The dropshipping community is split about this issue—even the experts cannot agree on one thing. Is high-ticket dropshipping worth it? Some say (and make whole courses telling you) that only selling high-ticket items means they only have to sell a handful to make good money. But how accurate is this?
I want to help you make this decision, but I will not show any bias towards it. What I want to do today is to dig deeper and understand the underlying factors of selling high-ticket items.
I will talk about:
- What is a high-ticket product?
- Pros of High-ticket dropshipping
- Cons of High-ticket dropshipping
- How do you dropship a high-ticket item?
- Is high-ticket dropshipping better than selling low-value items?
In the end, I’d like you to take a long hard look at the merits and disadvantages of high-ticket dropshipping for yourself before you decide.
What is a high-ticket product?
There is no hard and fast rule about the definition of a high-ticket product. Some say it has to be at least $1,000, and some say $500.
The safest definition of a high-ticket product is anything that has a value of more than $200. This amount is roughly the equivalent of a day’s salary, and people do not typically spend that kind of money to buy things online.
Here are some examples of high-ticket products:
- Collector’s items
- Designer clothing
- Expensive toys
- Sports vehicles like kayaks and mountain bikes
As you can see, many of these are day-to-day items, and yet these are not the things that we typically buy online unless there is a special reason (like we habe no time!). You can also dropship branded items if you find a supplier who allows it, such as gaming consoles, desktops and laptops, and even smartphones. Just make sure they (and the products) are legit.
A high-ticket product is something that people will think about buying more than twice—the capital investment is enough that people will always take the time to decide whether the price they are paying is worth it, or if they can buy it a bargain somewhere. Or simply if they need the product enough to purchase it. Impulse buying becomes a lot less when dealing with high ticket items, simply becaause of the cost.
Again, there is no standard definition for the price. For the purposes of our discussion today, our standard is $200. For the rest of the article, we will use an electric scooter found in AliExpress, which sells for $1,378.
Pros of High-ticket Dropshipping
Despite the arguments against high ticket dropshipping does also have its benefits. These are the pro’s of dropshipping high value items for us:
Because of the cost of the items, there is significantly less competition in this space. To be honest, most dropshippers are people who have little money or resources to work with such high value products.
This is the very reason they dropship—they have no capital to invest in retail inventory. Many dropshippers also prefer to use free tools to manage their dropshipping stores, like Oberlo and Spocket.
If you think about it, most dropshippers sell low-cost items found in China, like mugs and clothing and items whose capital cost is less than $20.
This type of dropshipper is what comprises a vast majority of sellers in the dropshipping universe.
Because most dropshippers are people who are employed individuals—people who are trying to supplement their wages, hoping that they will strike gold. It often starts as a side hustle.
And since they are employed, you cannot really expect them to shell out $1,000 for an item if they made a sale.
A lot of expensive items found in AliExpress are of better quality than cheap knockoffs. If you dropship high-ticket products, you are in a better position to find customers who are looking for goods that last, not goods that they will throw away after a few uses.
Educated and geniune customers
The customers you are likely to get are those that think seriously about their purchase—people who will not rush in and impulse buy. Someone that is willing to put down larger sums of money when they decide to buy is also more likely to be a genuine and qualified customer too.
If you do not know by now, there is online fraud that is rampant in online retail—customers buy stuff online like clothing, and then they return these items after using them. If you sell high-ticket products, you are not likely to come across customers like this—people will not risk a thousand dollars in the hopes of getting a refund.
High profit margin
If you dropship low-ticket items, you are likely to stay in the range of a 30% profit margin. If your capital is $10, your gross profit is only $3. You need to sell 100 pieces just to profit $300.
But if you sell a single electric scooter, you can profit much more than this in a single sale.
High ticket dropshipping is for people who can afford luxury in life. It is not every day that people buy furniture or other products that cost them $200 or more, much less those that are above $1,000.
If you dropship high-ticket products, you can command a higher profit margin. However, you also have risks, which we will discuss below.
Cons of High-ticket dropshipping
Like all businesses, there are disadvantages to dropshipping expensive items. Take a look at our list below.
You need a high capital investment
In dropshipping, you do not immediately get the payment that a customer sent to you. It is going to stay in your payment processor for a little time, especially when you use 2Checkout or PayPal, or even the Shopify payment system.
