In this blog I will talk to you about the recommended startup cost or investment it takes to start and build a profitable eCommerce business.
if you’re someone who’s considering starting a simple and work from home eCommerce business, understanding the capital requirements is of high importance.
It’s very common for people to start with the wrong investment amounts and I don’t want you to do that.
Most people either start with a capital that’s just not enough to sustain the business or they just don’t set a capital amount aside for their businesses and keep spending until they can.
These are very risky ways to begin with.
A goal without a plan is just a wish
Antoine Exupery
There are different ways you can start an eCommerce business with:
a. Starting a no-stock business (called drop-shipping)
b. Starting a stock-based business (a full fledged brand)
Now see, I recommend you to start an eCommerce business with minimal risk.
The biggest risk for eCommerce business owners is the stock they have to hold.
Because of which, I don’t recommend you to start with stock or inventory.
It’s better to start with drop-shipping. An eCommerce business model where you don’t stock any products yourself. Rather, you work with suppliers who already have the products you want to sell and offer drop-shipping services where they ship orders for you directly to your customers regardless of the order quantity (be it a single piece or a 100 pieces)
This way you can focus on marketing the business, getting customers and getting profitable without worrying about stock, inventory or delivery.
Now, to get customers for your drop-shipping business I recommend you to start with Facebook Ads. Here’s an example of how ads for a drop-shipping business look like:
Why? Because they’d help you get results fast. You can reach your customers in your desired location within hours.
Let me break down the expenses for you:
- Domain Name: ₹1000
- Logo: ₹1000
- Building your eCommerce store through Shopify: ₹20/mon for 3 months followed by ₹2400/mon
- Ordering Product Samples or getting designs made: ₹10000 (every 2-3 months)
- FB/IG Ads: ₹1 Lakh – ₹2 Lakhs
- Total: ₹1.25 Lacs – ₹2 Lacs
So the main expense here is going to be in marketing your eCommerce business.
Imagine creating your website (using Shopify), adding relevant products to it (from a drop-shipping supplier) and then using FB/IG ads to send customers to your product pages.
We’ve seen that people are usually able to get profitable within 6 months of starting their drop-shipping businesses when they start with an average capital of ₹1.5L to ₹2L (provided that they consistently do the work for 6 months)
Now, FB Ads are definitely recommended.
We use FB Ads for our own eCommerce businesses and also teach our students to run the same.
The same students who’ve done a combined revenue of over ₹50Crores for their own drop-shipping businesses that they started from scratch using FB Ads.
So the model definitely works.
Now, if in case you don’t have that kind of startup capital here’s the solution for you:
Skip FB Ads and focus on sending customers to your website using content marketing. One great way to do this is by utilizing Instagram.
I’m sure you’ve seen a ton of content on Instagram from different eCommerce brands.
It’s definitely possible to start a brand without advertising. The only down side is that it takes time for people to notice your brand and start ordering from you. It’s a slow process.
And because the process is slow, most brand owners give up on marketing using content creation on Instagram.
The way you do this is by creating relevant content to promote your products and doing free collaborations with micro influencers who have existing audiences by sending them free products in exchange for shoutouts and mentions.
Here are a few free collaborations we did when we started our brand’s Instagram content marketing journey:
If you skip ads and follow Instagram content creation your estimated capital requirements will change to:
- Domain Name: ₹1000
- Logo: ₹1000
- Building your eCommerce store through Shopify: ₹20/mon for 3 months followed by ₹2400/mon
- Ordering Product Samples or getting designs made: ₹10,000
- Sending Your Products to micro influencers: ₹10,000 (every 2 months)
- Total: ₹40,000 – ₹50,000
I think that if someone starts with a ₹50k startup capital and focuses on Instagram content marketing really well, they definitely can reach profitability within 6 months. Consistency is key here, because seeing results takes time.
Personally, we run ads for all our eCommerce businesses.
And recommend every student we work with to do the same. Because ads are fast and targeted.
But, that doesn’t mean that one can’t start an eCommerce business with a lower capital. Ways always exist to minimise the startup capital, like the one I shared with you above.
So with ads: ₹1.25 Lacs – ₹2 Lacs
Without ads: ₹40,000 – ₹50,000
This blog post is inspired from a recent email I sent to my newsletter subscribers. Join my newsletter to receive weekly emails from me about building eCommerce, drop-shipping and print on demand businesses: Join here
