How Much Do You Need To Start Dropshipping – Is trading on eBay for no money real? How much does it cost to start dropshipping on eBay? If you ask Google or YouTube, they will immediately tell you that it costs $0 to get started.
But dropshipping on eBay with no money is only theoretically real. In reality, eBay dropshipping requires minimal investment compared to other business opportunities, but you may incur small one-time costs in addition to the loan required to start the business.
How Much Do You Need To Start Dropshipping
In this article, I will try to break down the cost structure of a new eBay selling business.
How To Start Dropshipping In 2023
The analysis of the article is similar to the one in the video below. Note that I mention an educational training library called Entrepreneurzone in the video. Unfortunately, it is no longer available, so in the article below you will find an alternative to it.
The most common one-time cost to start selling on eBay is education. A course on how to sell on eBay is recommended over self-study because it usually takes you through the process of building a business step by step.
If you feel that attending a doctor’s appointment is too much of a burden for you, there are also opportunities for self-study. But the self-study path has less guidance and less structure, so you’ll need to invest time and effort into it.
If you decide to take the time and learn on your own, read the following guide to help you get started with this business model.
How To Start An Effective Dropshipping Business In 2022
I want to emphasize one thing, there is no one-time cost other than education. You can hire a designer through Fiverr and spend money to design store and product description templates (or just get ready-made eBay product description templates yourself), but these are optional.
This makes eBay dropshipping a very interesting business model, so let’s compare it to other business models to see what I mean.
Compared to other business models, eBay dropshipping offers the lowest one-time costs.
In comparison, if you decide to use Shopify to build your own store, the one-time costs will be much higher. Training is just the beginning, then paid themes for your store, design and development budget, and the biggest expense, the advertising budget, never translate into sales.
How To Start A Dropshipping Business In 8 Easy Steps (2023)
Similar to Shopify, if you decide to start an Amazon FBA business, you’ll need to invest in purchasing inventory, and when starting a new FBA brand, it’s common to place ads on Amazon. You can read more about the differences between dropshipping on eBay, Shopify, and Amazon FBA in this comparison article.
It is known that fixed costs are more important than one-time costs (in importance, not in number). These are expenses that determine the cost of doing business.
To put this as an example, if you spend $300 on a course and earn $100 a week, you will return your investment in the course within 3 weeks. Of course, in reality, returns are not linear, you can make $0 in the first few weeks, $10 in the first profitable week, then $50 per week, then $100 per week. In any case, in the end, the investment in the course will pay for itself.
But if you’re paying $300 a month for software and your average profit is $200, your business isn’t profitable. Unprofitable means the business is not working or you are not running it properly.
How Much Does It Cost To Start A Dropshipping Business?
In the monthly cost department, eBay dropshipping offers a low cost structure. The only cost you can’t avoid is the dropshipping software, but other costs may be suggested.
The goal of dropshipping software is to automate the tasks that humans cannot do and make day-to-day store management easier. For example, these are just a few of the automation features available in the DSM tool:
DSM tool works in freemium model. Sign up and you’ll be instantly upgraded to the basic plan for free for 7 days. It includes all the automation features you need to start your business.
After the 7-day mark, you can choose from two options: set up a payment method, keep the upgraded version of the software, or upgrade to the free tier.
How To Start Dropshipping For Free
Free Tier offers the most important features to keep your sales business running, including pricing, stock synchronization, listings, and order management. But it’s limited by the number of websites you can source and the automation features you can use.
No, this is not software that flags new sellers on eBay. This is something you should be aware of in advance when choosing a dropshipping business model where your store does not comply with eBay’s dropshipping policies.
But what does that mean? As a dropshipper, you will get less traffic than eBay. eBay prefers sellers who own their inventory over sellers, and often ranks them higher in search results. But low traffic doesn’t mean no traffic, and you can still get great sales without risking money and investing in inventory.
There are some theories that suggest the use of dropshipping software is the cause of reduced visibility. Some people suggest using only so-called “non-API” software, and both of these claims are busted myths.
How To Start An Amazon Dropshipping Business In 2023?
Start a profitable dropshipping business with DSM Tool. Get free courses and free software trials.
In order to find products to sell in your store, you will need to do some market research on eBay. At the beginning of the article, I shared a link to a free guide on how to find products to sell using the “sniping” method.
Sniping is a great technique because it’s free. You don’t have to spend a dime on research using it and you’ll end up with a great product to sell.
But this is not the only method of market research. In 2017, eBay acquired market research software company Terapeak. The insights Terapeak offers create incredible opportunities for low-cost sales, which you can learn more about in this product sourcing masterclass.
How To Start A Dropshipping Business
Each product you add to your store (like a listing) requires you to use one credit to “zero the listing fee”. You get 200 credits per month and once you hit the limit, you start paying for each entry.
Fortunately, as a beginner, you’re unlikely to pay any fees due to eBay’s selling restrictions, but as your business grows, it’s an expense you should expect.
Generally, when you list an eBay store, you can cover your costs with your profits, which is another good reason to choose dropshipping on eBay if you ask me.
Learn more about the different fees and how to calculate them in our eBay Fees article.
How Old Do You Have To Be To Start Dropshipping?
The biggest expense of your dropshipping store is buying the products you sell. After all, even if you sell your product with a 30% profit margin, most of the money from the sale must be paid to the dropshipping supplier who processes the order and ships the product to the buyer.
The problem for new sellers is that when you dropship on eBay and get paid via PayPal, it’s the PayPal account that causes the problem, not the eBay account. PayPal keeps 15-20% of the money it receives for 21 days.
As of January 2021, it’s unclear if they’ll keep your money even if you choose to use another payment processing solution, such as eBay Managed Payments (if you know anything about this, please comment on this post).
PayPal escrow, sometimes referred to as “PayPal Jail,” lasts 90 days from the date of your first payment. This means that you need a loan to cover the 21 days that funding stops.
What You Really Need To Know About Dropshipping In 2024
The term working capital refers to money that is invested in short-term business activities in order to run a business. The inventory of retail companies is the most common example used to explain what working capital is.
When dropshipping on eBay, the money you need to put into the business as working capital is risk-free. Since you’ve already made sales, working capital is the loan you need to finance your assets for the first 90 days.
One way to reduce the amount of money you need to borrow is to limit your growth during these months. The less you sell, the less money you’ll hold back and the less credit you’ll need to cover it.
I can’t give you a specific number on how much you can limit your sales in the first 3 months, because it depends a lot on your purchases.