While that money is sitting there, you have to front your customer’s purchase from your supplier, and this means spending a large sum of money for every order.
Customers do not come back
Customers who buy high-ticket goods often do not buy that same product again for some time. Your challenge as a high-ticket dropshipper is that you are consistently on the lookout for new buyers.
If you sell $10 items, it is easy for any customer to buy another one, but not for scooters that you sell for $2,000.
While your customers can recommend you to their friends, the sheer cost of your products is a barrier that can prevent them from making a purchase. Some of them may even look for cheaper alternatives.
Shipping can cost a lot of money
Most high-ticket items have free shipping. The sellers in AliExpress have already factored this in their price. However, this free shipping promotion only applies mostly to items that cost $1,000 and up.
For example, a solid wood bed that costs $700 in AliExpress has a shipping cost of $368. So, if you sell this bed in your store for $999, you also have to charge your customer the shipping fee, and your customer has to pay about $1,400.
And the shipping you use must have good insurance to cover losses, meaning the cost will often be higher because of this too.
Takes a while to sell
Because the items are expensive, do not expect your customers to make a quick purchase. It may take three or even seven touch points before a customer makes a decision to buy. They may go away several times to research more before finally coming back to buy your product.
This is the most challenging problem in high ticket dropshipping items. Once a customer sees your item, he or she is definitely going to look for alternatives. You will spend a lot of money marketing your goods just to be able to make a sale.
As you can see, these are the most common challenges that you have to face as a dropshipper—if you feel that you have good solutions to these potential pitfalls, high ticket dropshipping might work for you.
How do you dropship a high-ticket item?
Should you decide to go this route, you need to understand that you need to do this right. There is no trial and error in dropshipping high-ticket products. One mistake can cost you a lot of money, and the last thing you want is to give up even before the journey has really even started.
In low-cost dropshipping, it is alright to make mistakes—after all, these errors will not bankrupt you. But not in high ticket dropshipping products.
Below are some important things you must plan for.
I am adding this first as it has to be the biggest mistake I see from people trying to dropship higher value items. You need to make sure that your payment processor is fine with the type of monetary value you will be putting through them.
If you have a brand new Paypal account, for example, and then you suddenly have multiple customers putting large sums of money in there, you will more than likely get that account frozen.
Make sure you have the banking capacity before you start. It helps if your accounts with payment processors are somewhat warmed up first!
Quality of the product
The quality of your products is of the utmost importance. If a customer paid $1,000 for a bed frame, you better make sure that it is a bed frame that is worth that money. Otherwise, you will have a seriously unhappy customer who may even take you to court for customer fraud. At least may want a refund that the supplier might not want to fulfill, leaving you out of pocket.
Some customers will also report you to the Better Business Bureau, or to give you low ratings in TrustPilot.
So, how will you guarantee this?
The only way is by ordering the product yourself. This is a high-ticket product we are talking about—not your typical dog collar or cat toy.
You can easily get away with a cheap and low-quality $10 cat toy, but not with a $,2000 scooter. Unless you order the item yourself, you will never know if you are being sold a cheap knockoff.
If the product you sold is bad, your customer is going to be furious and will want his money back, even if it takes filing a chargeback against you.
Buy the product yourself and only select high-quality ones to sell. If you cannot afford to do this, you can forget about dropshipping such items.
Reliability of supplier
Choose a reliable dropship supplier. Again, you will never really find out unless you order the item yourself.
Here is a checklist on how you can measure a supplier’s reliability:
- Shipping timeline and commitment – this has nothing to do with the length of shipping, but rather the commitment to meeting the promised delivery date. If the supplier promised a total of three weeks, including processing time, then he has to deliver in three weeks. Anything longer than that is a red flag.
- Quality of goods – again, order the item yourself and check the quality of goods. If it is not the same as described as what was displayed online, stay away from this supplier.
- Return and refund policy – a reliable supplier has confidence in its product. Reliable suppliers have a reasonable refund policy—they know that their products and processes can meet customer expectations, and they can show this through a guarantee. Make sure this is in place before you start dropshipping their product!
- Communication – reliable suppliers are those who will give you answers in less than 24 hours. They know how to communicate, and they value their customers’ concerns.
