What do fidget spinners, swimsuits, teething rings, and dog toys have in common?
Small, lightweight, and low cost, these items tick all the boxes for the traditional dropshipping business model. Margins are low, but so are shipping costs; at low prices, you can push sales volume by focusing on impulse buying.
But there is another way to do dropshipping. Forget squeaky stuffed animals — high-ticket dropshipping pushes the luxe factor with products like 3D printers, engagement rings, and greenhouses.
It’s the same basic method but with different product categories and strategies and, potentially, a whole lot of profit.
What is high-ticket dropshipping?
Dropshipping is an ecommerce order-fulfillment method. When a customer orders a product, it is sent directly from the manufacturer or another third party to the customer. Online retailers find this method appealing because:
- You don’t have to deal with shipping arrangements
- You don’t have to store or manage inventory
- You can get started without much capital or risk
- It’s fully remote
- It’s relatively easy to scale
The terms “low ticket” and “high ticket” refer to the value of the products sold.
Low-ticket dropshippers typically source cheap (say $20-$70) products from suppliers in China, and sell them through a website (using platforms like Shopify). They often try to rebrand the products they sell (rather than selling under the manufacturer’s brand).
They also tend to drive traffic to their stores using social media ads that encourage impulse buying. For example, a customer might see a TikTok video of holiday-themed socks and click through to the online store to make a purchase right away.
There are some problems with the low-ticket approach:
- Margins are low, especially since competitors can push you into a price race to the bottom
- It can be easy for competitors to copy your product and brand it as their own
- You need to get your product in front of a ton of people, which requires skill and can be expensive
There’s no official price range, but items that sell for $200 to $15k+ could be referred to as “high ticket” items. Dropshippers in this category usually source products from domestic suppliers and sell them under the manufacturer’s brand.
With this strategy:
- Margins are usually higher
- You aren’t reliant on high sales volumes
- You can trade on the reputation of established brands
- You don’t rely on impulse buying
It’s unlikely that someone will spend $1k online after seeing an Instagram ad. High-ticket customers are usually already searching for something specific, which means they have active buying intent.
How to find high-ticket dropshipping products
The research approach
Anton Kraly is the founder of Drop Ship Lifestyle, a company that provides training on how to get into ecommerce. He has also successfully dropshipped everything from modern furniture to medical supplies and paddleboards. Before he sets up a new venture, he goes through a five- step product research checklist.
1. Price point
Kraly typically looks for products between $200 and $2k, a sweet spot he found through trial and error.
Take sofas, for example. “On the lower end, with less expensive futons, there were a lot more returns and complaints because the quality wasn’t there. At the extreme high end, selling sofas that were $10k or $15k, it was a lot more customer-service heavy” because buyers have more questions when they shell out extra.
He tests the price point by searching for the product on Google Shopping and going through the first page to make sure that at least half the results are $200+.
2. Multiple brands
Relying on a handful of brands leaves you vulnerable if one fails or has supply issues. Kraly looks for products with a minimum of 20 different brands currently being sold in online-only stores.
It’s important the brands are online only, because suppliers with their own direct-to-consumer retail systems are unlikely to allow others to dropship their products and are difficult to compete with.
He searches for the product category (e.g., standing desks) on Google, and opens every website on the first page of results. He checks their contact pages to make sure there is no mention of a physical location. He then makes a list of all the brands of standing desks available on those sites.
3. Product variety
If you’re selling something that’s available at a local store, you have to compete by offering more variety so you can cater to specific tastes.
For example, Home Depot may sell chandeliers, but if a customer wants an emerald-green crystal chandelier, they may not find that at their local shop.
“We like to see that there are at least 100 individual products available,” says Kraly.
4. Sufficient demand
To make sure that enough people are looking for a product, Kraly uses Google Keyword Planner. “We wanna find at least 20k searches per month in the country where we want to do business,” he says.
While low-ticket dropshipping is often about identifying current trends, Kraly looks for products that are evergreen. He uses Google Trends to check that searches for the product have been consistent over the last five years.
5. Limited competition
The more online stores there are selling the same product, the harder it is to stand out. Kraly uses Google Shopping to check that there are fewer than 10 stores selling each individual product. That means if Kraly finds 150 different chandeliers currently being sold in online-only stores, he checks that each chandelier he plans to sell is being sold by fewer than 10 stores.
This product research strategy is simple and straightforward, says Kraly, but it’s not a get-rich-quick situation. A lot of time and work goes into setting up a store.
The keyword-focused approach
“We put a lot less emphasis on the upfront market research,” says Joe Brusca, who has brought in ~$30m in sales from high-ticket dropshipping with his brother Mike Brusca.
Joe says people get too hung up on figuring out metrics for which high-ticket products make money when, in reality, you can’t really know the profitability of any product until you see a supplier’s price list.
Setting up a website is relatively quick, cheap, and low risk, and it doesn’t cost anything to call up suppliers and start building a relationship. That way you can figure out what margins you can make on different products. You can also get new ideas by looking through products on the supplier’s price list.
The Bruscas came up with some basic criteria for the products they sell:
- The price point is $500 or more
- The product category is not overly dominated by a major brand/s (e.g., Apple iPads or Sealy mattresses)
- The product is “obscure and specific”
That last one has to do with how high-ticket items are marketed. High-ticket customers are not impulse buyers, so high-ticket products lend themselves better to search engines than social media ads.
The Bruscas aim to target longer, more specific keyword searches. “If you try to rank or place an ad on a search engine for the word ‘wine cooler,’ it’s going to be very expensive because there’s a lot of search volume for that keyword,” says Joe.
On the other hand, “wine cooler with french doors” is going to be less expensive and easier to rank, since there’s less competition.
High-ticket dropshipping products
Though the list of potential products can be endless, here are a few ideas to get you started.
- Air fryers
- Coffee makers
- Ice makers
- Induction stoves
- Kitchen islands
- Range hoods
- Folding bikes
- Car roof racks
- Kitesurfing kites
- Life jackets
- Pizza ovens
- Robotic lawn mowers
- Koi ponds
You could tackle these categories by offering variety (e.g., 150 different camping tents) and/or specificity (e.g., a potting shed with shelves and windows).
How to start high-ticket dropshipping
Once you’ve chosen a niche and made a list of brands, it’s time to put products on those virtual shelves and get to business.
Impress your suppliers
When you reach out to suppliers, you want to impress them. After all, you’re asking them to trust you with their brand. Set up a demo store before you start making calls, says Kraly.
You can use a platform like Shopify, design a logo, and upload stock images of products. Then when you call the supplier, they can see where their product will be listed if they give the thumbs-up.
Additionally, take time to research the supplier. Let them know why you want to sell their brand and how you plan to offer great customer service. Starting off on the right foot might help you negotiate faster shipping, more flexible returns, or extended warranty policies.
Perfect your store
When you create an online store, you need to think about how you can beat your rivals. Suppliers sometimes set a minimum advertised price for their products, which means retailers can’t compete on price, but there are other ways to stand out.
Kraly recommends searching for the product on Google, just as a customer would. “Pull up the top-ranked sites, look at their product pages and think, ‘What can be different about ours?’” It could be having more images or videos of the product, a more attractive website, or better navigation. Over time you can compete on positive reviews.
Market your product
Your marketing strategy will depend on what you are selling but, as mentioned before, high-ticket dropshipping lends itself to a search-engine-based approach. Utilize SEO practices to maximize organic leads, but invest some money into paid advertising too.
Track your margins
Once you start selling, you need to make sure the money you are spending on advertising is translating into profit. Track your margins on a product-by-product basis. After a while, you will identify which products are bringing in the most profit and you can rearrange your product pages and reallocate your advertising budget accordingly.
“The better your customer service, the more you’re gonna sell,” says Joe Brusca. Make sure your website shows lots of ways for people to get in touch (e.g., phone number, email address, live chat). Someone should always be ready to pick up the phone — once, Mike Brusca picked up a call that led to a $60k order of office furniture.
Kraly has a 15-person customer service team based in the Philippines, but he encourages entrepreneurs to do their own customer service to begin with. It will help you understand your customers, and, when you’re ready to outsource, you’ll have a standard operating procedure ready to hand over.