April 1, 2020
How Much Money Do You Need to Start Dropshipping? ($100? $500? $1000? $3000?!)

How Much Money Do You Need to Start Dropshipping? ($100? $500? $1000? $3000?!)

Hey guys, today I’m going to answer a really
common question that we get asked a lot here on this channel and that is how much money
do you need to start a drop shipping store? Do you need $50? Do you need $100? Do you need $500? Do you need $1,000? Now while quite a lot of YouTubers have answered
this question already there is one hidden cost that they usually don’t talk about. I’ve decided to throw my hat into the ring
and give you my honest answer for this question plus I’m also going to give you some tips
on how you can keep your costs low as well. Alright, let’s jump straight into the video. Okay, so there are three major costs when
you’re starting your drop shipping business. The first are your start up costs to actually
build your store. The second is your marketing budget. I’m going to be honest, this is probably going
to make up the majority of your expenses and there is of course the third hidden cost in
there which is very important to know which I will get to at the end of this video. For now, let’s look at the first. How much does it cost to build a store? Now, while [inaudible 00:01:03] is great I
suspect that most beginners watching this channel are probably going to chose Shopify
to build their store with because of the fact that it is more beginner friendly. If you’re doing that then your start up costs
are just $29 a month for the Shopify plan and then $14 for the domain name if you’re
purchasing it through Shopify. That brings your start up costs to build your
store to $43 and that’s it. The free Shopify themes are absolutely fine,
you do not need to pay for a premier theme at all. However there are two optional expenses that
are well worth it if you can afford it. Extra one, a logo from Fiver. You will need to have a logo for your store. You can make one for free using a free logo
maker and I will include a link to one in the video description below but the truth
is is that you will get a nicer one if you get one professionally designed and you can
get them professionally designed on Fiver for super cheap, for just $5 plus a 50c transaction
fee. Extra two, a Shopify up sale plugin. Now there are multiple different types of
premium plugins that in the future you will want to invest in for your store but in the
beginning the most important one to make sure you have money for is an up sale plugin in. A beginner friendly one is the SMAR7 bundle
up sale and it costs $47 a month. As you may have noticed that costs more than
Shopify. The thing about up sales is that they make
so much money that it’s well worth it but in the beginning if you are strapped for cash
then you can get away with not getting it just yet. In that case what I would recommend is that
you set up your store with Shopify, you add your products to your store and then you run
ads for those products and you don’t purchase the plugin. When you find a product and an ad that connects
really well with your audience and you start making lots of sales that is when you buy
the plugin. Use that plugin to add an up sale to the product
that is selling very well and you will very quickly make your money back plus a lot more. In the beginning you don’t need to purchse
the plugin, you can purchase it later once you are successfully selling items in your
store. There you go, your start up costs are going
to be somewhere between $43 and $95.50, pretty good, right? Hold your horses because we’ve still got to
get to the marketing. How much money do I need for marketing? Here’s the reality, for most of you watching
this video 80 to 90% of your start up budget is going to go towards your marketing and
for this video I’m going to be talking exclusively about Facebook ads. I will say though if you simply don’t have
the money for this then you can utilize free traffic methods and I do talk about them in
my video, Start drop shipping with $50 but as I said in that video, free traffic is slow. Is it possible to make money with free traffic? Absolutely but is it the best? No. You’re going to make money a whole lot faster
if you use paid traffic with Facebook ads and Instagram shout outs being the most beginner
friendly. Now to explain how much it’s going to cost
you to run a Facebook ad it’s very important that I first of all explain what it means
when we say to test a product on Facebook. What we mean in this industry when we say
that we test products is that we add a product to our store and then we run low cost Facebook
ads for it. Generally when you’re doing this I recommend
