How Much Does It Cost to Start Dropshipping in 2024: Breaking It Down

Looking for a flexible and low-risk way to enter the ecommerce world? Dropshipping might be it.

In just the past year, the dropshipping market has grown from $192.76B to $249.16B. Despite inflation and global economic disruptions, the industry is expected to reach $724.26B in 2027.

The rising popularity of dropshipping can be attributed to several factors. It reduces startup costs and inventory management expenses while offering broad product selections, flexibility, and scalability—key benefits for any business.

While this sounds great, you might be wondering: how much does it cost to start dropshipping? The costs can vary significantly depending on the steps you take.

Today, we’re taking a closer look at how dropshipping works and what it will cost you to begin this venture. Whether you’re a seasoned professional or a complete beginner, we’ve got something for everyone.

Sounds good? Let’s get to it!

What is dropshipping?

Dropshipping is a business model where a third-party supplier handles the manufacturing, packaging, and delivery of orders on behalf of other businesses. This model’s main advantage is that it lets businesses offer a variety of products without the usual overhead costs associated with traditional retail, such as warehousing and large inventory investments.

Source: Printful

Dropshipping suppliers provide on-demand order fulfillment, allowing businesses to pay for products only as orders come in. This ecommerce model is gaining popularity due to its low entry barriers and flexible product offerings.

How much money should you have to start dropshipping?

With abundant online tools and resources, starting a successful dropshipping business doesn’t require a big financial investment. In some cases, you can start with just a few dollars and build a following organically. However, if you plan to make dropshipping a full-time gig, it’s better to have some starting capital.

The actual startup costs for a dropshipping business depend on various factors, including the type of website you want to create, the products you plan to sell, and the online features you want to offer your customers. There’s no fixed budget required, as some entrepreneurs might invest more in building a robust ecommerce website, while others aim to keep costs minimal.

Source: Unsplash

Can you start dropshipping with no money?

Although dropshipping is a relatively inexpensive business to run, and technically you can start for free depending on your approach, achieving the best results typically involves some costs. 

Thus, dropshipping is best viewed as a low-cost, rather than a no-cost, business model.

Dropshipping startup costs

Now that we’ve covered the basics of dropshipping, let’s dive deeper into how to start a dropshipping business and the associated expenses.

1. Business registration costs

Is it necessary to register a business for a dropshipping side hustle? Although it isn’t always mandatory, registering your business provides several advantages and protections.

Federal Tax ID Number

Obtaining a federal tax ID number, or Employer Identification Number (EIN), is a quick and free process. An EIN is essential for applying for business licenses and permits, opening a bank account, hiring employees, and paying federal taxes. You can apply for an EIN for free through the IRS. Depending on your state, you might also need a state tax ID number.

Source: Unsplash

Business License

A business license provides legal protection, builds customer trust, ensures tax compliance, and grants access to local government aid. There are various licenses available, such as a Business Operating License, Seller’s Permit, and Doing Business As (DBA) License. The appropriate license depends on your specific situation, and the fees typically range from $50 to $400.

Please note that the information in this article is for general guidance only and shouldn’t be taken as legal advice. For specific questions about business registration and dropshipping law, we recommend consulting an attorney.

2. Ecommerce platform and marketplace fees

Whether you choose to sell products on an ecommerce platform such as Shopify, Wix, or Squarespace, or opt for an online marketplace like Etsy, eBay, or Amazon, it’s important to take the associated fees into account.

Ecommerce platforms

Ecommerce platforms have become more popular than ever, and their appeal is heightened by the rapid growth of ecommerce businesses, which are expected to reach a market share of $8.1trillion.

Creating a standalone store on an ecommerce platform offers endless customization options but requires more effort to drive traffic. Typically, these platforms charge a monthly fee and a transaction fee for each sale. For example, Shopify’s Basic plan costs $39 monthly with a 2.9% credit card fee, plus $0.30 per transaction. Higher subscription plans can reduce these fees.

Source: Unsplash

Benefits of ecommerce platforms:

• Control over your store: You have complete control over your website, from its design, layout, features, and functions to branding, pricing, and promotion.

• Access to customer data: Running your online store gives you direct access to customer data. This includes contact information, purchase history, and account details, which can enhance the shopping experience and inform your marketing strategy.

• Niche down your business: Ecommerce platforms allow you to set the tone, specialization, and unique value of your business. Trying out different dropshipping niches and settling on one enables businesses to pick the right products and carve out a distinct identity for their brand.

