You may be happy with the financial resources you have, but deep down inside you know you always want more. More money, more freedom, and more flexibility. If you are finally ready to take action, owning a dollar store to earn passive income is a great way to go. A dollar store may feel like a small opportunity but it can earn you a wide range of profits if done right.
Passive income is a great supplementary source of income for many people, but most importantly it can prove to be an especially valuable lifeline during a recession or uncertain pandemic times. These kinds of resources can keep money flowing when you face any financial hardship or lose any other source of income. That’s why building wealth through passive income resources like owning a dollar store is a strategy that might appeal to you.
A dollar store is a retail store that limits the prices of every item included in its stock. From household goods to party supplies, the dollar store can sell anything. While the name suggests that nothing can be sold for over a dollar, some stores implement exceptions for some products while keeping the vast majority of stock at less than a dollar. People like to save money on everyday items that include soap, laundry detergent, toothpaste, and many other daily used items. The dollar store offers just that.
What are the costs involved while opening a dollar store?
If you want to open a physical local dollar store, that will cost you your savings, or you’ll have to apply for a bank loan. You’ll likely need up-to $150,000 or more, starting from nothing or purchasing a franchise. It depends on location, inventory, and advertising budget. You’ll also have to pay sales taxes on intrastate customers, therefore, you’ll need to obtain a vendor’s license for your dollar store.
It’s a lot. Right? Especially if you don’t have these kinds of resources. Well, don’t lose your hope yet. There’s another way. An online dollar store. You read it right. An online dollar store only cost about $1000 to $1500 per month to set up and start the operations.
Who is the target market?
You may think dollar stores cater to those at the lower end of the income spectrum, actually, they are for all earning brackets. Broke college students, busy moms, shoppers who literally can’t afford to shop anywhere else – all-in-all, anyone who appreciates a good deal.
What about inventory?
You need to be careful with the inventory at the start. Don’t spend more than 40 percent of your startup budget on inventory for your dollar store. To save more, you’ll have to compare vendors to get the best possible prices and it’s always best to start with fewer items if you have a low budget. Also, make deals with stores to purchase in-demand merchandise, usually, stores have left-over inventory or from those stores which are closing. Another way to go about is to collaborate with another business owner to purchase items in bulk and then split the shipment. This way you can save money on your initial order. You can also approach surplus and salvage distributors for cheap dollar items as well.
How does a dollar store make money?
Dollars stores usually get their stocks in bulk at wholesale prices, or at discounted prices, or during any special sale that allows them to charge a mark-up on every item they sell. By buying items in bulk volume at discounted prices, owners can afford to sell them for a dollar, and still generate a profit. Additionally, when products are sold individually, they also generate profits against their discounted wholesale bulk volume prices.
Can you charge more than $1?
Although the majority of items are available at $1 or less price, you as a dollar store owner can make exceptions for higher ticket items. You should be careful with more than a dollar pricing though, be sure to do so sparingly. Consumers don’t appreciate having to hunt for prices when they’re in a dollar store. The concept of a dollar store is facilitating your clientele to find the least expensive place to shop when compared to other types of stores. Some make mistakes by selling off-brand items at odd sizes as a way to make it look as though customers are getting a better deal than they are. You can too, it’s totally up to you to make this odd decision.
On other hand, it’s important for a dollar store to keep the majority of its stock at the $1 price mark. With some products, it may not be possible but what you can do is to shrink the size of the container of toothpaste, shaving cream, or other items the quantity of what you’re selling. Remember, as inflation goes up, expect items to get even smaller.
Selling items at a low price that people can’t find somewhere else is what attracts consumers towards dollar stores. If you already run an online store, you can always integrate a dollar store strategy into your existing online store because low-price goods attract customers and the chances of them picking up other items at expensive prices become very high.
All-in-all a dollar store can be a great way to earn passive income, just do some initial research and follow the above-described ways to be successful at it.