The Raw, Unfiltered Truth About Dropshipping
Dropshipping is the first step for many people venturing into entrepreneurship.
Is it really the best step?
With dropshipping, you’ll learn practical Ecommerce skills and set up a viable business while taking minimal risk. That’s one of the many reasons we love it.
But the truth about dropshipping is that it isn’t for everyone. There are some key things you need to consider before diving straight into choosing a niche and setting up your store.
You’re building a real business, which will take time and effort. It’s not a get-rich-quick scheme, and your computer won’t just start spitting out dollar bills the moment you fling open your online doors.
What is it really like to start a dropshipping business? What are the pros and cons?
Let’s dig into the details, explode some myths, and give you the straight scoop on what happens behind the scenes so you can figure out if dropshipping is right for you.
The Truths & Realities of Dropshipping
Dropshipping is a retail model where a seller is not required to keep products in stock. When a product gets sold, it’s purchased from your supplier at wholesale cost and dropshipped directly to the customer.
There are a lot of myths and misconceptions about this model floating around – let’s talk about ‘em.
Business Building
Many hope dropshipping will be a ticket to instant wealth. It’s not.
Building a successful dropshipping business takes time and effort, and the idea of “passive income” is bullshit. There’s no shortcut to making money in this industry.
Consistency, dedication, and hard work are required, just like with any other business.
If you’re not ready to commit, reconsider your plans.
Low Profit Margins
Dropshipping often comes with slim profit margins, especially when selling low-cost items. Tiny margins on cheap products can lead to limited returns, even with high sales volume.
But with high ticket dropshipping, which is what we teach here at Dropship Breakthru, you sell more expensive items. These items range in price from hundreds to thousands of dollars per sale. And with high ticket products, you can still make a decent amount of money on each sale, even with low profit margins.
Still, you need to remember that higher-priced items can also mean higher customer expectations. Your customers will likely be conducting extensive research (because they’re spending a lot of money!). So, you’ll need to provide excellent customer support so people feel comfortable pulling out their credit cards.
Legal Liabilities of Dropshipping
There’s a belief that dropshippers are liable for everything they sell. This is only partly true.
Think of it this way: If you purchase a MacBook Pro from Walmart and it malfunctions, you’ll go to Apple (the manufacturer that holds the warranty) to fix the issue, not Walmart.
You’ll be acting as the retailer in your dropshipping business, just like Walmart.
The waters do get murkier with low-cost products, but in general, you won’t be facing legal liabilities if you practice high ticket dropshipping the way we teach it.
However, you should still keep these dropshipping legal issues in mind:
- Selling products with unauthorized trademarks or logos is off-limits. This includes fake and counterfeit items. Selling these is not only unethical, but also illegal, and can lead to severe consequences.
- Any product that fails safety standards or has selling restrictions is risky. Do your homework and make sure what you’re selling is safe and legal for your region.
- Making false claims about a product is a surefire way to land in legal hot water. It’s dishonest, and it risks breaking advertising and consumer protection laws. Stick to the facts, don’t make claims you can’t back up, and avoid exaggeration.
The best way to sidestep legal issues is to sell high-quality products made in your own country. This ensures you’re selling items that adhere to local safety and quality regulations, so you never need to worry about deciphering foreign rules.
Dropshipping Competition
There’s a buzz around the Ecommerce world, and lots of people are asking, “Is dropshipping too competitive?”
In high ticket dropshipping, you’re:
- Selling reputable brands that customers actively search for
- Shipping those items from trusted suppliers
- Taking care of customers within your region
So to cut through the suspense: No, it’s not overly saturated or competitive. But, there’s a twist.
The competitive landscape shifts. Overall, the level of competition in high ticket dropshipping hasn’t drastically changed recently. But the demand for certain products or niches does ebb and flow.
That’s why when you’re choosing a high ticket dropshipping niche, you need to do your research to find out how competitive certain markets are. Some products are just too competitive, especially when you’re just getting started, But others hold enormous potential.
The key is to dig deeper, avoid jumping on short-lived trends, concentrate on niches that pass specific criteria, and focus on a person to serve, not products to sell! And every now and then, you’ll stumble on a niche that seems untouched or underrepresented.
New, innovative ideas spring up all the time, and you need to be ready to notice and grab those opportunities. From our recent interactions with students in our dropshipping course, we’ve seen that there are lots of markets where hardly anyone is doing dropshipping. These could be great potential niches for you.
Quality Control
Quality control (QC) is a critical part of high ticket dropshipping. You’re not selling generic, low-quality products shipped en masse from distant locations. We’re talking about authentic, branded, high-quality items created and shipped by local suppliers.
The good news is that great-quality products make it easy to market your business. When dealing with reputable brands, you’ve already won a significant chunk of the marketing battle.
These products often have a dedicated following, established marketing guidelines, and recognizable branding. This makes your marketing efforts more streamlined and effective.
Here are some tips for dropshipping QC:
- Prioritize authenticity: Consumers rely on established brand names as a sign of reliability and quality. When you sell real brands, you’re aligning yourself with those names. That’s a shortcut for building trust with your audience.