• Valuable analytics insights: Ecommerce platforms come with built-in analytics tools that enable you to monitor traffic sources, product performance, visitor metrics, and customer behavior.

Drawbacks of ecommerce platforms:

• Higher upfront costs: The costs of setting up and streamlining your own ecommerce website can be quite high. While ecommerce platform subscription fees are relatively inexpensive, additional costs for setting up, designing, hosting, and customizing a website professionally can accumulate.

• Data security risks: Unfortunately, data breaches on ecommerce sites are not uncommon. These sites are particularly vulnerable to cyber-attacks since they store large amounts of personal and financial data.

• Marketing costs: To attract potential customers in a crowded online marketplace, ecommerce business owners may need to invest significantly in developing effective marketing strategies.

Want to learn more? Check out our blog on the Best Ecommerce Platforms in 2024.

Online marketplaces

Online marketplaces attract potential customers to your store but provide limited opportunities for customization. Plus, they usually charge fees for product listings and sales transactions. For instance, Etsy charges $0.20 per listing, a 6.5% transaction fee per sale, and a 3% plus $0.25 payment processing fee.

Source: Unsplash

Advantages of online marketplaces:

• Increased visibility: Selling on an online marketplace exposes your products and services to an established customer base. Unlike other sales channels, marketplaces can drive traffic to your product listings without significant marketing expenses.

• Established trust: Customer trust is crucial for business prosperity. More than half of online shoppers trust purchases through familiar marketplaces, even if they’re unfamiliar with the specific retailer.

• Simplified logistics and fulfillment: Online marketplaces often relieve sellers of the burden of order fulfillment and logistics. Many offer services such as warehousing, generating shipping labels, order tracking, and processing payments and returns.

• Low start-up costs: Online marketplaces offer a straightforward setup, ready-made features, a fulfillment system, SEO, and even marketing strategies as part of the subscription fee.

Disadvantages of online marketplaces:

• High competition: The most visited marketplaces are saturated with sellers. Some platforms even offer their own products alongside third-party retailers, making competition fierce.

• Limited data access: Sellers have limited access to customer data, which can hinder relationship building and personalized customer support. This restriction also complicates targeted marketing campaigns and monitoring analytics.

• High commission fees: Selling on online marketplaces involves commission fees, typically 10%–30%.

• Lack of brand visibility: Online marketplaces emphasize products rather than the businesses that sell them. This focus makes it challenging to build a brand and convey authentic messaging, as potential customers engage more with the products than with the brands.

For an in-depth comparison, check out our blog Marketplace vs. Ecommerce Platform: Which Is the Best?

3. Domain and hosting

If you plan on creating a standalone store, you’ll have to consider domain and hosting costs.

A domain name serves as your store’s unique identifier. It lends credibility to your business, aids in search engine ranking, and allows you to control your online presence. The domain cost depends on factors such as keywords, the top-level domain (e.g., .com), and the registrar you choose.

Source: GoDaddy

Here are some popular domain registrars and their prices for registering and hosting a .com domain.

Most domains cost around $10 for the first year, but be mindful that prices may rise in subsequent years. Searching for affordable domains on platforms like GoDaddy can help you find the most suitable option for your dropshipping business needs.

4. Supplier fees

Once your website is set up, you’ll need products to sell. That’s where dropshipping suppliers come into play. Many top-rated dropshipping supplier directories and platforms charge either a one-time or annual fee.

Here are some of the popular ones:

• Worldwide Brands: Provides over 16 million certified wholesale products. Charges a $299 one-time fee, or a $99 down payment followed by two installments of $110 each.

• SaleHoo: Gives access to over 8,000 suppliers for $67 annually or $127 for lifetime access. You can also get the SaleHoo Dropship subscription—the Basic subscription is $27/month and the Premium is $97/month.

• Wholesale2B: Free to sign up but charges for dropshipping order services, with 17 subscription plans ranging from $37.99/month to $539.91/year.

• Doba: Offers a centralized platform for $60/month, allowing direct integration with suppliers.

• Oberlo: An app by Shopify that connects with AliExpress suppliers, costing $29.90 per month for the basic membership.

Source: SaleHoo

Depending on your choice, supplier access costs can range from $30 to $60 per month or as much as a one-time fee of $540. In addition to product costs, dropshipping suppliers often charge additional fees for services such as ecommerce integrations, increased product limits, order synchronization, and premium products.