that you set your ad budget to about $5 a day. You then run that ad for a few days, I normally
recommend running it for four days. Over those four days you see if you make any
money from advertising that product and if you do that’s fantastic and so you scale the
ad budget up and up and up making more and more sales which makes you more and more money. When that happens we refer to it as a winning
product. A winning product is simply a product that
when you advertise it on Facebook you make a profit. Most of the time when you’re testing products,
they don’t make you money and we call those products losers. Most products are going to end up sadly being
losers. Unfortunately it can be very difficult to
pick what’s going to be a winning product you normally have to just add lots of products
to your store and test them to find out which ones connect and which ones don’t. Probably the smartest person that I know when
it comes to drop shipping with Facebook ads is my friend Fred Lamb. As he said on my interview with him that it
normally takes him about 10 product tests to find one winning item and that is a really
high success rate. It’s been studied a lot and it’s generally
found that for most people it’s going to take about 20 products to find one winning item
but there are no guarantees, it might take you even longer to find a winning item. Of course, on the other hand you might get
super lucky and find a winning item immediately, you just don’t know until you try. Of course, that one winning item can easily
earn you tens of thousands of dollars to even over $100,000 a month but of course, you’ve
got to find that item. I reckon with Facebook ads you need to be
willing to test at least 20 products so let’s use that as a yardstick. Doing the maths we want to be spending $5
a day for four days to test a product which means it’s going to cost us $20 to test one
product but of course, we want to try and test 20 products so $20 times 20 means that
we’re going to be spending $400 on our ads to test our products. Along the way you are almost certainly going
to make money from selling products, even ones that turn out to be losers so it’s unlikely
that it’s going to actually cost you $400 but it’s good to budget for this anyway. In total then that usually means that I recommend
being willing to spend at least $450 to $500 for both your start up costs to build your
store and to market it. Now for some of you out there you might be
thinking, “Oh, $500, that’s not much money at all.” Of course for some of you out there you might
be thinking, “Oh, $500, I don’t have $500.” Well, I’ve got to be honest with you, if you
want to start a genuine real business then you need to be willing to invest some money. I have some people that come to me and they
say to me, “Sarah, I have $100, how can I turn that into $10,000 really fast?” Well, quite honestly, the only way that I
can think of to turn your $100 into $10,000 really fast is to go and gamble it on penny
stocks or to invest it in a Ponzi scheme but please do not go do that. This is my real honest answer when it comes
to L express drop shipping, free traffic is slow, paid traffic is fast, if you want to
take advantage of it then you need to be willing to invest money but yes, I understand because
funnily enough, not everybody has $500. If that is you, here are two tips. Tip one you side hustle to save up the extra
cash. I actually have a video specifically on the
subject on eight different side hustles that you can use to earn extra cash then reinvest
into your business and I will have a link for that in the video description below. Now, do they pay amazing? No, they don’t because a lot of them like
Amazon mechanical [inaudible 00:07:45] require you to exchange your time for money and whenever
you’re doing that that’s never a good exchange. What you want to do is you want to take that
money that you earn from those side hustles and then you want to invest them in a business
that scales from you investing money rather than your time and that is how you get rich. Tip two, you don’t need all of this money
at once. Now if $500 seems overwhelming to you then
don’t worry because you don’t need to have all of this money at once. Perhaps you split this over two months. In month one you test 10 products and in month
two you test the other 10 and hey, you might even get super lucky and find your winning
item in the first month. There is something else that is very important
that we need to discuss because if you remember I said that there is a hidden cost to drop
shipping that very few people talk about so what is it? Purchasing items that customers buy from you. Now, here’s the reality, when a customer comes
