Starting a Dropshipping Business in Nigeria: Low Cost, High Potential
Table of Contents
- Introduction
- The Cost of Starting a Drop Shipping Business
- Choosing the Right Platform
- Selecting a Drop Shipping App
- Exploring Payment Gateway Options
- Setting Up a Business in the US
- Marketing your Drop Shipping Business
- Total Cost of Starting a Successful Drop Shipping Business
- Alternative Options: Using WordPress
- Additional Costs: Domain Name and Drop Shipping App
The Cost of Starting a Drop Shipping Business in Nigeria
Starting an online business has become increasingly popular, with drop shipping being one of the most attractive options due to its low startup costs and convenience. However, if you're based in Nigeria and considering launching a successful drop shipping business, it's essential to understand the specific costs involved. In this article, we will explore the various expenses associated with starting a drop shipping business in Nigeria, helping you make an informed decision.
Introduction
In today's digital age, the concept of drop shipping has gained significant popularity as an online business model that requires minimal upfront investment. Drop shipping allows entrepreneurs to sell products without holding any inventory or fulfilling customer orders themselves. Instead, when a customer places an order, the retailer purchases the item from a third-party supplier, who then ships it directly to the customer. This eliminates the need for storage space and streamlines the entire order fulfillment process.
The Cost of Starting a Drop Shipping Business
When it comes to starting a drop shipping business in Nigeria, several factors come into play, each involving specific costs. It's important to consider these expenses to accurately evaluate the investment required for launching and running a successful drop shipping business. In this section, we will break down the costs step by step.
1. Choosing the Right Platform
The first cost you need to consider is the platform you'll use to sell your products. While there are various options available, Shopify is highly recommended for its user-friendly interface, extensive features, and scalability. Shopify offers different pricing plans, with the Basic plan starting at $24 per month, the Shopify plan at $69 per month, and the Advanced plan at $299 per month. However, by using a special link provided in this article, you can try Shopify for free for three days and then pay only $1 per month for the next three months. This significantly reduces your initial investment and allows you to test the platform before committing to a higher plan.
2. Selecting a Drop Shipping App
To import and manage products from suppliers like AliExpress, you'll need a drop shipping app. While several options are available, we recommend using the free version of the "Disa Drop Shipping" app, specifically designed for beginners. This app allows you to seamlessly import products from AliExpress to your Shopify store and fulfill customer orders efficiently.
3. Exploring Payment Gateway Options
One of the most crucial considerations for starting a drop shipping business in Nigeria is choosing a payment gateway. As PayPal and Stripe are not currently available in Nigeria, an alternative approach is necessary. Our suggestion is to register your business in the United States, which grants you access to Stripe, a reputable payment gateway. By obtaining an Employer Identification Number (EIN) for your US-registered business, you can create a Stripe account and link it to your Shopify store. This allows you to receive payments from customers and transfer funds to your local bank account in Nigeria.
4. Setting Up a Business in the US
To register a business in the US and obtain an EIN, you'll need to follow specific steps and incur associated costs. The business formation process typically costs $40, obtaining an EIN costs $49, and an LLC operating agreement costs $89. However, it's worth noting that setting up a business in the US primarily serves the purpose of accessing Stripe as a payment gateway. If you already have a Stripe account or an alternative payment solution, you can skip this step.
5. Marketing your Drop Shipping Business
Once your drop shipping store is ready, it's crucial to allocate a budget for marketing to drive traffic and increase sales. Facebook and TikTok are two highly effective platforms for promoting your products to a targeted audience. We recommend setting aside a budget of at least $500 for marketing campaigns. While you may not necessarily spend the entire amount, having a dedicated marketing budget ensures that you have funds available to run successful advertising campaigns.
6. Total Cost of Starting a Successful Drop Shipping Business
Considering the aforementioned costs, the total investment for starting a drop shipping business in Nigeria amounts to approximately $681. When converted to Nigerian Naira using an exchange rate of 1 USD to 750 NGN, the total is roughly 510,750 NGN. It's important to note that this figure does not include the cost of a domain name, which typically ranges around $15. Including the domain name, the total investment will rise.
7. Alternative Options: Using WordPress
While Shopify is the recommended platform for drop shipping, another viable option is WordPress. With WordPress, you'll need to purchase a domain name, which costs approximately $15. Additionally, you'll incur hosting expenses, typically ranging around $100 per year, depending on the hosting provider you choose. Although WordPress offers flexibility and customization options, it may require more technical know-how compared to Shopify.
8. Additional Costs: Domain Name and Drop Shipping App
To calculate the precise cost of starting your drop shipping business, you need to factor in the cost of a domain name and a drop shipping app. With Shopify, the approximate total cost would be around $696, while WordPress would have a total cost of around $815. These additional expenses contribute to a fully functional drop shipping store.
In conclusion, starting a drop shipping business requires a modest initial investment, taking into account factors such as platform fees, payment gateways, marketing budgets, and optional elements like domain names and specific apps. By thoroughly considering these costs and making informed decisions, you can set the stage for a successful drop shipping venture in Nigeria.
