You often hear that to start a dropshipping store you don’t need any investment.
The investment is indeed very low compared to other online businesses, but you have to admit that everything has a price! Like any other project, you need to set aside a certain amount of money to start your business and put all the chances on your side to succeed in online sales.
Here are the different things to know about your budget to do dropshipping.
No inventory to manage, no expenses?
We love dropshipping and one of the best reasons why this business is the perfect option for any entrepreneur wanting to start an online business is that you can sell products without investing in a stock.
This is one of the factors why dropshipping proves to be the best solution to start up with a low budget
What is sure in selling online without stock is that you do not run great risks in case of unsold products, but as a professional in eCommerce, you must however anticipate certain eventualities that you may encounter!
Indeed, as you do not have access to and do not manage the inventory of your supplier, you do not have certain information on the stock. It is, therefore, possible that you may be confronted with a stock shortage of a product that your customer has previously ordered, for example.
In this case, it is you who are in trouble, not your wholesaler
You and you alone will be required to manage the necessary refunds and the various conflicts. Hence the need to always plan a separate budget for stocks.
Mandatory expenses in dropshipping
Although dropshipping is seen as a low-investment activity, there is no denying that there are mandatory expenses that you must be prepared for. I will mention the most important and recurrent ones:
The domain name
If you want to show professionalism, it is better for you to invest in a domain name than to use a free domain with an endless extension such as “yourshopname.solutionname.com”.
This is undoubtedly the basis of any online store that wants to show its customers that it offers a quality service.
By buying a domain name, you will avoid scaring away your potential customers and especially the loss of sales. So, invest in this lever. Moreover, a domain name costs only 10 euros per year!
If some providers offer their product catalog free of charge, asking for no additional costs except for the sales you will make, others, on the other hand, will ask for a contribution at the beginning of the collaboration or even a monthly fee. In any case, always budget for this part, because maybe, the products you are looking for are only found on paid platforms.
Some dropshipping wholesalers use this method to attract only serious distributors.
To learn more about choosing your supplier: How to choose your dropshipping supplier?
The means of payment
Another cost that is inseparable from dropshipping is the payment method. Since all operations take place on the Internet, you must have a bank account linked to a payment tunnel allowing your customers to make their purchases in complete security.
The first alternative that comes to mind will probably be Paypal, but there are also other online payment gateways that you can use. Sometimes you will need a corporate credit card, which is quite common among many e-tailers and dropshipers.
Expenses to promote yourself
If there is one thing you need to remember when you start an online business, it’s that you need to generate traffic to your store, otherwise you won’t be able to generate sales or grow your business. And this requires an adapted communication and an online marketing strategy based on many levers.
The first thing you need to do is to build the identity of your online store
A brand name that is easy to remember and write, as well as an explicit logo that stands out from the crowd, will certainly be your first asset.
Then, don’t neglect the essential levers such as SEO and SEA which, as a reminder, allow you to guarantee the visibility of your online store
This is a subject that I discuss in the article on The pitfalls to avoid when you sell dropshipping. SEO consists in building lasting visibility and reputation of your store, while SEA allows you to be very quickly visible on the internet to generate sales quickly. Don’t forget social networks which are essential vectors in your communication and your brand identity.
Furthermore, you can also invest your budget in marketplaces which are excellent levers to increase your traffic consistently. Your margins will be reduced, but you will have more sales.
In conclusion, dropshipping is a great way to start an online business
I keep telling you that. But like any other project, it requires some investments to get started efficiently and to function properly. So, beyond the common thoughts that you don’t need to invest in a stock, however, you should know that you need to include various expenses in your budget even if they are minimal.