into your store and say, busy this travel mug for $20 you don’t get that money instantly. If you’ve got a Shopify payment set up that
is run through Stripe and your money is paid out every seven days and if the customer bought
it from PayPal then until PayPal trusts you they are very likely to put a three week hold
on that money before they will release it to you. Let’s say you have a budget of $500 and you’ve
already gone and spent it all on marketing and set up costs and then somebody comes and
they buy this mug from you for $20 well it costs about $9 to purchase it from the supplier
but you don’t have $9 left and you’re going to need to wait one to three weeks to receive
the money from the customer but you need to order it right now, what do you do? Well unfortunately if this was you there probably
isn’t much that you could do. This is a cashflow problem and you know, it’s
one of the biggest reasons why new businesses fail so if you don’t want to join that statistic
have a plan for it in advance. There are two solutions to this problem. The first one is free, the second one is technically
free but doesn’t feel free so let’s talk about the first one first. Use credit cards. Credit cards are absolutely the easiest way
to take care of this issue. With a credit card you usually have about
five weeks to pay off the money on it that you spent so even if you had to wait one week
for Stripe to pay you the $20 that the customer paid you for this mug that’s okay because
you’ve got five weeks to pay off the $9 you’ve spent on your credit card. The same goes for PayPal, even if it takes
PayPal three weeks to send you the $20 that the customer paid for this mug then that’s
okay because you’ve got five weeks to pay off the $9 that you spent on your credit card
plus if you use credit cards you get awesome bonuses as well such as free air miles so
you can fly around the world for free along with cash back rewards with help you offset
fees. If you don’t have access to a credit card
though you will need to prepare in advance using the second solution, have $200 to $300
saved in advance. Keep in mind though that this money isn’t
being used to pay for expenses like Facebook ads, this is just money that we are using
in the meantime while we are waiting for the customer’s money to clear so don’t think of
this as money being used for expenses in the same way that the other money was, this is
money that we are using to just help us manage our cashflow. There you go, that is my honest answer to
this question, how much do you really need to start a drop shipping store? Now I do understand that $450 to $500 may
seem like a lot of money for some of you guys out there watching this and do not mean to
trivialize anybody’s position if they are having a hard time financially but I do want
you guys to keep something in mind, that 20, 25 years ago if you wanted to start a store
here’s what you had to do. You’d have to go out there and rent a physical
storefront and it might cost you hundreds to thousands of dollars every month and plus
you’d probably be locked into a lease for six to 12 months. Then you’d have to go out there and purchase
thousands of dollars of inventory so that you would have something to sell in your store
with no guarantees that it would sell at all. Then you’d have the choice of either exchanging
your time for money by sitting behind a counter for eight plus hours a day serving customers
or alternatively you could spend thousands of dollars a month to hire someone else to
do that for you. Let’s flip the start up costs into a positive
and keep in mind that we’re actually super lucky to be living in a time where thanks
to the internet if we want to start a successful store we no longer have to spend thousands
and thousands of dollars to do so. Thanks for watching this video. If you liked it and appreciated my honest
advice then I’d really love it if you gave this video a thumbs up an subscribe to [inaudible
00:12:15] Tip for more great videos about selling online. When you subscribe be sure to click that little
notification bell next to it so that you don’t miss any videos that we post. If you would like to build your own Ally express
drop shipping store but you don’t know how we have a step by step video guide that is
perfect for beginners called the drop ship club. It is a video training course that takes you
through the exact process from start to finish. You will find a link on how you can join it
in the video description below. Before you run off I do have one last freebie
that I would like to give you. Here at [inaudible 00:12:46] Tip we have a
free E-book, How to make $10,000 a month online with drop shipping. You’ll find a link on how to download this
E-book in the video description below.