- Build direct relationships with suppliers: Building a direct and transparent relationship with your suppliers allows you to clarify product details, understand the manufacturing process, and even visit the supplier’s premises. When you have these relationships, you can vouch for the products you’re selling, and in the rare instance of a defect, you have a clear channel for resolution.
- Monitor feedback: Implement a system to collect feedback from your customers so you can catch recurring issues and spot opportunities for improvement.
- Practice continuous improvement: Quality control is an ongoing process that requires regular checks, updates, and adjustments based on supplier feedback and customer experiences.
Dropshipping is a fantastic business model with a low, upfront investment, but being a successful dropshipper should never come at the cost of quality.
In the world of online sales, reputation is everything. Prioritizing quality is not just good ethics – it’s smart business.
Branding
Ghostwriters pen masterpieces without their names on the cover. Songwriters compose chart-topping hits but remain behind the scenes.
It’s the same way with dropshippers. As the middleman, you operate in the background, in a way. Many times, the brand of the products you’re selling takes center stage.
But there are ways you can stand out from other resellers and dropshippers who sell similar products. You can create an attractive store, provide content to get attention and build trust, and ensure transactions happen smoothly by delivering excellent customer service.
Even though the product may not carry your logo (unless you’re doing branded dropshipping, which we don’t typically recommend), the experience you offer – from browsing to purchase to post-sale service – constitutes your brand.
Your unique selling proposition is the shopping journey you deliver, from the first click to the final thank-you email.
Your sole focus should be on solving one person’s problems whether they buy from you or not. The products are a solution, but not the only solution. Solve that one person’s problems, and they’ll likely buy from you anyway.
Can You Actually Make Money from Dropshipping?
Many beginning entrepreneurs ask us if starting a dropshipping business is a viable way to make money.
Absolutely. Yes, it is! Dropshipping works, and you can make a substantial amount of money doing it.
Here are some of the biggest advantages of being a high ticket dropshipper:
- Low startup costs: There’s a minimum investment required to get started, often less than $500. You won’t have manufacturing, inventory, or warehousing expenses. See our full breakdown here on dropshipping startup costs.
- No inventory hassles: Dropshipping eliminates the need for product storage and inventory management. Customers order products, and they’ll be shipped directly from suppliers.
- Global reach: Operate in any country with an Ecommerce market, without needing a physical storefront.
- Time and Location Flexibility: It’s an online business, and you’re the boss. You’ll need to put in the work to establish your business, but you’re in control of when and where you work.
- High profit potential: High ticket items can yield high profits even with fewer sales, reducing the risk associated with poor-quality products from international suppliers.
- Demand capture: Go after customers already searching for the products you’re selling, so you can streamline marketing efforts to take advantage of existing desire. If you select the right niche, you can scoop up customers looking for your products in the search engines right now.
How to Do Dropshipping the Right Way
So, what’s the “right” way to do dropshipping? Ask five different people, and you’ll probably get five different answers.
Ask me, and I’d say – the right way is clearly high ticket and focusing on serving a person, not selling products.
Do the work.
Start by picking a niche that has plenty of eager and enthusiastic customers. Don’t just choose random products – focus on potential customers. Make sure there’s a need in the marketplace by looking for enthusiast communities of people with hobbies or interests they’re spending money on. Give them the products they need and want.
Remember to prioritize your customers. You’re not just selling stuff; you’re building relationships. Cultivate a service mindset, and take care of the people behind the monitor.
After zoning in on your niche, the next step is to secure high-quality dropshipping suppliers. We give you a step-by-step process for finding U.S. dropshipping suppliers here.
Once you have suppliers lined up, build your dropshipping store on Shopify, our top pick for dropshippers.
Post-launch, knowing how to market your dropshipping store is the thing that will bring in your first sales. In the beginning, buying targeted ads and focusing on SEO for dropshipping are your best bets.
Is Dropshipping Actually Worth Doing?
The truth about dropshipping is that it’s not a route to instant prosperity. It’s not going to make you an overnight millionaire.
Building a successful dropshipping business requires patience, persistence, and hard work. But it is worth it.
Focusing on high ticket dropshipping can counterbalance low-profit margins because you’ll potentially make more profit from each sale. And if you steer clear of legal liabilities, you can keep your customers happy and ensure you feel good about what you’re selling.
Put your emphasis on genuine, branded, high-quality products, and you’ll have an easier time marketing your business and building trusted relationships with prospects and customers.
Still unsure if we’re telling you the truth about dropshipping?
Consider these numbers:
- Almost a quarter of all online sales (23%) are made using a dropshipping model. That’s around $85 billion every year.
- 27% of online retailers have implemented dropshipping as their main fulfillment method. For example, Wayfair does over a billion dollars in sales using drop shippers.
- Dropshipping is also beneficial for suppliers because they make an average of 18.33% more profit when selling to dropshippers than they do selling the same products in their own online stores.
- Without the burden of storage, packaging, and warehouse costs, dropshippers typically make 50% more in profit compared to maintaining their own inventory.
Ready to dive deep into the world of high ticket dropshipping? Sign up for our free training to learn how to build and launch your business in 30 days or less. We’ll teach you how to create your store, find the right products to sell, and make your first sale.
Want to start your own high ticket dropshipping business?
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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