drop shipping Jul 02, 2019
In the drop shipping world, many people make the mistake of focusing on viral, trendy products. They believe they will sell like hotcakes, and feel it’s an easier route than high-ticket dropshipping.
This may be true, but unfortunately, these trendy products will only sell for about the same price as a hotcake. A great line of Marvel t-shirts may sell for around $20 each, netting you a profit of just $5 or $6 at best.
By comparison, high-ticket items can earn you much larger profits. For example, an office chair that retails at $997 could bag you a net profit of about $300.
Furthermore, these high-ticket products can be targeted to business owners and homeowners, and they sell all year round.
So, why do a lot of people still opt for the traditional route of low-priced goods on AliExpress? Is high-ticket drop shipping too good to be true?
In this article, we’ll find out as we explore the differences between AliExpress and high-ticket drop shipping, and show you just where you should be investing your time and effort in the modern-day e-commerce game.
Approximately 23% of sales in 2017 were fulfilled through dropshipping, amounting to roughly $85.1 billion.
There’s no doubt dropshipping is becoming increasingly popular. But before getting any further, let’s get to grips with the basics – what is dropshipping?
Unlike normal retail or e-commerce stores with original products, there's no inventory in dropshipping. Basically, it works as follows:
And that’s it!
Now that you’ve got the fundamentals down let’s discover more about the most popular form of dropshipping – AliExpress.
For many years, AliExpress has been the go-to for newcomers to dropshipping.
It’s very popular and undoubtedly has some great benefits, especially for people who are new to the game. For example, AliExpress involves:
It’s easy to start dropshipping with AliExpress. You can follow the four steps below to launch your own store very quickly:
Look for products you believe will sell well. It’s best to go niche, but some people find success by offering a broader range of products to start, before refining their stock to focus on top-performing products.
Design your store and load it up with stock, which can be focused on your niche products, or it may be a generalist store.
This allows you to transfer products across from AliExpress to your Shopify store. In Oberlo, you can edit aspects like product descriptions, images, and pricing. More importantly, this third-party platform is what enables you to process customer orders. As it can be automated, it takes a vast amount of the work out of your hands.
Typically, these are cheap products from China, so you will need to run great ads to target people that don’t know you, and ideally persuade them to be interested in these products
As for 2018, Instagram has begun to generate over 1 billion users. On top of that, this platform is good for developing your brand image while Facebook Ads offer a powerful means of targeting specific audiences that may be interested in your products.
Sounds pretty easy, right?
Well, it is – which is why it’s no surprise that AliExpress has become so popular in recent years. ...Unfortunately, that’s not a good thing.
Here are a few problems with AliExpress dropshipping.
As it’s easy to get started, and you don’t need much money upfront, basically anyone can compete with you.
There’s no contract with your supplier, so anyone can come in, set up their own store selling the same products, and start competing directly with your new store.
In fact, even your customer could go direct to AliExpress, find the same product, and buy it for cheaper than you sell it!
Anyone can sell it for cheaper – and they usually will.
In a lot of cases, people will even sell it for free. Yes, free! You may have heard this model called “free plus shipping”, which is super popular right now. The idea is that by giving products away for just the shipping charges, people hope they can upsell customers to buy more products.
For example, imagine you’re selling a cell phone case. You could offer it for free, charge $7.99 for shipping, and that's your profit. Then, on the upsell page, you’ll have an offer like, "Get two cell phone cases. Just pay shipping."
As a result of this, it creates a very competitive space where it’s hard to generate a profit.
Some people make millions of dollars a year through AliExpress drop shipping, but it never lasts.
You see it fizzle out a few months later. These people get frustrated, and then they try to teach it. More often than not, they have a very low success rate, because it's hard to find something that's viral and trendy and that's going to stay current as time goes on.
Eventually, anything viral and trendy fizzles for the next thing.
One of the major factors for this short cycle is that many AliExpress products come from suppliers in China. Deliveries can take several weeks or even months!
Customers get frustrated. They complain. They demand refunds. They get onto their credit card company. Worse still, they complain to Facebook, which leads to a bigger problem…
Most people will use Facebook or Instagram to run ads. Not too long ago, Facebook started wanting to clean up these ads with cheap products on their platform, so they sent out surveys.
