $50. So not true. SUBSCRIBED!!!

  2. Great video, thanks for sharing. I think you provided a great starting point for people who have zero up from information or learning. Just like there are many different budgets, there are also many different way to start an e-commerce store.

  3. Can anyone let me know if I would also need a monthly budget towards my purchasing of the items from Ali Express(via oberlo)that I’ve just sold?? Especially if I have very little credit?

  4. The items that you’ve purchased to test could be sent to smaller Instagram influencers in the same niche as trade for shout outs to further test products eh?

  5. Most successful dropshippers these days seem to strongly suggest that purchasing a “theme” in Shopify in order to build more trust with potential customers is becoming more necessary due to competition caused by oversaturation of online Shopify stores.

  6. Im more confused now
    after watching this
    then when i was before…
    No one is giving any substantial
    useful info
    thats cause no one that does well
    wants any competition
    So therore no video outthere tells u
    what u need to know – The Truth.

  7. I didn't hear anything about incorporating with your state or paying for the local right to do business, which could run from $500-$1000. I'd also round a few figures up. $200 for test products, $500 for advertising and marketing, and about $40 for apps. Some apps, such as insurance, will take their fees from the actual transaction. Of course, if you're trying to go pro, you'll need to invest more, especially where promo is concerned. Final note, if you're not an expert at using words to attract buyers, you may need to hire content writers.

  8. So this sounds like a start up budget, but a profitability budget should be substancially more then. If i have to spend 350 bucks to make 5 sales at 15, and we haven't even taken into account the cost of the product. Let's say its 10 bucks, then i just spent 350 for 50 bucks… you better increase conversion or get a much better product…

  9. Hi Jessica, thanks for this useful information! Does all suppliers in OBERLO offers dropshipping? Or we need to directly contact the supplier first to have it verified? Do we need to buy/test the product first before we list/sell in shopify?

  10. Outstanding! Still are unable to realize I just made $1284 with this terrific web-site here MyIncomeSystem. club?488

  11. So this is going to be my second attempt at eCommerce. I have started a store before, chose a niche, launched, and even sold a few products. I know it can be done. I learned a lot in the process. Here is a question I have though, and maybe other "newbies" have it as well… How do you decide on a domain name? For example, do you make a "general" store name and focus a product, or do you cater your domain name to say a niche. Because what if that product fails and you switch products, and your domain name doesn't go with the new product you want to sell. Maybe I am overthinking things… Anyways. I loved the video and all the advice in the comments as well.

  12. Again. Can anyone who is an active dropshipper please explain to me how your budget be 400.$ if you have to purchase the dropshipped item once it has been sold in order to take the sale items net prof. Particularly if you have no credit card??

  13. i don't know if this would work but what if i spend 40 dollars or something on an instagram influencer and get like a couple of sales as instagram is not for long term ill spend money on facebook ads and try to build a brand so instagram is basicly so i can get some money to get started

  14. In other words you have to spend about $400-$500 your first month in order to learn what works, and what doesn't, then invest into what does work and profit. Repeat. Interesting…

  15. Great video but there are a lot of apps that cost monthly and it will all add up to more than $19 per month. What are the best apps to pick at the beginning?

  16. Hi Jessica, This is my very first tutorial video about how to start dropshipping, i find it very clear and to the point. Thank You! I am on to oberlo.

  17. So very refreshing hearing about dropshipping from a more neutral standpoint rather than 'mentors' just looking for money from vids and courses. I think I will reach a decision after gathering as much info as I can get my hands on, and make my own mind up through trials and errors.

    One thing I learned quite quickly is not to dwell on these things for too long. Yeah do your research. But sometimes the best way to learn is to get stuck right in! Learn as you go! I hesitated too much for my last project and went in 6 months too late while others didn't. Lost out on a ton of money!

    This is definitely amazing content! Well done!

  18. Thank you. You gave me a starting point of numbers to work with. The answers I have always gotten on how much to spend on FB to start out is “whatever you want” or “whatever you can afford” which is not helpful. Thank you as always!

