Revealed: How To Launch A High Ticket Dropshipping Business
Patricia from SMART Apps here, again, to talk with you on one way you can revolutionize your dropshipping store once you have some experience under your belt!
Imagine being able to sustain a profitable store with only four sales a month!
I’m not talking about just scraping by with just enough money to get you to the next month. I’m talking about making $10k-$20k profit each month.
These are the kind of results you can get by dropshipping high-ticket items (HTI’s).
The common dropshipping method most entrepreneurs practice is selling low-cost items at a 40% markup while targeting cold traffic made up of impulse buyers.
High-ticket items, in contrast, are items that have a minimum wholesale price of $200 that you mark up 30-40% while targeting warm traffic with an intent to purchase.
Dropshipping HTI’s is an excellent market to transition into. However, it takes an in-depth understanding of all aspects of e-commerce such as branding, store design, user experience, selecting profitable products and running ads.
Risks of Dropshipping High-Ticket Items
Now its time to get to the other side of this shimmering coin, the risks.
1. Investment in time and money. Dropshipping HTI’s is very similar to running a brick and mortar. The hours are long, and you have to outsource tasks due to the increase in responsibilities like custom product images and custom coding.
2. Testing products. When you get into selling expensive items, you have to physically inspect them yourself to make sure the price matches the product.
3. Certifications. You’re required to have a reseller certificate as well as an employer identification number to sell HTI’s. Requirements for each license varies by state.
4. Warranties. Offering warranties on expensive products are not only an expectation, but they also make your prospect more inclined to buy. The best way to go about offering warranties is to find a supplier that provides a manufacturers warranty. However, if the supplier doesn’t offer one, you still should. Make sure to explicitly state what is included in the warranty so a customer can’t claim anything that isn’t in print.
5. Chargebacks. A chargeback is when a customer disputes an amount that a seller charged their card. Chargebacks frequently happen with expensive purchases. When a chargeback occurs, you will ultimately suffer the loss, and the funds are removed from your account before you receive a notice.
Before resorting to chargeback insurance, you should implement these tactics to avoid chargeback from occurring in the first place:
- Address customer service requests immediately.
- Post a clear return policy throughout the store and on receipts.
- Record important information on every sale, such as proof of delivery, payment details, and buyer info.
- Use a payment processor that has fraud detection and seller protection features.
- Use an accurate payment descriptor.
The issue with solely relying on chargeback insurance is that it doesn’t protect you from friendly fraud, which is the most common chargeback. Friendly fraud is when a customer states that the product was damaged, defective, or doesn’t match the description reported on the site. Your best bet would be to argue the claim, in the case of friendly fraud.
6. Transit issues. There are bound to be mishaps in transit with the number of items that circulate through USPS, FedEx, and UPS. Packages are unavoidably lost or delivered to the wrong address. Unfortunately, this is a risk that must be taken into consideration because not only is the cost of losing the item expensive but so is replacing it.
Benefits of Dropshipping High-Ticket Items
It’s always good to start on the right foot, so let’s dive into why you should consider expanding into this form of dropshipping.
1. It can be a more sustainable business. You only focus on selling a few items instead of continuously being on the search for new products to phase in. You also don’t spend as much time or money testing ad sets that may not work.
2. Interest-based targeting works particularly well due to the narrow audience size. You target people that will click with the intent to purchase.
3. There are less customer support requests, which is another benefit that comes from having a narrow audience.
4. The high-profit margins provide a solid foundation for a flourishing business. Although you aren’t generating as many sales, your revenue increases due to the high cost per item.
The Sales Cycle for High-Ticket Items
HTI’s have a very long sales cycle, in contrast to low-cost items.
Prospects view the product as an investment, which draws out the purchasing decision. The days of targeting impulse buyers are long gone, now you have to deal with price and feature comparisons across the web.
The best thing you can do to keep your products and brand at the front of your prospects mind is to engage with them continuously. Emailing customer case studies and testimonials to your prospects is a great way to set yourself apart from the competition. Other ways to stand out are to offer quizzes and in-depth descriptions of your products unique value proposition.
The general rule of thumb is: the more expensive the item is, the longer the decision-making process will take.
Must Have’s for Every High-Ticket Store
Strong Brand Identity
Brand identities have the potential to form a strong relationship between the consumer and the business.
If your brand has an identity that closely aligns with the values of your customers, you have the potential to develop a religious following which will give you the upper hand over your competitors.
The brands’ main value proposition must be transparent throughout all branding efforts – from store design to copy, even in customer interaction and engagement.
Take the luggage company, Baboon, as an example.
Baboon is a self-proclaimed adventure company that clearly states its unique value proposition throughout every branding element, “Versindestructibleuctable, and fun.”
They have generated thousands of customers, fans seem more appropriate, in the short period since their launch in July of 2018 due to their fun designs, hilarious copy, and overall customer engagement.
The copy should be congruent across all outlets. That means product descriptions, titles, greetings, as well as the text in your email campaigns and ads should have the same tone and voice.
Longform copy is shown to perform better because it provides the space to address answers to any questions your customers may have, that is why it’s essential to sit and consider all of the doubts that prospects would conjure before writing your copy.