Choose only one country
To succeed in high-ticket dropshipping, I strongly recommend that you ship to one country for starters. Understand what happens in that country’s logistics, especially in customs.
The last thing you want is to have several orders, and then these orders are stuck in customs. You will face a lot of headache dealing with refunds and returns if this happens.
Ship to one country only, and then add one country at a time when things go smoothly. Even if you have one supplier, it is likely that your supplier has different shipping costs per country. On top of this, your customer may even pay customs fees.
Go slowly and make sure you fully understand the country you are serving.
Analyze your competitors
The last important factor is competitor analysis. If you want to sell bed frames, you need to go to Amazon and other websites selling the same things to your target market.
You need to know what kind of products they offer, and how much these products are. The scooter that I showed you is not available on Amazon, for example. You need something unique to give your customers a reason to buy from you! If they see the exact same thing over at Amazon, of course they will just buy there!
So, what does this mean? This means that your competitors do not have the exact product as you do. Sure, there are other scooters, but not like the one that I showed you.
If you know what your competitors are selling, you can carefully select the products you will sell even before you open your store. You will also know how much they are selling it for, and you can assess how much the market is willing to pay for it.
I know that this is hard work, but this hard work is going to pay off. It is better to work hard and get positive results than to wing it. If you just learn along the way without any plan, you will be sorry.
I want to put this at the end as a general warning! Be prepared and do the groundwork before you start! High ticket dropshipping can get expensive fast if you don’t know what you are doing!
For example, what if three people ordered a $1,000 item from you? Do you really a have $3,000 to front the purchase?
What if a customer did not wait and asked for a refund while the order is in transit, what will you do? You need to plan out what you will do in many situations, and make sure you have a plan to mitigate them from happening in the first place.
Is high-ticket dropshipping better than selling low-value items?
This really depends on your perspective. Let us take a look at some situations and assess which one is better.
- Expense – low-cost dropshipping is better. You can easily buy ten $11 shirts at a time, and then have them delivered to your customer while you are waiting for their funds to clear. You cannot do this with high-ticket dropshipping unless you are capital rich 🙂
- Profit – selling high-ticket products is better. Low-cost products give you a margin of no more than $15 per item. If you sell high-ticket items, you can have a minimum profit of $100 per sale.
- Returns and refund – this is really subjective. Most expensive items are of good quality. However, it only takes one returned item, and this can damage your business dramatically.
- Conversion rate – low-cost is better. Selling is about impulse purchases. It is easy to sell 100 pieces of an item that are only worth $15 or $25 than to sell a scooter that costs $2,000. As a dropshipper, you need conversion. You are spending money every month, and you will be depleting your funds if you do not make a sale.
- Marketing – it is much harder to market high-ticket items. You see, a dog collar is a dog collar no matter how you put it. People will buy it for $20 and not ask a lot of questions. But a $ 700-bed frame? People need more information than usual. Because of this, you need to do a better job at marketing, which also means a higher level of effort and better quality in ads, videos, and images.
If you do not mind making a few sales here and there but earn a lot of potential profit, high-ticket dropshipping is a good business. It does not need a lot of work like low-cost dropshipping. In high-ticket dropshipping, you only have to talk to a few customers—your volume of inquiries will be much lower than when selling lower value products.
The thing is, do you have the nerve for it? You might only sell one high value item a week. With so few sales, the threat of just one refund could be quite high to your business. Low volume means a higher value is placed on each individual order. You better get things right! That’s a lot of pressure if you are new to dropshipping!!
In my opinion, high-ticket dropshipping works great for the ‘big dogs’. If you are just starting out, I strongly suggest that you sell small items first—those that you can sell for $20 to $40, but nothing even close to the $200 mark we have highlighted in this article.
Why? Because there is so much about online retail that you need to understand. Also, how can you dropship high-ticket items unless you can buy that product yourself? The electric scooter example that we talked about earlier costs $800—if you cannot get this for yourself, there is no way you can see the quality of the item.
Approach high-ticket dropshipping with caution. Start small, and then move up slowly as you feel more confident and once you develop your expertise.
Selling high-ticket items should be something experienced dropshippers can aspire to in the future if they wish. It’s not for the faint of heart or newbie dropshipper to take on. This is when you could land yourself in a lot of hot water!!