If you sell a product through AliExpress, your customers may get a survey from Facebook, asking them about their experience with your store.
Now, imagine you have customers that have waited weeks or months to receive products. Imagine the product arrived in the wrong size or color, or if it was broken somehow. You can expect some bad reviews.
Facebook takes this seriously, and too much negative feedback can spell disastrous consequences.
On top of that, 85% of customers trust online (therefore Facebook) reviews as much as friend or family recommendations.
Facebook has been known to ban advertising accounts, which doesn’t just impact the ad campaign in question – it shuts down the entire Business Ad Manager account so you won’t be able to run ads for your store anymore. A lot of AliExpress drop shippers have gone out of business because of this.
Make no mistake:
If Facebook bans you from running traffic, it could kill your business. That said, you must understand that social proof has the power to make or break your dropshipping business.
Everyone that is learning how to do AliExpress dropshipping is doing the same thing as you. They're looking at Facebook ads, researching the market, spying on their competition.
You can go through a ton of effort to build a successful store, but it’s easy for someone to make a copycat version.
People will pick up on the fact that you're making money, and there's no barrier to entry, so they'll easily be able to replicate your product and your success.
Although you can find quality suppliers from AliExpress, for the most part, suppliers in China are notorious for sending defective products.
Not only are defects common, but sometimes products don’t even get delivered at all. This will frustrate customers, and damage the trust in your brand.
Ultimately, you'll be flooded with requests for refunds and exchanges, which can become overwhelming as you find yourself dealing with lots of support issues through email (and possibly phone calls if you provide your phone number).
If you are building a business online, you’re probably doing it because you want a better lifestyle.
In time, you can outsource many of the tasks, so you can have other people handling order issues and customer support emails and refund requests.
But why bother with all that at all if you aren’t making much money? With AliExpress, you’ll need to sell A LOT of products to make it worthwhile.
So, what's the alternative?
Starting a successful business takes time, effort, and money.
You’re going to invest a lot into learning about dropshipping, building a store, looking for products, reading articles from experts, watching videos, applying tips and tricks into your own business, and even learning how to run ads…
Here’s the thing:
If you’re going to do all that, wouldn’t it be better to invest it all in a business model that's sustainable?
Wouldn’t it be better to create a model that's going to last more than a few months – something that can become a real business asset that you can profit from long-term, and potentially sell down the line?
High-ticket dropshipping is the model you need.
High-ticket dropshipping is similar in many ways, as you can still use Shopify to run your stores. However, instead of relying on AliExpress and cheap Chinese products, you can strike deals with domestic suppliers.
The big difference here is that you aren’t just in it for a quick buck:
High-ticket dropshipping is about building a great brand online.
To do this, you must spend some time researching products and niches. By taking the time to discover quality products, and doing your due diligence with market research and competitor analysis, you can validate your ideas to be sure you are on to a winning product.
This is a sustainable long-term business model that allows you to forge strong working ties with trusted suppliers that are manufacturers of high-quality, premium-priced products.
One of the main reasons high-ticket dropshipping is better is because of something known as MAP, which stands for Minimum Advertised Price.
In most cases, domestic suppliers - quality suppliers - will have you sign a reseller agreement. You are not obligated to buy or pay for anything, but this simple dropshipping agreement is mandatory.
In here, you’ll find a clause that states you must abide by the supplier’s MAP policy. What that means is that neither you nor your competitors are allowed to promote or advertise the supplier’s products for less than their minimum advertised price.
For example, let’s consider an office chair, priced at $997 by the supplier. You can list it for more than $997 on your store, but you are not allowed to list it for lower than that.
The big advantage here is that you have an agreement with a top supplier. It’s less likely that other dropshippers will work that hard to get a similar contract with the same supplier, so this filters out many would-be competitors. Also, the MAP clause protects you from competitors as they can’t simply undercut you with lowball prices.
So, with the MAP clause, the allure of high-ticket dropshipping may already be tempting you. But there’s more than that.
Here are four more advantages to consider.
You may be selling products listed at $500, $1000, or even $5000, but you still don’t need any credit to get started.
