Can You Start Dropshipping With No Money?
Online shopping continues to be a huge part of the internet experience, and dropshipping is a kind of business model that can meet consumers’ needs. If you’ve decided to start a dropshipping business, you may have asked yourself, “Can you start dropshipping with no money?”
The answer to that is, “No.” Although, the good news is that you can start dropshipping with very little money. Remember that dropshipping has very low startup and operational costs, but it does still require a certain amount of capital investment. Think of that old saying, “You have to spend money to make money.” Well, in the case of dropshipping, you could easily change that to, “You have to spend a little money to make money.” This is a business operation, after all. But dropshipping is unique in that it doesn’t take much money to get started. This is just one of the many benefits of dropshipping.
How Does the Dropshipping Model Save You Money?
Once you start a dropshipping business, you won’t have to store, package, or ship your inventory. Those logistics are all handled by the dropshipping supplier (also known as dropshipping provider). This allows you to focus on the most important aspect: connecting with your customers.
In addition to low startup costs and capital investment, dropshipping also means that you will not have to:
- Own, rent, or operate a warehouse to store inventory.
- Oversee the packaging and shipping of inventory to your customers.
- Keep track of inventory for accounting purposes.
- Oversee ordering new inventory to stay fully stocked.
- Handle product returns if a customer is unhappy for some reason.
There are so many reasons why dropshipping is a great business model. Additionally, an online store is most effective when the dropshipping supplier handles the functioning and logistics. You should always try to avoid overall bloat and instead focus on connecting with customers and meeting market demand.
Minimum Costs to Start Dropshipping
So let’s take a look at what your bare minimum startup costs would be for your online store:
- Choose a web host – Depending on the company, this can start at $2.95 a month. If it can be integrated with WordPress, this will make it especially easy for you to build your e-commerce store. Remember if you get lots of traffic, these rates may increase.
- Install a shopping cart – This is can be an open-source cart, thereby making it free. This is an important step as your customers will crave security. Even though the source code will be free, you will have to host it on a server that you manage.
- Sign up to get an SSL certificate – Usually about $1.50 a month, although your web host may sometimes offer it with the price of the web domain. This is also crucial for security.
- Sign up to get a credit card processor – Not a monthly fee, but usually between 2 and 3% per transaction. Usually, you will have to go over a rate proposal with your processor. Much like the shopping cart and SSL certificate, this is also vital for customer security.
- Template for your website – Anywhere between $20 and $50. This is an optional one-time cost if you do not want to go through the trouble of designing your website. Templates are especially useful for people who are new to web design or user experience.
If you look at these basic costs, it’s all very do-able! Additionally, it is possible to find companies that will offer you a free trial for your domain name (usually 1 year), so this will allow you to lock in a clientele and build a profit margin before you have to start paying.
You Need to Pay Your Dropshipping Supplier
The costs listed above all have to do with actually setting up your online store. But we haven’t covered an important part of this business model: paying a dropshipping supplier. Besides, how can you start dropshipping without a dropshipping supplier? You won’t have any inventory to sell, let alone to ship to customers!
Collaborating with a supplier is absolutely necessary as they will be handling the storage, packing, and shipping of the inventory. The fee you end up paying them is totally worth it, especially considering how much work they end up doing. This fee can vary from supplier to supplier, although most will be one of the following:
- Per order fee – The supplier applies a surcharge to every order made, usually ranging from $2 to $10. This fee structure may be beneficial to you if you have a store with a low volume of sales, but if you plan on running a successful store than these fees add up and can bite into your profit margin. Additionally, suppliers who claim that they “have no membership fee” or are “free” are actually using some variation of this system.
- One-time setup fee – This is essentially a single membership fee, although most highly regarded suppliers do not usually use this system. Furthermore, it can be quite expensive; the cheapest suppliers start at several hundred dollars.
- Monthly/annual membership – More and more suppliers are adopting this system. If you choose annual membership, most suppliers offer more competitive rates that usually start at around $100.
Choosing the right supplier is an important decision. You’ll need to look at more than just the pricing; consider their inventory, customer support, and technical tools to help you track sales and business metrics. Don’t forget that choosing a dropshipping niche can be highly profitable, so frequently it’s better to choose a supplier that specializes in certain products.