100 thoughts on “How Much Money Do You Need to Start Dropshipping? ($100? $500? $1000? $3000?!)

  1. If we were to try out 20 products, I suppose we may re-design our store logo for different type of products? Would you recommend to use a very generic store name and logo for all of the testing products?

  2. I'm not sure if you're going to talk about this but you also need ti set money aside to BUY the items the customer purchases from you.

    Your money you make from Shopify won't clear you bank in time to use the customer's payment to cover the purchase costs.

  3. Hi Sara, Can you please suggest what are the best niches for a beginner like me to start drop shipping?

  4. Having watched numerous channels talking about this, I like you – you're honest and provide useful information without too much waffling.

  5. Love your videos. I didn't understand anything before because you talk to fast but when I saw more videos of you, now I can understand you easyly. Great video.

  6. Taking a credit card to use money you don't have is a bad BAD IDEA.. Seriously that's one of the worse advice to give beginners.

  7. This channel is golden! I am just beginning to learn about drop shipping and the videos are very informative. I can't wait to binge watch more of these as they have answered questions already that other channels failed to do. So glad I came across this channel. Thanks Wholesale Ted! Side note, the host is absolutely gorgeous but that's just a bonus😍

  8. NOTE: for serious minded people only. if you are based in the US or Canada and above 20years of age Contact agent Matty vIA WHATSAPP @ +15186023105 OR +13159890060 OR [email protected] for easy cash up to $15,000. DON'T SLEEP ON THIS!!!!!!!!!

  9. I just started watching your videos and I love them so much! Thanks for all the content you put out there I’ve learned so much. I’m currently working on a plan of action to start my very own Drop shipping business so I don’t have to work at a part time job anymore to focus on school

  10. Your videos have so much value, I'm honestly surprised that you are not at like 1 mil subs at least.

  11. Hi! Great video! My wife and I are running an online store. Nowadays, testing 20 products using FB ads costs more than 500 bucks; my wife nearly fainted when she gout our credit card bill; over 1,500 dollars on 20 products advertised on FB in less than a week. And that's not including purchasing the products to sell to the customers. How much profit did I get? Around 800 bucks (sob,sob) Lesson learned here: If you plan to dropship, be ready to shelve a lot of money and I do mean a lot.

  12. Hi, i was planning to opt for alidropship custom store as i don’t have time for working on my own from scratch, the $499 plan, what are your reviews on that?

  13. This video was great, I also got a lot of value similarly on this topic from this video

  14. Hi Sarah, I have watched several of your videos tonight but this one is the best one so far, your videos are great and you teach more for free than most other traning videos and whats more it's all free (I do realise that you have a paid membership to what you call "The Dropship Club)" which is a super cheap price, but most online gurus boast and brag about the millions they've made and most have some sort of supercar like a Lamborgini or a Ferrari in the background of their videos……How crass I always think to myself, however you do not do this and I think that what you are doing is really great, keep up the good work sarah, I'm on a month long vacation right now and don't have the time to start a drop shipping website right now as I'm travelling from country to country through Europe but when I return to the UK I shall certainly be interested in signing up for your course as you've got me very interested, one last thing, I have tried internet marketing before and failed miserably and lost a lot of money in the process, however there wasn't so much online help back then as there is now like from your channel !!

    keep up the great work Sarah and thanks for enlightening me about dropshipping

    Glen 🙂

    PS…..I have subscribed and liked too !!

  15. I LOVE your accent and the way you talk. No seriously. I'm in love. <3 <3 And not just intelligent but also beautiful! 🙂 And not just this but also interesting and smart content! What more could one ask for ?

  16. Love your videos!
    I have a question: if everyone is using aliexpress and other suppliers on shopyfy how do you stand out? And isn’t market already over saturated?
    Thank You

  17. Hi Sarah, May be a silly question but is the money you’re talking about in USD or NZD? I’m in New Zealand too so am crossing my fingers you mean NZD! 😂

  18. Hey Sarah, so for the ads i need $400 for 4 days but i mean.. 4days..? Is that enough to have some sells? Looks verry expensive😣

  19. I've been told my whole my life every time I talk about working for myself that I'm basically too basic…Im 30 and I'm tired blue collar worker who feels 50… I got very little education and appreciate people like you putting this stuff out

  20. My issue is that I have $500 to use but I don't have it to waste on a product that's not going to make that back. Not to mention another $400 for each other product I'd have to test.

  21. Thanks for highlighting the costs and capital reserves needed in an honest way… great tip the credit card hack.
    As always thanks for sharing this information – it's really helpful!