While the products may be more expensive, you are still using the traditional dropshipping model. You are a medium between consumers and suppliers, passing orders through to the latter as the former places orders on your online store.
For your hard work marketing the supplier’s products, you can earn big profits on these items. Typically, the supplier’s price will be about 20-40% cheaper. This model can quickly generate a great return on investment (ROI) for your time and effort with just a few sales.
Forget about being low-balled by cheaper competitors. This model weeds out the pretenders and makes it harder for new stores to compete with you. If you focus on growing your brand, you will continue to make sales, and won’t have to worry about being crushed by a competitive market.
Remember that this isn’t just a few quick sales of cheap products. In high-ticket dropshipping, you are building a real business and a real brand. Over time, when you have established your brand and secured reseller agreements with trusted suppliers, your business will be worth a lot more. This makes it a very attractive asset that can fetch a high price if you wish to sell it someday.
So, what’s the catch?
Well, while started a high-ticket dropshipping store is an endeavor that promises a lot of great rewards, success is by no means guaranteed.
If you’re going to walk this path, you must understand a couple of things:
You can’t bluff your way to the top in high-ticket dropshipping. You must be prepared to put the time and effort into researching markets, trends, and products.
Furthermore, you should have a solid demo store set-up and ready before approaching suppliers. You need to be able to prove you have the determination and the knowledge to get them on board,
Trust is integral in ecommerce. Not only must you nurture trust with consumers, but you must also build trust with suppliers.
This all comes down to being personable, and by working hard to build relationships. If you aren’t prepared to go the extra mile to build these relationships, then perhaps AliExpress is the route for you.
Okay. So, you’re ready and willing to put the effort in to start high-ticket dropshipping.
Here’s the bases you need to cover.
Instead of offering a broad range of something like electronics or clothes, narrow your focus to specialize on a smaller, but more engaged audience. Something like high-end handbags or smart home devices.
Want help finding a winning niche? Check out my free webinar.
You can learn a lot from spying on the competition. Make a list of your closest competitors, and then put them under the microscope with a SWOT analysis that identifies their strengths, weakness, opportunities, and threats.
This will help you discover unique selling points for your business, and allow you to position yourself in the market in a way that boosts your chances of success.
Next, you need to get a store up and running before reaching out to suppliers.
Go to Shopify and sign up for the 14-day free trial. It’s possible to create a decent-looking store in that time, which will help you win over suppliers before Shopify even starts charging you.
Once you have your store, it’s time to get approved by premium suppliers.
Don't Google "dropship suppliers".
If you do that, you’ll end up with middlemen and scam artists. These type of people are just waiting for dropshippers to make that mistake.
It’s a little harder to find quality domestic suppliers, but if you dig deep beyond tacky ads and broad lists, you can find great suppliers for any industry.
You can experiment with Google Ads and Facebook Ads to drive more traffic to your site, which increases brand awareness, leads, and most importantly, profits.
Best of all, in high-ticket drop shipping, you don't need a lot of traffic.
With just a few customers a day or even a few per week, you can scale your business to earn several thousand dollars each month.
AliExpress is great in many ways, especially for newcomers who want to get a feel for how dropshipping works. However, the low barriers to entry and the meager earnings make it an unsustainable model that is unlikely to deliver results in the long-term.
When it comes to making money online, you have to make your customers happy. That requires consistent, high-level service, and a trustworthy brand that people can believe in. With cheap AliExpress products that take months to ship from China, you’ll struggle to accomplish this.
Thankfully, high-ticket dropshipping offers budding e-commerce entrepreneurs a better alternative. It operates on the same model, but you can do it without third-party platforms.
Rather than relying on giants like AliExpress, eBay, or Amazon, you can do high-ticket dropshipping by working directly with domestic suppliers.
This is much better, as you are effectively building your own business asset and your own brand.
This opens up a whole new realm of possibilities, which paves the way for a more sustainable, profitable business that keeps both you and your customers happy.
Are you interested in learning how to start a profitable high-ticket drop shipping business from scratch? You don’t need any previous experience in marketing, researching product, or tech skills.
All you need to do is subscribe to my YouTube channel and join over 2,000 successful members of the 7-Figure Skills community.
© 2020 Business Pro LLC, DBA AJJOMAH