Do you want to start drop shipping business?

Are you thinking about starting a drop shipping business? The biggest benefit of starting this business is that you don’t need to keep products in stock. You can easily partner with wholesale suppliers who will stock their own inventory and ship the goods directly to customers. All you have to do is transfer the customer orders as well as the shipment details to the suppliers.
You can even start this drop shipping business plan part-time and it will still be profitable provided that you invest one of out of the following two things: time or money. In any case, you will have to prepare a comprehensive dropshipping business plan that will serve as the foundation of your startup. If you are wondering how to write one then here we are providing you the business plan for a drop shipping business startup named ‘Zee Online’.

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Executive Summary

2.1 The Business

Zee Online will be a drop ship business plan which will be solely owned by Jennifer Kates, a business graduate and an entrepreneur. The company’s office will be located in Texas city while the company will provide its services across the United States.

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2.2 Management

The main management of the company will comprise of sales executives, managing assistants and customer representatives. The management is dedicated to make the dream drop shipping business model a reality by providing excellent service and adding value to the customers.

2.3 Customers

Our customers will be the men, women and the businesses located across the United States.

2.4 Business Target

The company’s three-year targets are outlined as follows:

Drop Shipping Business Plan - 3 Years Profit Forecast
Franchise Business Planning 
Helps the franchisee get business case approval from the franchisor

Company Summary

3.1 Company Owner

Zee Online will be owned by Jennifer Kates, a business graduate from the University of Illinois.

3.2 Why the Business is being started

The dropshipping business plan is being started with the aim of making profits in the online retail industry while also adding value to the customers through excellent drop shopping services.

3.3 How the Business will be started

The business will be located in a small office located in Texas but will operate across the United States. In addition to the usual inventory, the company will procure drop ship business plan internet connection along with computers, servers, peripherals and other office furniture. The startup summary is as follows:

Drop Shipping Business Plan - Startup cost

The detailed start-up requirements are given below:

Start-up Expenses 
Research and Development$42,750
Expensed Equipment$42,750
Start-up Assets$0
Cash Required$322,500
Start-up Inventory$52,625
Other Current Assets$222,500
Long-term Assets$125,000
Total Requirements$245,000
Start-up Expenses to Fund$121,875
Start-up Assets to Fund$195,000
Non-cash Assets from Start-up$118,750
Cash Requirements from Start-up$0
Additional Cash Raised$118,750
Cash Balance on Starting Date$121,875
Liabilities and Capital$0
Current Borrowing$0
Long-term Liabilities$0
Accounts Payable (Outstanding Bills)$0
Other Current Liabilities (interest-free)$0
Planned Investment$0
Investor 1$312,500
Investor 2$0
Additional Investment Requirement$0
Loss at Start-up (Start-up Expenses)$313,125
Total Funding$265,000
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    Services for customers

    You must decide what products will you provide to your customers before thinking about how to set up drop shipping business because the planning of other subsequent components (such as finding relevant suppliers) depends on your products. Zee Online will provide following products to its customers:

    • Phones, Computers & Accessories: This category includes smartphones, laptops, tablets and other related accessories such as chargers, earphones, data devices etc.
    • Men’s Fashion: This category includes men clothing, shoes, wrist watches and other wearables.
    • Women’s Fashion: This category includes women clothing, shoes, handbags, cosmetics, artificial jewelry and other wearables.
    • Home & Living: This category includes household items.
    • Baby, Toys & Kids: This category includes all kinds of baby products and toys.

    Marketing Analysis of dropshipping business


    The most important component of an effective is its accurate marketing analysis. If you are starting this venture on small scale, you can take help from this drop shipping business plan template and carry out a marketing analysis yourself. Marketing analysis is extremely important because it gives you an idea of your position in the market therefore, it must be considered before you think about how to start a  dropshipping business plan.

    If you are going to start a dropshipping business plan on a larger scale, it is better to seek the help of marketing experts since they will help you organize all your dropshipping business ideas and will according create a marketing strategic plans for you.

    5.1 Market Trends

    Drop shipping or ecommerce industry business is one of the largest industries in the United States as well as in the rest of the world. In United States, the Ecommerce sales were estimated to be $353.7 billion for 2017. The industry is growing at the forecasted rate of 17% and is estimated to become a $485.3 billion industry by 2021. As of 2016, there are 211 million digital shoppers in the United States and this figure will increase to 224 million by 2019. To be more specific, eight out of ten Americans are now online shoppers. Considering these statistics, one can imagine how big this industry is. In dropshipping business plan can be profitable provided that it has some competitive aspect so as to survive the environment shared by Ecommerce giants such as Amazon and Alibaba.

