Starting an online boutique is a good idea if you want to be financially independent. But how much does it cost to open a clothing store? It all depends on what business model you choose.
The size of the global apparel and footwear market in 2019 was estimated at $1.9 trillion. So, it’s no wonder many people consider opening an online boutique and capitalizing on this growing market.
But it would be a huge mistake to immediately quit your job and plunge into making a website. Starting your business will require investments.
In this article, we are going to estimate how much it’ll cost you to start an online clothing store. The sums will differ depending on what business model you choose, so keep that in mind when you make your business plan.
How much does it cost to start an online boutique in dropshipping?
First of all, let’s find out what dropshipping is. In dropshipping, when a customer orders a product from you (an ecommerce store owner), you place the same order with your supplier. After that the supplier ships the product directly to the customer.
This simple scheme has a number of advantages compared to the traditional retail model.
- The most important advantage of the dropshipping model is the fact that the entrepreneur doesn’t have to buy goods in advance. Yes, you still need to purchase them when you get an order from a customer. But even in this case, you actually pay with the money you got from the customer.
- This fact leads us to another advantage of this type of business. Scaling your business is much easier: all you have to do is to add new products to your inventory. As long as there’s a supplier who has these goods in stock and is ready to ship them as soon as you pay, it’s absolutely safe to do this.
- Dropshipping is much safer than other business models. Even if customers don’t buy a new product you have added to the inventory, all you lose is the money you have spent on advertising. The same situation in traditional business would leave you with a number of unwanted goods.
- And finally, in dropshipping, it is wholesale suppliers who take care of packing and shipping.
Domain and hosting
If you decided to start a dropshipping store that sells apparel, the very first things you are going to need are a domain name and hosting for your future website.
There are plenty of sites where you can rent a domain name – for example, Go Daddy. While some domains can cost several thousand dollars, in most cases, one can find decent options for as much as $10-15.
As for hosting for your dropshipping store, the cheapest options will cost you about $50-60 per year. If you choose to create a dropshipping store using AliDropship solutions, I recommend also using our hosting service. The cheapest plan will cost you $48 a year.
Building an ecommerce website
Today one can create a website on the WordPress content management system. It’s absolutely free, which is why 35% of all sites are built on this CMS.
At this point, you are also going to need a dropshipping tool that can automate most part of your work. If you consider dropshipping goods from AliExpress, which has a great number of apparel products for affordable prices, then I recommend buying and installing the AliDropship plugin.
This tool was designed particularly for AliExpress dropshipping. It costs only $89, and it’s a one-time payment. Besides, the plugin also works as a website builder and comes with a number of free themes. It’ll help you customize your website in any way you want.
If you’re not good with IT, consider ordering a Custom Dropshipping Store. The AliDropship team will create a unique dropshipping website according to your specifications. The price starts at $299.
You will also need to install payment gateways so that the site could process payments from credit cards and e-wallets. Stripe and PayPal (the most popular gateways) charge 2.9%+$0.30 per each transaction. Some gateways also charge monthly fees, but in most cases, you can install them for free.
These are the basic costs of starting an online boutique if you choose the dropshipping model. However, it’s not enough to make your online business work.
In dropshipping, one can pay for goods with the money paid by customers who placed orders. So, you don’t need additional sums for this. On the other hand, some dropshipping entrepreneurs prefer having two bank accounts – one for collecting revenue and another one for ordering goods.
Many dropshipping suppliers charge small fees when you place orders with them. But when you resell goods from AliExpress, you pay the same price as every other AliExpress buyer. Moreover, sometimes it is possible to negotiate lower prices if your dropshipping store brings an impressive number of orders for a particular AliExpress seller.
Overall costs of starting an online boutique in dropshipping
- Domain and hosting: $58-63
- Website creation: $89-299
How much does it cost to open a clothing store in a traditional business model?
Creating a website
Just like with the dropshipping model, the first thing you’re going to need is a website. Since we’ve discussed the cost of a domain name and hosting earlier, let’s move on to site creation right away.
If you’re good with IT stuff, you can build a site on your own. If not, you’ll have to pay a professional web designer who will make you a unique online store. Prices here can reach thousands of dollars, but I’d say expect to pay about $100-200 for a simple site on WordPress.
As for payment gates, the expenditures here are the same as in dropshipping.
Packing and shipping costs
In the traditional business model, you buy goods in advance. Therefore, it’s up to you to store, pack and send products to customers. When starting an online boutique, you can probably do this on your own. But if things go well or you want to start a large scale business right away, you can use third-party logistics companies.
Also known as 3PL, these firms are basically fulfillment centers that take care of packing and shipping your goods.
Some 3PL companies require no set-up fees, but some can charge as much as $1,000 for software installation, training, etc. You will also have to pay for all their services:
– Shipping and receiving (expect $25-50 per hour)
– Storage (depends on how much space your goods require)
– Packaging (expect $0.25-2 per package)
Another alternative here is to use Fulfilment by Amazon. In this case, you won’t even have to make your own site as you’re going to use Amazon as a selling platform. However, the problem is Amazon charges very expensive fees for the right to trade on their site.
Amazon FBA alone will cost you about 10-15% of your revenue. You will also have to pay for an Amazon Professional Sellers Account, which is $39 a month.
Cost of inventory
Now you need actual products to sell online. The traditional retail model implies that a retailer buys inventory from a wholesaler in advance and only after that tries to sell the goods to customers.
Therefore, buying inventory will take another share of your initial investments.
Many wholesalers will sell you goods only if you order a minimum amount of units, which can cost as much as $300 and more. And if you want to sell at least several models, you’ll have to spend about $600-1500 on your first product inventory.
On the other hand, Alibaba, for example, doesn’t have this requirement, and you can buy just a few units per each model you want to sell in your store.
Overall costs of starting an online boutique in the traditional business model
- Domain and hosting: about $60
- Website creation: $100-200
- Packaging and shipping: $0-1,000 (+fees)
- Cost of inventory: $600-1,500
The last thing I’d like to mention is marketing. Because of the high competition level on all markets, you can’t expect your small business to start making money on its own. Only advertising can bring you customers. And that also costs money.
There are many ways to draw traffic to your clothing store including search engine optimization, email marketing, social media marketing, advertising on a social media platform and so on. But the AliDropship team recommends promoting on Facebook.
Facebook promotion has proved very effective, but it’s not cheap. Whether you want to build a dropshipping store or a traditional online shop, you absolutely have to invest in advertising to start making money. Our team recommends saving at least $600 for Facebook promotion. In most cases, you will need even more to make your first sale. So, make sure to add this to your list of costs.
If you’re new to the ecommerce business, consider starting an online boutique by using the dropshipping business model. It requires less money to start and carries less risks. At the same time, you’ll be able to get all the skills necessary for the traditional online retail.
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