To build a successful dropshipping business, sourcing the right products is crucial. Other popular product sourcing methods include:

• Private label products: These items are produced by third-party manufacturers and marketed under your own brand. For example, Onoxa offers skincare items costing below $5, with a minimum order of 12 pieces. Larger orders reduce the cost per unit.

• Print-on-demand (POD): POD suppliers like Printful allow you to offer custom products with your designs, such as apparel, tech accessories, home decor, and much more. Products are printed and shipped directly to customers upon sale, with no minimum orders or upfront costs. Prices depend on the item, materials, and printing method.

Printful’s fulfillment centers

Here’s a list of dropshipping business ideas to get you started.

5. Sample costs

Once you’ve finalized your designs and your products are good to go, it’s crucial to ensure they meet your expectations before presenting them to customers. Ordering samples allows you to assess the final product’s design, quality, and overall appearance.

Sample costs will vary depending on your product supplier. For example, SaleHoo offers samples starting at 8$ a piece, however, prices will vary depending on the product. Printful’s sample program provides store owners with a convenient way to order products with a 20% discount.

Source: Printful

Every registered Printful customer qualifies for one sample order per month, with a maximum of three items per order. When your monthly accumulated sales reach $300 or more, you become eligible for up to five items per sample order in the following month.

6. Marketing costs

Now that your store is all set up and you’ve tested the product, it’s time to start selling. To generate sales, you’ll most likely need to dive into marketing strategies. Investing in just a few marketing tools will go a long way.

To start off, analyze your marketing budget to find the most profitable strategies for your online store. Marketing costs can range from a few bucks to a few thousand dollars.

Source: Unsplash

Here are some of the ways to market your store:

• Social media ads: Platforms like TikTok, Instagram, and Facebook are potent marketing tools if you can create compelling content tailored to each platform’s unique style. Ad prices will vary based on the platform you choose. Meta suggests you allocate at least $1/day for marketing efforts.

• Influencer marketing: Influencers play a significant role in attracting customers. Prices vary widely, from $800 for nano influencers to over $7,000 for mega influencers.

• Email marketing: You can leverage cost-effective tools like Sendinblue, Mailchimp, or Omnisend to automate and streamline customer communication and engagement. Pricing for email automation tools can start as low as 10$ and easily reach a couple hundred dollars for more expensive plans.

Use SEO

You can decrease ad spend by focusing on search engine optimization (SEO). Generate organic traffic for free by optimizing your store’s structure, product listings, blog content, and more.

Keyword research is crucial, as it helps your store rank higher for terms that potential customers are actively searching for. Focusing on long-tail keywords is particularly effective. Although these keywords have lower search volumes, they attract more targeted traffic to your store, resulting in higher conversion rates and increased sales.

For example, consider a dropshipping store specializing in t-shirts with custom-printed plant designs. This seller could use long-tail keywords like “custom plant design tees” or “personalized plant print t-shirts” in product descriptions and website tags. By doing so, the shop is more likely to attract plant lovers, specifically those looking for apparel that represents their love for greenery.

Want to learn more about driving traffic to your store? Check out our in-depth SEO guide for beginners.

Start your dropshipping journey with Printful

At Printful, we provide a comprehensive range of dropshipping products and services designed to support your business at every step. 

We offer online store setup services, photo, video, and design services, and even customer support for your clients. All our products are 100% white-label and customizable, with loads to pick from.

Source: Printful

Our integrations seamlessly work with the most popular online stores, including Shopify, Etsy, WooCommerce, PrestaShop, BigCommerce, and many more. We guide you through the setup process step by step, providing all the tools and information you need to be successful. At Printful, we aim to ensure your business thrives by offering top-notch support and a diverse array of customizable products.

Begin your journey now and tap into the thriving dropshipping industry. With Printful by your side, success is just a step away.

Ready to drop your first product?

After all this, you might be wondering: is dropshipping worth it?

Yes, dropshipping is absolutely worth it. The key to running a profitable dropshipping store today is to move away from reselling cheap, ready-made items and focus on offering quality products through trustworthy suppliers.

Nowadays, you can start a dropshipping business with just a few bucks in your pocket, depending on your product and the chosen approach. 

Partnering with Printful allows you to keep your dropshipping costs at a minimum with no up-front investment and no order minimums. Our in-house team will ensure your products meet the highest quality standards.

It’s never been easier to start a dropshipping business. What are you waiting for?