    5.2 Marketing Segmentation

    We will target all people living in the United States. Our experts have identified the following type of target audience which can become our future consumers:

    Drop Shipping Business Plan - Market Segmentation

    UK Start-Up Visa Business Plan

    The detailed marketing segmentation of our target audience is as follows:

    5.2.1 Women:

    The biggest consumer of our services will be the women in the United States. It has been established by various surveys and studies that women are more likely to make online purchases than men. That’s why, American women will be the biggest contributor to our revenue. Except for the Men’s Fashion category offered by us, women will buy more products as compared to men in the remaining four categories.

    5.2.2 Men:

    The second biggest consumer of our products will be men. Although their contribution to our revenue will be less than women but still it will be of significant value.

    5.2.3 Businesses:

    We also hope to target the corporate sector for buying the products from our first category, computers and accessories.
    The detailed market analysis of our potential customers is given in the following table:

    Market Analysis       
    Potential CustomersGrowthYEAR 1YEAR 2YEAR 3YEAR 4YEAR 5CAGR

    5.3 Business Target

    • To achieve the net profit margin of $10k/month by first year, $15k by second year, and $25k by third year
    • To add 3 more categories of electronic appliances, sports products and furniture by the end of the first year

    5.4 Product Pricing

    Considering the competition in Ecommerce industry, we have priced all our products in the similar ranges as of our competitors. However, the delivery changes are kept slightly less as compared to our competitors.


    Like marketing analysis, sales strategy is also an important component of a drop shipping business plan so it must be planned before you think about how to start dropshipping business plan.

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    6.1 Competitive Analysis

    The biggest problem you will face while starting this venture is the intense competitive environment created by giants like Amazon, eBay, Alibaba etc. In addition to that there are tons of other drop ship business plans with ranging magnitudes. That’s why, if you are thinking how to start a successful drop shipping business, the only answer is find a competitive advantage. Carry out an in-depth analysis of what your competitors are missing and how can you add vale to your customers.
    Zee Online will achieve its competitive advantage by providing fastest shipping, minimal shipping charges and excellent customer service. As per the price of products, they are in same ranges as of our competitors since cutting them will impact the profitability of the dropshipping business plan.

    6.2 Sales Strategy

    • We will carry out a large scale paid social media advertisement campaign.
    • We will use digital marketing strategies, SEO and SEM practices for promoting our website and achieving higher search results in Google rankings.
    • We will offer various discounts on women’s fashion products during the first month of launch.

    6.3 Sales Monthly

    Drop Shipping Business Plan - Sales Monthly

    6.4 Sales Yearly

    Drop Shipping Business Plan - Sales Yearly

    6.5 Sales Forecast

    Drop Shipping Business Plan - Unit Sales
    Sales Forecast   
    Unit SalesYear 1Year 2Year 3
    Phones, Computers & Accessories187,330260,320258,240
    Men’s Fashion802,370815,430823,540
    Women’s Fashion539,3207702301,002,310
    Home & Living265,450322,390393,320
    Baby, Toys & Kids1,435,3201,250,4301,762,450
    TOTAL UNIT SALES3,229,7903,418,8004,239,860
    Unit PricesYear 1Year 2Year 3
    Phones, Computers & Accessories$140.00$150.00$160.00
    Men’s Fashion$600.00$800.00$1,000.00
    Women’s Fashion$700.00$800.00$900.00
    Home & Living$650.00$750.00$850.00
    Baby, Toys & Kids$140.00$120.00$100.00
    Web hosting services$214,800$274,000$333,200
    Phones, Computers & Accessories$120,050$194,500$268,500
    Men’s Fashion$50,110$71,600$93,000
    Women’s Fashion$139,350$194,600$249,850
    Home & Living$62,350$72,300$82,250
    Baby, Toys & Kids   
    Direct Unit CostsYear 1Year 2Year 3
    Phones, Computers & Accessories$0.70$0.80$0.90
    Men’s Fashion$0.40$0.45$0.50
    Women’s Fashion$0.30$0.35$0.40
    Home & Living$3.00$3.50$4.00
    Baby, Toys & Kids$0.70$0.75$0.80
    Direct Cost of Sales   
    Phones, Computers & Accessories$98,300$183,000$267,700
    Men’s Fashion$66,600$119,900$173,200
    Women’s Fashion$17,900$35,000$52,100
    Home & Living$19,400$67,600$115,800
    Baby, Toys & Kids$27,700$69,200$110,700
    Subtotal Direct Cost of Sales$294,100$699,400$1,104,700

    Personnel plan

    You must also decide what staff will you need to run your company before you start your own drop shipping business because it will help you in estimating the accurate financial expenses.