  22. I literally just quit my job so I can focus 100 percent on making this happen. If I fail. Im screwed. Wish me luck.

  23. Honestly I think I’m going to let AliExpress woo design my site for me because I have to take into account how much my time and sanity is worth also!

  24. Wholesale ted: I really appreciate your videos. I want to start ecomerce business and I have watched alot of youtube videos about shopify, though most of the aren't honest. I found your videos very helpfull but I have not started yet. I would like to ask if you can help me on how to find the right supplier and is there any other dropship wholesaler other than Aliexpress. I live in the uk, stucked 9-5 job.

  25. When choosing to drop ship I must pay for all the orders my customer makes? For clarification, I sell over $2000 on my site. I need to have that available to pay the drop shipping company until the purchase is finalized (I.e. my customer payments clear), which could be 3 – 4 weeks after each purchase, correct?

  26. Thank you for the video, I've watch most of your videos. I just want to ask because Im from Philippines, do we need to pay taxes if I will create my own store for dropshipping?

  27. I like the way you say "I don't have that money in my pocket". You must be getting a lot this reaction from peoples when you speak about business start up costs. Peoples are cheapies when it comes to business start up costs, they give this answer that they don't have the money but when it comes to find the money for shopping or other liabilities they find them pretty easy….

  28. This is one of the first videos I've seen that shows people need to understand that it really does take money to make money. Thanks Sarah.

  29. I want to start dropshipping. However I see that shopify gateway and Stripe will not work for someone in Africa. I live in Swaziland. Small country next to south africa

  30. Hey , so i search up the upsell shopify plug in but got no results , i think that its now apps that you download though shopify to do that but i might be mistaken


  31. This is why i am waiting for start it. . Waiting is bad but better then just jump into and lose everything including my motivation.

  32. How should we test 20 different products.. do we need to purchase 20 different domains for testing 20 different products…or am I supposed to pick a one domain name which is suitable for all kind of 20 different products…!

  33. Is there some way to use alibaba / aliexpress to dropship but from the USA where most of my customers would be located? In this day and age, a week or two to receive a product at a premium cost in not acceptable, and yes, there are those that will be suspicious of an item shipped from China rather than a domestic distributor. Thanks, Sarah.

  34. I know this is a little ridicules (but I want to make sure) but when your talking about ads your talking about Facebook and Instagram?

  35. At first I was not sure about your videos, but after watching I realize that you are an awsome person helping people on how to make money. You just got a subscriber😁

  36. I'm looking for the video where you mention a site where you can get free stock images for ads. Not sure if this is it. Any idea what i"m talking about and what site that is? Thanks!

  37. Hi Im new about this and half way through to watch of all your video and thats give me a lots of ideas and learned before I set my first online store. I have one question. I have personal bank visa card that I always used to buy like eBay and have also payPal account. Do I need to apply another credit card to set up my account in shopify or I can used my personal Visa card? Thanks a million

  38. goah thank you all these gurus and none of them even answer this first up but be a kiwi thing from Nzd tooo aaayyyye👐

  39. I like this video ,cause she doesn't promise to people golden hills ,it makes me trust her . Most of scamers promise quick get rich in 30 days ,but in this vid it's clear water :if you do dropshiplifestyle get ready for work.

  40. Awesome video and very clear cut. So far, you have my attention. Now if talk costs and I see that you have done this for some time already if I consider getting into your course, that would obviously raise the entry price into the DS world and this is where I have a question:
    If I take the course from you, I will learn what you have established as being "the way to go" and it probably took you some trial and errors to get there. The learning curve is steep. If we talk time saved, how long would you say your course if worth?
    Thanks a ton for your content, really good.

  41. Thanks for your vids. Questions:
    1.Do you have any statistics regarding the time required to be profitable after the initial investment of $500.
    2.Some rough idea, how much time consuming is this business.
    3.Which platform is better, AliExp. or Shopify.
    4. How to select the winning items and select your margin of profit?


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