The language used should appeal to the type of emotion that will lead to the purchase. There is no one-size-fits-all model for tapping into these emotions; it’s entirely situational based on the brand, product, and audience you’re targeting. Stores that sell high-end jewelry, for example, usually speak with a rich, luxurious tone throughout their copy.
It is best to avoid scarcity tactics such as, “Act now while supplies last!” or, “Pam in New Jersey bought ____ Product!”. Prospects don’t like feeling rushed, nor do they enjoy the feeling of being sold to, so using gimmicky language in this situation is unappealing and unprofessional.
Stores selling HTI’s must have a quality of design that matches the quality of the product. Mediocre and amateur designs will drive prospects and suppliers away.
The intricacies of design for these types of stores goes beyond the scope of this article. However, I will touch base on the three key elements each store should have.
Product images play a significant role in making a company stand out from its competition and can set a certain standard. Humans are visual by nature; we rely heavily on symbolism, which is precisely what the images provide. Humans form impressions within .05 seconds of landing on a page, and a low-quality image symbolizes a low-quality product – that is not the lasting impression you want to make.
Using custom photography shot with a high-resolution camera is the best way to achieve desirable results.
As we all know, the majority of inbound traffic is going to come from a mobile device.
It’s essential to have a site that is mobile responsive; proper button functionality, the ability for images to scale down without losing quality, as well as user navigation should be flawless.
Until the recent e-commerce boom, consumers have saved expensive purchases for face to face interactions due to the skepticism of safe online checkouts.
Now that we have a greater understanding of what causes consumer anxieties, we can implement solutions to curb those fears and facilitate a safe purchase.
1. Guarantees. Standing behind a strong guarantee or warranty lessens the burden of your customer paying a large sum of money for your product.
Online shoppers are unable to view the item in person, and the descriptions only go so far to offer details, thus providing a money back guarantee or extended warranty on a product will make the prospect more inclined to purchase.
Buffy, a company that specializes in environmentally sustainable comforters, allows its customers to try the product out for 30 nights before committing to the purchase. They also offer free shipping and returns. This solution eliminates the risk of customers being unhappy with the investment.
3. Social Proof. Individuals feel more secure about making a purchase when they look at others raving about the product. Using testimonials is not only a great way to shamelessly boast about your products, but they’re also a great way to let prospects know your brand is one that can be trusted.
Exemplary Customer Experience
Ever notice how high-end boutiques treat their shoppers like celebrities?
It’s not because they to show off the fact they can afford to serve their patrons Moet in fine crystal. However, it is because people who are planning to spend a lot of money expect higher levels of attention and service in exchange in the hefty deposit they’re about to make.
To get someone excited to buy from you, they must feel special and valued.
Although you can’t virtually pop bottles for your customers (who knows actually, there’s probably an app for that), you still can provide a level of service that can match.
Exceeding expectations through engagement and user experience will not only promote the formation of a relationship between your brand and your customer, but it will also strengthen the connection the customer feels to the product.
Your customer service should be above and beyond – easy to find touchpoints, fast response times, and friendly disposition are great starting points.
Customers don’t want to interact with a robot, so the conversation should be natural and genuine. The tone should be cheerful, but not overwhelming.
Excellent customer service extends beyond the sale. It is advised to follow up with your customers post-purchase to see how they are enjoying their new product.
Value Added Content
Companies are now offering their customers the experience of value-added content. This form of customer engagement familiarizes the prospect with your brand and product, which increases the chance of a sale.
Value-added content allows your prospects to visualize themselves with the product and envision how the product will benefit them.
Moon Juice, Care/Of, and Ikea hit the nail right on the head when it comes to offering value-added content.
Moon Juice knows the key to a persons heart is through their stomach, that is why each of their product pages includes a unique, healthy recipe made up of their products. These easy to follow recipes allow the prospects to conceptualize how they can incorporate Moon Juice’s products into their daily routines, facilitating the purchase.
Personalized vitamin company, Care/Of, primarily engages their prospects by having them take a lifestyle quiz and recommends a vitamin regimen based on their current health status and goals. The purchase is solidified more by offering the assessment and results than just relying on product descriptions.
Ikea came out with their augmented reality app in late 2017. This app allows shoppers to get a real-time image of what a piece of furniture would look like in a particular room of their house. Fears of purchasing a piece of furniture that is too big or doesn’t match the decor of the room subside because of the app. Since its release, the Swedish furniture corporation has seen a noticeable increase in online sales.
Offer a Wide Range of Payment Options
People have different preferences for making online payments; some are just simply more convenient than others. To allow for more sales, consider allowing more than one way to pay.
Some companies are now offering a buy now, pay later option called AfterPay. AfterPay is a lay-pay system that charges merchants a small flat fee per transaction, however, as the merchant, you’re paid the full amount upfront while AfterPay takes on the customer’s payment installations. This no-risk option has generated increased revenue for hundreds of high-end companies.
There’s also Affirm which allows your buyers to split up their payments and integrates well with Shopify
Fast, Free Shipping
Customers who spend upwards of $500 on a single purchase expect to have fast, free shipping.