For example, Greendropship has over 20,000 natural and organic products for an annual membership fee of $149. As one of the leading suppliers in the US, we offer competitive wholesale prices and various tools to help you optimize your sales. To learn more about our products, download our product catalog here.
Don’t Forget these Additional Costs!
In addition to the costs of setting up your online store and securing a supplier, you will also have to cover the following costs:
- Marketing and advertising costs – What’s the use of having an online store if no one knows that it exists? You have to get your name out there! Email marketing and blogging can be effective, but Google ads or Facebook ads are the best bet. Of course, these will cost you, depending on the size and scale of your advertising.
- Miscellaneous expenses – Depending on where you operate, there may be local laws that require permits or licenses. You will also need a Tax ID and may have to get business credit cards.
These additional costs will vary – depending on specifics of your dropshipping store – so always do your research! However, even with all these costs, dropshipping is an exceptionally easy business model with low startup and operational costs. Remember: you have to spend a little money to make money.
What About Using A Fully Hosted Shopping Platform?
Make no mistake, personally overseeing all these aspects of your online store can be a tremendous hassle. Remember, these costs start low but can quickly add up, especially if web traffic gets fairly high (which you want as that means that your online store is thriving). For most online retailers, going with a fully hosted shopping platform like Shopify, BigCommerce, or Oberlo is the way to go. Keep in mind that these companies:
- Will manage your shopping cart. This is a biggie, since not all shopping cart software is created equal.
- Give you 24/7 technical support. They will also make it exceptionally easy to get started.
- Always keep the servers up and running. If you oversee this part of the process yourself, you run the risk of having server downtime.
- Make sure that you won’t get hacked. Remember, security is paramount for your customers!
- Automatically back everything up. You’ll never have to remember to save your data!
Can You Start Dropshipping With No Money On A Shopping Platform?
Not exactly. A shopping platform will allow you to start a store with no money, but you will still have to pay your dropshipping supplier. Let’s take a look at this a little more closely.
Amazingly enough, Shopify offers a free 14-day trial! After that, it costs $29 per month, but in those first two weeks, you can start selling immediately without having to front any capital investment. In other words, the Shopify platform makes it easy for you to start right away and will even provide you with a Shopify domain name. However, if you are serious about successfully branding and marketing your dropshipping store, then you will have to buy your own domain. Luckily, Shopify offers this as well, at $14 a year (which is also a steal).
Using a Shopify is an excellent way to hit the ground running. Novices and experts can both use it, and the user experience and web design will always look crisp, clean, and professional. Imagine an online store just like a brick-and-mortar business: would you go inside a store with dirty floors or windows? Probably not! So make sure your online store looks sharp.
What Is the E-Commerce Market for Dropshipping?
Let’s be perfectly clear: online business is booming! According to research firm Digital Commerce 360, e-commerce sales in the US alone made up 14.3% of all retail transactions in the year 2018. This comes out to $517.36 billion and is an impressive 15% increase from 2017!
This expansive growth is driven by increases in customer confidence. Consider the following figures:
- 80% of internet visitors shop online.
- 71% of internet visitors consider e-commerce stores to have better prices.
- 44% of internet visitors search for products by using a search engine
So where does dropshipping fit into all this? Grand View Research concluded that 23% of these total e-commerce sales ($85.1 billion) were from the dropshipping business model in the year 2018. This report also concluded that over 30% of all online businesses used the dropshipping model.
Well, what does all this mean? Online stores in general and dropshipping specifically are both undergoing extensive growth right now and seem to have the potential to only grow from here.
Don’t forget that as an online retailer, you can start dropshipping with a preexisting platform. For example, 34% of all Amazon sales ($14.2 billion) in the year 2011 were from the dropshipping business model.
Greendropship As Your Dropshipping Supplier
This explosion of growth in online retail has made your average consumer more aware of what they like and want. So, if you want to succeed in your online business, you have to connect with these consumers and offer them products that they want! That means choosing a reliable dropshipping supplier with an extensive inventory of in-demand goods. Plus, if you want your profit margins to stay healthy, membership to the supplier should be competitively priced.
Greendropship is this kind of supplier. We offer over 20,000 natural and organic products, mostly premium and gourmet items made in the USA. Our selection is wide enough for you to find a profitable niche for your dropshipping store. Join us today and start selling right away!