  19. Mennnnn 250d for advertising to get 5 sales 😏…. how will you make a profit for a low margine product?

  20. Hello everyone, I am from India and I want to start dropshipping business in USA, so can you please help me out?

  21. One question regarding the integration between Webshop and Ali express, how this is handled with automation ? is it done through Shopify?

  22. Dropshipping is a system which you have to understand in detail at beginning after that it will be a piece of a cake for you

  23. Hello I’m using your oberlo app and it keeps saying all my items are unavailable. Why is it doing that? On Shopify it shows that there’s inventory but when go to post it on my Facebook it says unavailable.?

  24. it's always scary thinking about how much money you gotta spend, but knowing it can pay off in the long run is what is exciting

  25. Excellent break down, simple easy to follow for someone looking into getting into the drop shipping’s e-commerce business. 👍

  26. Hi, Jessica, it was good heads up, i got one question Is there any video on how to test the real products?
    thanks in advance

  27. What about the legal side? DBA? Sole proprietorship? Sales tax permit? Trademarking/Infringement?

    And also, do you need a Facebook account to advertise?? Or IG?

  28. Nice tips video. Useful for me.
    Domain for a year for $14 is expensive. You can get much cheaper ones. Even for $0.99 cents a year. I bought a few.
    As for FB ads testing, a good budget is $1000-$2000 just for testing ads, etc..
    If you make sales with them, good for you.

  29. This is a great deal. Ive been looking for business to start without arm and leg cost. Such greatful to cross to this channel😊😍

  30. The key is to choose the right products. Instead of selling random knick knacks you can find at your local Walmart, sell problem-solving products with a passionate audience.

    In regards to budget, the more the better. This way you're not panicking when you out spent your $250 budget. I allocated $2000 for my dropshipping business when starting out exclusively for marketing costs for Facebook ads.

    You also have to consider that Facebook ads is a very lucrative skill to learn. Sure, it's more expensive than Google Shopping Ads or Instagram influencers, but once you learn Facebook ads it not only helps your dropshipping business, but you can sell to local business providing another stream of income, affiliate marketing becomes hell of a lot easier, you can sell courses, the possibilities are endless with Fb ads despite its significantly higher initial costs.

  31. Hello Jessica, you and your team are awesome. Very Honest, informative and educative video. One of the best video that helped me to grow. Hoping for more such videos from you guys. Many many thanks.

  32. How can I sell ANYTHING when my item is 10 pages down and I have 300 of the same items in front of mine? nobody will see my product!!!!

  33. I am new to all of this, I've been watching a lot of videos, which has helped. I am very interested in drop shipping but I'm kind of scared to take the leap, it seems like there is soooo much information. Suggestions on narrowing this process down? I am looking into drop shipping health and beauty.

  34. Setting up a budget for your dropshipping business did not ever seem this easy. Thanks a lot to this fantastic video that has taught a lot regarding the budget setup.

  35. Another great idea for advertising is using YouTube. I'm not talking about YouTube ads, I'm saying that a dropshipper or anyone who is looking to advertise products should start a channel where they are demonstrating and reviewing their product(s). This type of channel not only brings attention to the product, but also to your store, and you can monetize your channel which brings revenue back to you. YouTube is one of the most popular social media sites and this idea is a win, win for you, for advertisers, and for YouTube.

  36. can someone explain me this so when someone orders from your site do you have to go to ali express and find it and pay for it and send it to the customer or does oberlo do it for you

    also does oberlo only use ali express or can it be used with amazon if that made sense

  37. Thanks. All due respect Jessica but your last statement re. the expectations of the 6 fig d'shipper, following an approx NZ$700.00 initial investment?: Not very encouraging!! I was totally on-board up till that point. I guess "us" small-fry just ain't gonna make the cut with Oberlo's way of doing things. I'll keep on keeping on elsewhere??

  38. $19 to spend on various apps? the average for one app for one month is higher than that! wouldn't $100/mo. be more realistic?

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