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Dropshipping Budget in 2020

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Dropshipping Budget in 2020

What is a Realistic Dropshipping Budget in 2020?

When I first started researching how much it cost to start dropshipping back in July, I found hundreds of articles with differing information.  It seemed like it would be the cheapest way to start an online business. I could buy a domain for $14, use the 14 day free Shopify trial, and pay $15 for an Instagram promo to start getting sales. And that’s exactly what I did to start, however by the time my trial was up I barely broke even.

It wasn’t until I fully invested in dropshipping, and more recently partnered with a very successful drop-shipper, that I understood a realistic budget to become successful.  Before I break all the costs down and explain how the budget is allocated, I’ve gotta let you know that the budget varies. It is possible to find a winning product from the get go and immediately start churning profits. However, it took me about $1,500 testing a few dozen products before I found my first winner.

The costs associated with dropshipping include a Shopify store, Shopify apps, video creatives, marketing, and product costs.  Here’s my current dropshipping strategy:

One Product Store

This is critical because it allows you to save money from purchasing multiple shopify stores and domains.  It gives you the best platform to quickly test multiple products until you find a winner.  It also allows for easy branding once you’ve found a winner.

I’m currently running a one product store while testing a new product every three days until I find a winner.  The only apps needed on the store are Oberlo (free) and Loox ($9.99/month).  You can use free themes, I like using Brooklyn or Venture for one product stores.  The store should take less than an hour to set up and get going. 

In total, you’ll pay $14 for the domain, $29.99/month for the store, and $9.99/month for the Loox app.

Some important steps to remember:

  • Choose a domain that’s broad and easy to remember
  • Correctly set up your payment settings so you can get paid!
  • Set up Shipping settings
  • Import reviews via Loox
  • Create a logo that matches your store name
  • Create an email that matches your store name
  • Install your Facebook pixel from Facebook Business Manager

Product Research

I like to start by searching Facebook for videos with words like “free shipping” or “shop now.”  I look for product videos that have a few hundred thousand views from within the past month.  I then go to Facebook ads library to spy on the company who is marketing the product.  The ad library allows you to see all the videos and ad copy a page is advertising.  It also will let you follow the links to their website where you can get great ideas for a product description and overall layout.

Once I think I’ve found a product I’ll go over to AliExpress and use the dropshipping center to learn how many units are being sold of these products each day.  I also look for sellers with a rating of 4.7 or higher with over 1000 orders.  I also like to comb through the reviews to see what customers have to say about the product. 

I like products with a profit margin of at least $20.  This gives me room for advertising and makes the whole process worthwhile.

Don’t go crazy trying to find the perfect product to sell, you won’t know if it’ll be a winner until you test it.  Also, don’t get emotionally attached to a product.  Stick to the ads strategy and analytics to decide whether to continue selling it or not.

To ease the process, you can sign up to product research tools.  My favorite is EcomKey.  They give you full access to their product analyzer, website analyzer, winning products, and dropshipping tutorial all for the price of Netflix.  I’ve been a member since December and use them all the time to verify products.

If you choose to use EcomKey it costs $12.99/month.

Ad Creative

This is probably the most important aspect of dropshipping.  Your product video is everything!  If you want to make sales, you must first grab the attention of cold traffic and interest them enough to click on the link to your website.  It is possible to create your own videos by downloading them from AliExpress and YouTube.  But I’ve found it much easier to pay the experts to do it. 

I’ve spent hundreds of dollars using Fiverr to create video ads and the quality was just OK.  Now I’ve found by far the best company to create my ad creatives in Viral Ecom Vidz.  Every video they make has the potential to go viral, and many of them have.  Noah Brewer owns the company, and he’s used their videos to create millions of dollars in sales by dropshipping.  The best part is they don’t knock you over the head with their prices.  If you want just one video, it’s $32 with a discount code.  And you can continue using the discount code by signing up with a new email each time.  On their website it says it takes 1 to 3 business days, but every video I’ve requested I received on the same day.

I 100% recommend using Viral Ecom Vidz for every product you test.  There is no other company that can compete with the quality and the price.  They also offer 1 free revision, no questions asked, within 24 hours of receiving your video.

Each professional product video will cost $32.

Facebook Ad Strategy

Here’s where the fun begins!  It’s important to stick to a strategy that’s proven to be successful.  This strategy saves you time and money, being able to quickly identify a winning product will allow you to become successful even faster!

Here’s how the setup works:

  • Budget of $50 to $75 per product to test
  • Day 1: One Campaign set up for purchase conversions
  • 7 Ad Sets with interests related to your product of audiences between 1 to 20 million
  • $5/day per Ad Set
  • One ad video (costs $32 using Viral Ecom Vidz)
  • Total budget of $35 per day

Choosing whether to scale or shut down:

  • Day 2: after spending $50 do you have a sale?
    • If yes: let run until spent $70
    • If no: shut down & move onto the next product
  • Day 3:  after spending $70 total do you have another sale?
    • If yes: delete the ad sets with no sales, duplicate ad set with sales, create one new ad set with a new interest
    • If no: shut down & move onto the next product
  • Day 4: keep testing
    • Eliminate ad sets with no sales after spending at least $15
    • Duplicate ad sets with multiple purchases
    • Create one new ad set with a new interest each day

Continue this strategy until you have 30 to 40 sales.  Then create a CBO campaign with your ad sets that have multiple purchases.  I’ll have an entire blog post on scaling coming soon!

Total Dropshipping Budget in 2020 When Testing Multiple Products:

  • Shopify store: $29/month
  • Domain: $14
  • Apps: $9.99/month
  • Ad Creative: $32
  • Facebook Ads: $50/product

To get started, it will cost about $135 to get started dropshipping and testing your first product.  Each additional product you test you’ll need to spend $82; $32 on the video and $50 on marketing.  Remember you don’t need to buy a video, you can create one on your own if your confident in your ability.  I’m just not tech savvy and I believe Viral Ecom Vidz is the best at what they do so I leave it to them.

Do you have $135 to start testing? 

A realistic dropshipping budget in 2020 is $135. If you have just $135 dollars you can start to build your ecommerce business from scratch. But remember, it’s unlikely that the first product you test will be a winner. If it is then run to the closest gas station and buy a few lottery tickets!

I had to test a few dozen products until I found a winner that consistently sells $1,000 each day. I’ve heard a few stories of people finding winning products within the first five they’ve tested. It all depends! It’s hard to know which products will work and which products won’t. That’s why having a dropshipping budget that allows you to test multiple products is most ideal when starting out. In my opinion, you should have a budget of at least $1,000 to get started.

P.S.  Shopify has a 14 day free trial so you can test your first few products without spending $40 for Shopify and the apps.  If you want to slow down after testing a few products, Shopify makes it easy to cancel your subscription and start a new free trial under a new domain name and email address.

Want to learn more about this Facebook ad strategy?  Checkout Noah Brewer’s video where he takes a deep dive into this strategy:

Checkout his other videos to learn a realistic dropshipping budget in 2020 when testing products until you find a winner.

Also, checkout my latest blog posts below: