An Honest Look at Dropshipping Pros and Cons
We love the momentum dropshipping has picked up in recent years. And with that momentum comes many curious people who want to know more.
Well, you’re in the right place! We’re going to look at the pros and cons of dropshipping so you know exactly what to expect before starting a new Ecommerce business.
Different approaches to dropshipping come with different challenges and opportunities. The balance of pros and cons can shift dramatically depending on which model you choose.
High ticket dropshipping refers to selling items with a price point of $800 or more. With us, it also means using trusted, local sellers that provide high-quality items with quick delivery times.
Low ticket dropshipping is selling items with a price point of $100 or less. Most of the time, this relies on out-of-country sellers that have low-quality items and long delivery times.
As you’ll soon see, we love high ticket dropshipping! And many of the reasons why will become clear as we work our way through the pros and cons.
Want to start your own high ticket dropshipping business?
Watch this FREE, on-demand training session that will uncover the exact steps you need to take to launch your first high ticket dropshipping business in the next 30 days.
Pros of Dropshipping
There are a lot of pros when it comes to dropshipping – and a TON of pros when it comes to high ticket dropshipping.
Low Initial Investment
A lot of people think that starting your own Ecommerce business is costly. But the reality is, when done our way, dropshipping doesn’t cost much to kick off compared to many other Ecommerce businesses*.
In fact, it’s less than $500 – we know because we calculated it.
- Domain name – $13, we recommend Namecheap and LeanDomainSearch.
- A place to host your store – $29/month, check out Shopify, 2-week free trial!
- Shopify theme – $200-$500 (Or free if you join our course Dropship Breakthru).
- Business email – $12/month if you use Google Workspace, and you should.
- Business phone number – $40/month, Grasshopper is our fave to get an 800 number.
- Your brand – +/- $20, Head over to Fiverr and get yourself a logo.
Grand Total – (Drumroll please) = $314
Not bad, right? We’d even say it’s more than affordable when considering you’re starting a real business!
*Affiliate marketing has similar starting costs. Learn more out the similarities and differences between dropshipping and affiliate marketing.
Scalability
What makes dropshipping so scalable?
This is where we focus on the person behind the screen. What else would someone who buys a sauna be interested in? A cold plunge? Red light therapy? Towel bars, towels, candles, robes, etc.
The more you diversify, the more you can scale and build your business.
No Inventory or Storage Expenses
With dropshipping, you don’t have to worry about the expenses of storing your inventory. By not having to rent or lease storage or warehouse space, you have more money to use in other, more important areas of your business.
Flexible Work Hours and Location Independence
When it comes to work, do you like being free and flexible? We do too!
Dropshipping allows you to work when and where you want. You can create a work schedule that best suits your needs and lifestyle. All you need is a good internet connection!
So if you’re thinking of traveling, spending more time with family, or just want to work at your own pace, dropshipping might be a great fit for you.
Endless Niches to Choose From
As a dropshipper, you have countless niches or product ranges to choose from – everything from pizza ovens to camping gear.
This means you can choose your niche based on what’s important to you. Need help with this? Try our challenge. In just 5 days (for only $97), we’ll help you figure out exactly who you’re going to sell to and what you’re going to sell. At the end, you can hop on a call with Jon or Ben to discuss your choice.
Learn Real Business Strategies
Dropshipping doesn’t have to be a mindless side hustle. When done right, it’s an education on running an Ecommerce business.
You might stumble along the way, but there are no failures! Just figuring out how not to do something!
By setting up your own dropshipping company, you’ll find your knowledge increase around what it’s like to run a business. This includes learning about Google ads, cross-selling, branding, SEO, copywriting, email marketing, and even simple coding.
Think of it as a way to learn marketing while making money. What’s not to love?
Cons of Dropshipping
Dropshipping has a few cons, but the majority are linked to low ticket dropshipping and branded dropshipping.
So by opting for high ticket dropshipping, you’ll already be dodging most cons, but it’s always good to be aware of them anyway.
Product Returns
With low ticket dropshipping, you might experience a high rate of product returns. This is often due to the poor quality of products.
And dealing with product returns can be intimidating. If you can limit returns by opting for quality products from reputable brands, go for it.
High ticket has fewer returns because people tend to put more thought into buying expensive items. On top of that, if you follow our methods, you’ll use local suppliers who make high-quality items that don’t break after one use.
Oversaturated Niches
The rise in popularity of dropshipping has resulted in increased competition and a couple of oversaturated niches, such as e-bikes and standing desks. (Though you can always tackle one of these if you can come up with a unique take.)
But fear not! As we stated before, there are so many niches for you to choose from.
Low Profit Margins
Low profit margins are more common for low ticket dropshipping. This often comes down to the fact that you can only charge so much for magnetic eyelashes or squeezable night lights.
And since the profit margin is a percentage of the product price, the lower the price, the smaller the profit.
With high ticket, since your price is a minimum of $800, you can estimate your profit to be around 30%, which is $240. Not too shabby! And ideally, we like to aim even higher. Do the math on a $3k or $5k product – it’s $900 and $1,500!
Playing the Middleman
Being the middleman between customer and supplier can be annoying if things aren’t running smoothly. This is especially true when it comes to returns.
It helps if you have excellent communication skills (or can hire someone who does) to play this role. Otherwise, you might get frustrated.
Chargebacks
Chargebacks – when a credit card company pulls back money from a sale if it’s a fraudulent or disputed transaction – are a big pain, especially for large ticket items. Think about it – if you get a chargeback for $1000 vs. $100, the prior is gonna hurt a whole lot more.
For this reason, we use Clearsale to handle cases of fraud.
You can take certain precautions to limit experiencing chargebacks, such as making sure all your fraud filters are turned on in your payment system.
Of course, we know there are instances when the above might happen (people moving, for example), but to be sure, you can always just call the customer to verify the order.
We often tell our customers to make sure they have an email address or phone number to contact people in case any issues arise.
Pros and Cons of Dropshipping: A Final Word
When it comes to the pros and cons of dropshipping, the pros certainly outweigh the cons. And if you go for high ticket dropshipping, you’ll find that most cons are eliminated.
An important thing to remember when considering starting your own Ecommerce business is that dropshipping is not necessarily a get rich fast business model. You’re building a real business. If you want it to succeed, you need to put real time and effort into it.
Ready to take the challenge?
Watch this FREE, on-demand training session that uncovers the exact steps you need to take to launch your first high ticket dropshipping business in the next 30 days.
Want to start your own high ticket dropshipping business?
Watch this FREE, on-demand training session that will uncover the exact steps you need to take to launch your first high ticket dropshipping business in the next 30 days.
Article by Jon Warren
- Worked with 400+ Ecommerce business owners to help them grow their business
- Started 3 high-ticket dropshipping businesses that reached 7 figures per year in revenue
- Managed marketing for his and his clients’ businesses that has produced 117,000 high-ticket purchases for an estimated value of $120.5M
© Dropship Breakthru 2021