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    7.1 Company Staff

    Jennifer will act as the General Manager of the company and will initially hire following people:

    • 1 Accountant to maintain financial and other records
    • 2 Sales Executives responsible to market and discover new ventures
    • 3 Call Center Agents to receive complaints of customers and answering queries
    • 2 Managing Assistants to manage the company’s official website and social media pages
    • 6 Customer Representatives to record and place the orders with suppliers

    7.2 Average Salary of Employees

     Personnel Plan   
     Year 1Year 2Year 3
    Sales Executives$85,000$92,000$109,000
    Call Agents$35,000$42,000$59,000
    Managing Assistants$60,000$63,300$70,000
    Customer Representatives$63,300$70,000$76,700
    Total Salaries$243,300$267,300$314,700

    Financial Plan

    The success of a business heavily depends on its accurate financial analysis so make sure to pay special attention to your financial plan before you start drop shipping business. The financial plan of Zee Online is as follows.

    8.1 Important Assumptions

     General Assumptions   
     Year 1Year 2Year 3
    Plan Month123
    Current Interest Rate10.00%11.00%12.00%
    Long-term Interest Rate10.00%10.00%10.00%
    Tax Rate26.42%27.76%28.12%

    8.2 Brake-even Analysis

    Drop Shipping Business Plan - Brake-even Analysis
     Brake-Even Analysis 
    Monthly Units Break-even5530
    Monthly Revenue Break-even$159,740
    Average Per-Unit Revenue$260.87
    Average Per-Unit Variable Cost$0.89
    Estimated Monthly Fixed Cost$196,410

    8.3 Projected Profit and Loss

     Pro Forma Profit And Loss   
     Year 1Year 2Year 3
    Direct Cost of Sales$15,100$19,153$23,206
    TOTAL COST OF SALES$15,100 $19,153 $23,206
    Gross Margin$293,969$366,781$439,593
    Gross Margin %94.98%94.72%94.46%
    Sales and Marketing and Other Expenses$1,850$2,000$2,150
    Leased Equipment$0$0$0
    Payroll Taxes$34,510$40,726$46,942
    Total Operating Expenses$188,766$220,744$252,722
    Profit Before Interest and Taxes$105,205$146,040$186,875
    Interest Expense$0$0$0
    Taxes Incurred$26,838$37,315$47,792
    Net Profit$78,367$108,725$139,083
    Net Profit/Sales30.00%39.32%48.64%

    8.3.1 Profit Monthly

    Drop Shipping Business Plan - PROFIT MONTHLY
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    8.3.2 Profit Yearly

    Drop Shipping Business Plan - PROFIT YEARLY

    8.3.3 Gross Margin Monthly

    Drop Shipping Business Plan - GROSS MARGIN MONTHLY

    8.3.4 Gross Margin Yearly

    Drop Shipping Business Plan - GROSS MARGIN YEARLY

    8.4 Projected Cash Flow

    Drop Shipping Business Plan - Projected Cash Flow Diagram
     Pro Forma Cash Flow   
    Cash ReceivedYear 1Year 2Year 3
    Cash from Operations   
    Cash Sales$40,124$45,046$50,068
    Cash from Receivables$7,023$8,610$9,297
    SUBTOTAL CASH FROM OPERATIONS$47,143 $53,651 $59,359
    Additional Cash Received   
    Sales Tax, VAT, HST/GST Received$0$0$0
    New Current Borrowing$0$0$0
    New Other Liabilities (interest-free)$0$0$0
    New Long-term Liabilities$0$0$0
    Sales of Other Current Assets$0$0$0
    Sales of Long-term Assets$0$0$0
    New Investment Received$0$0$0
    SUBTOTAL CASH RECEIVED$47,143 $53,651 $55,359
    ExpendituresYear 1Year 2Year 3
    Expenditures from Operations   
    Cash Spending$21,647$24,204$26,951
    Bill Payments$13,539$15,385$170,631
    SUBTOTAL SPENT ON OPERATIONS$35,296 $39,549 $43,582
    Additional Cash Spent   
    Sales Tax, VAT, HST/GST Paid Out$0$0$0
    Principal Repayment of Current Borrowing$0$0$0
    Other Liabilities Principal Repayment$0$0$0
    Long-term Liabilities Principal Repayment$0$0$0
    Purchase Other Current Assets$0$0$0
    Purchase Long-term Assets$0$0$0
    SUBTOTAL CASH SPENT$35,296 $35,489 $43,882
    Net Cash Flow$11,551$13,167$15,683
    Cash Balance$21,823$22,381$28,239