With the more considerable profit per sale, you should have plenty of money to allocate to enhanced carrier services such as UPS or FedEx.
It’s Time to Cut into the Metaphorical Meat: Sourcing Suppliers
Before finding your supplier, your store must be entirely designed and optimized. Suppliers won’t agree to sell their products to you if they’re unable to see what your store looks like.
Ok, now that I got that little bit of information out on the table, let’s move on…
There are a few ways you can find suppliers; you can search on Google for local supply companies, use AliExpress (yes, they’re reputable), or use references from other high-ticket dropshipping stores.
There are plenty of dropshippers close to your location or the location you plan to sell to the most, all it takes is a little hunting on Google to find the right ones for you. Most of these suppliers will have an annual or monthly fee, so it’s up to you to decide how much you’re willing to spend based on your budget.
For this article, I’m going to mention a few suppliers that service the U.S.
Doba is an online marketplace that gathers suppliers onto one platform for you to choose. Plans start at $29/month.
Buy2Bee is a fashioned based supply company that targets dropshippers that want to sell high-end fashion. Rates start at $250/month.
GND is a U.S. based jewelry manufacturing supply company that sells a wide variety of high-end jewelry styles.
Mod Made is a furniture supplier that ships to all of the 48 continental states, they also don’t require a minimum purchase amount.
Believe it or not, AliExpress has plenty of HTI’s made out of high-end materials from suppliers located within the U.S.!
If you’re like everyone else, the task of searching through all of AliExpress’s products seems overwhelming an impossible, so let me offer you a way to find the best selling high-ticket items – SMART Express!
SMART Express provides a way to easily laser target a product search and then import it over from AliExpress straight to your store without having to leave the dashboard of the app.
You can do this in 2 easy steps:
1. Go to the app dashboard and click “Add Products” at the top of the page.
2. Search for the product or category of the item you are interested in selling.
- Set the minimum price to $200
- Set the minimum rating to a 4
- Sort by the rating (or the number of orders)
- Set the minimum order to 30
As you can see, the results yielded a wealth of returns. I recommend choosing the products with the most amount of orders, which indicates that the product is reputable and reliable.
As you can see above this $252.00 blender has well over 1,600 orders (combining the four listings)
Reference Other Dropshipping Stores
In addition to using U.S. based suppliers and AliExpress, you also have the option to use references by well known dropshipping stores such as Wayfair and Modloft.
You can check out their partnerships with suppliers and then reach out to the suppliers and tell them you are interested in conducting business with them. Dropshippers usually showcase suppliers they work with on their homepage or About Us page.
Questions to Ask Suppliers Before Deciding to Work With Them
- Negotiating is the name of the game. You should arrange a 30-40% margin on each sale, which will give you the ability to cover any external costs such as shipping and ad spend.
- Ask the supplier if they require a minimum advertised price, if not, find another one. A minimum advertised price sets a required price that other stores can’t sell below, offering the advantage of staying competitive without worrying if other sellers are lowballing their prices and herding the sales.
Now It’s Time to Learn How to Drive the Sale!
The biggest differentiator of selling HTI’s, other than the price, is the ad platform.
Most of what you know as an advertising dropshipper will change, you aren’t targeting impulse buyers through social media platforms anymore, your targeting buyers with an intent to purchase through Google.
The reason being, these customers are actively searching for the best deals or features the product category has to offer, so you must target an appropriate, well-defined audience. Your ad should match the search query based on relevancy.
What’s a Google Ad?
Google allows you to run ads on its platform that appear in the search results after a relevant search has been made. The ad itself looks exactly like one of the search results, the only differentiating feature is the little green ad box right next to the websites URL.
How do Google Ads Work?
Google will display your ad based on the relative keywords used in the Google search. If you want your ad to appear in the search results, you must bid on the keyword you think will most commonly be used in the search for your type of business or service. In addition to keyword relevancy, Google will consider the relevance of your ad and website.
The Basics of Running Ads on Google
There are a few steps you must take when setting up your Google ad:
1. Select the goal to have an action taken on your website.
2. Decide the location you’d like to advertise.
3. Create a short message that highlights your unique value proposition.
After the completion of these steps, you can set a monthly capped goal and then go live with your ads!
As you can see, running ads on Google is more straightforward than Facebook. Google also optimizes your ad reach through its smart technology, offering ways to improve your ads based on performance over time.
Well, guys, we have reached the part of the article where we must, unfortunately, part ways. I have introduced the concept of dropshipping high-ticket items as well as given you an in-depth overview of what is expected of a store of this nature.
Let’s quickly recap:
- Dropshipping HTI’s is extremely profitable, with the right structure set in place.
- There is a high expectation of excellent customer service, your customers must feel special.
- Value-added content increases the chances of a sale.
- Easily find and import products from AliExpress over to your store with SMART Express.
Now it’s your turn to tell me how you plan to scale your dropshipping business in the comments below!
Patricia is a self-proclaimed dog enthusiast who also happens to spearhead the content marketing efforts at SMART Apps. When she’s not petting dogs or writing about the industry insights, you can find her on a yoga mat or reading anything that feeds her bibliophilic needs.