    8.5 Projected Balance Sheet

     Pro Forma Balance Sheet   
    AssetsYear 1Year 2Year 3
    Current Assets   
    Accounts Receivable$12,613$14,493$16,373
    Other Current Assets$1,000$1,000$1,000
    TOTAL CURRENT ASSETS$201,259 $237,468 $273,677
    Long-term Assets   
    Long-term Assets$10,000$10,000$10,000
    Accumulated Depreciation$12,420$14,490$16,560
    TOTAL LONG-TERM ASSETS$980 $610 $240
    TOTAL ASSETS$198,839 $232,978 $267,117
    Liabilities and CapitalYear 1Year 2Year 3
    Current Liabilities   
    Accounts Payable$9,482$10,792$12,102
    Current Borrowing$0$0$0
    Other Current Liabilities$0$0$0
    SUBTOTAL CURRENT LIABILITIES$9,482 $10,792 $12,102
    Long-term Liabilities$0$0$0
    TOTAL LIABILITIES$9,482 $10,792 $12,102
    Paid-in Capital$30,000$30,000$30,000
    Retained Earnings$48,651$72,636$96,621
    TOTAL CAPITAL$189,360 $222,190 $255,020
    TOTAL LIABILITIES AND CAPITAL$198,839 $232,978 $267,117
    Net Worth$182,060$226,240$270,420

    8.6 Business Ratios

     Ratio Analysis    
     Year 1Year 2Year 3Industry Profile
    Sales Growth4.35%30.82%63.29%4.00%
    Percent of Total Assets    
    Accounts Receivable5.61%4.71%3.81%9.70%
    Other Current Assets1.75%2.02%2.29%27.40%
    Total Current Assets138.53%150.99%163.45%54.60%
    Long-term Assets-9.47%-21.01%-32.55%58.40%
    TOTAL ASSETS100.00%100.00%100.00%100.00%
    Current Liabilities4.68%3.04%2.76%27.30%
    Long-term Liabilities0.00%0.00%0.00%25.80%
    Total Liabilities4.68%3.04%2.76%54.10%
    NET WORTH99.32%101.04%102.76%44.90%
    Percent of Sales    
    Gross Margin94.18%93.85%93.52%0.00%
    Selling, General & Administrative Expenses74.29%71.83%69.37%65.20%
    Advertising Expenses2.06%1.11%0.28%1.40%
    Profit Before Interest and Taxes26.47%29.30%32.13%2.86%
    Main Ratios    
    Total Debt to Total Assets2.68%1.04%0.76%67.10%
    Pre-tax Return on Net Worth66.83%71.26%75.69%4.40%
    Pre-tax Return on Assets64.88%69.75%74.62%9.00%
    Additional RatiosYear 1Year 2Year 3 
    Net Profit Margin19.20%21.16%23.12%N.A.
    Return on Equity47.79%50.53%53.27%N.A.
    Activity Ratios    
    Accounts Receivable Turnover4.564.564.56N.A.
    Collection Days9299106N.A.
    Inventory Turnover19.722.5525.4N.A.
    Accounts Payable Turnover14.1714.6715.17N.A.
    Payment Days272727N.A.
    Total Asset Turnover1.841.551.26N.A.
    Debt Ratios    
    Debt to Net Worth0-0.02-0.04N.A.
    Current Liab. to Liab.111N.A.
    Liquidity Ratios    
    Net Working Capital$120,943$140,664$160,385N.A.
    Interest Coverage000N.A.
    Additional Ratios    
    Assets to Sales0.450.480.51N.A.
    Current Debt/Total Assets4%3%2%N.A.
    Acid Test23.6627.0130.36N.A.
    Sales/Net Worth1.681.290.9N.A.
    Dividend Payout000N.A.

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