Mastering High-Ticket Dropshipping: Tips for Profitability

What's up guys, Trevor here with Ecommerce Paradise, and today I want to talk to you about how to do high-ticket dropshipping profitably.

It's a hard business model to make it profitable because generally the margins are a bit lower, and with high ad spend costs and virtual assistant costs and software costs, it's hard to pull a net profit sometimes. So in this video, I just want to go over a few tips and ideas on how to do it profitably so you can actually do it long-term and make a decent income from doing it. So just a little bit about me. I've been doing high ticket dropshipping since around 2010, 2011.

I started my first store and it was on a platform called eCreator and I was selling like two $300 products. And when I first started making sales, I was really happy. The net margin was maybe around 10-15%. But I didn't have to pay for any ads back then. It was all organic traffic. So I was able to keep that profit and I was doing everything myself too.

So besides the low amount of software fees and things like that, I was able to keep all the profits as personal income and then split it between my partner and I. Now, after about four or five years of doing that, the business grew substantially and we had to hire virtual assistants and I started running ads and we even opened a brick and mortar store. And so our costs went up substantially as did our profits, but with our higher costs, it became difficult to pull a profit.

And nowadays, the way we start new stores is we focus first and foremost on running ads in the very beginning. We don't wait for organic traffic because nowadays things are so much more competitive. So upfront, your costs are going to be higher nowadays when you want to start a high-ticket dropshipping business with ad spend, with software costs.

And usually you want to just start with a VA right away so that you have somebody answering the phones all the time and closing sales and things like that when you're not available. A lot of people, when they first start, you have a full-time job or something like that. Or maybe you work remotely and you live in another country or something like that. And you're not going to be up US hours. So there's a lot of reasons why people hire VAs in the beginning before they've scaled.

And you're just going to have to work those costs into your startup. Now, with that in mind, maybe the first three to six months of your business aren't going to be profitable months, or maybe just maybe the first two or three aren't going to be profitable.

But usually once you get the ball rolling, once traffic starts coming in, you get retargeting audiences built, an email marketing list built, and you start really, you know, getting referrals and things like that and reviews, then things will become profitable. So it usually takes three to six months for any store to start turning in that profit every month is what I've found. And then beyond that a year or two to really get to the point where it's pulling a, you know.

Generally even amount every single month that's sustainable. And what I found is that after ad costs, after software expenses, after VA costs, you have to be making at least maybe let's say 30 to 50,000 in revenue per month to be breakeven on all those costs. So it not just depends on your profit margins. So with high ticket dropshipping, you'll find that suppliers' profit margins are all over the place.

And sometimes products, different products within a supplier can have profit margins that are vastly different as well. And it depends on a lot of different things. But the main thing that makes the biggest difference is the shipping fees. So when a supplier charges you shipping, that means that your profit margins are going to be substantially less than what the difference between the cost and the selling prices, right?

So even if your, you know, gross margin, let's say between cost and selling price is like 30%, your shipping fees, if they end up being, you know. 10 or 20% of the entire product costs, then that's going to substantially deduct from that. Plus you have to pay a three to 6% merchant fee. So there's definitely costs involved and your margins can go low.

But what your goal is with high ticket dropshipping is to find those suppliers and this particular products that have high margins and really focus on promoting those products.

You have to find a good balance between best selling products, so products that sell really well and products that have good margins and also products that are quality products and have, you know, you know, good shipping and don't get damaged in shipment and things like that, because that can cause other problems down the road to like chargebacks and whatnot.

But I think the main thing is that if, as long as you have good margins, you know, after the shipping costs, or if their supplier doesn't charge shipping, then that's the most important thing. And then you'll have to look at your ad spend, how much it costs for you to an acquire a. Do you spend on ads for that particular brand and that particular product before you end up getting a sale on average?

And then you know your cost per acquisition, and then you'll be able to calculate your KPIs and figure out exactly what your net profit is going to be every month and what your breakeven amount with revenue is going to be. And just what I've found in general is 30 to 50,000 is paying on profits. So if you have a really high margin niche, generally speaking, then you can usually breakeven with less revenue, like 30,000.

The other thing that's interesting is that that lines up with the upgrade capabilities with Shopify. So usually you go from basic Shopify to regular Shopify, it'll give you a little bit lower, you know, merchant processing fees, and then you'll be able to do that. Just saving the money with the merchant processing fees pays for the amount of the upgrade. So right around $30,000 a month is sort of like a starting point. So you're breaking down business, you're ready to scale and move forward.

Now, scaling is best done by investing in content and backlinks and internal linking and site optimization, like SEO optimization. You know, the Google ads are great, but once you've laid the foundation, you don't really need to do a whole lot of work from there. Okay. Just besides adding, you know, your basic negative keywords to keep the Google shopping ads running properly and checking them on a daily or weekly basis to make sure that they're not getting messed up.

You know, there's no like weird generic keywords showing up on the products campaign and, you know, vice versa. Okay. So, you know, as far as Google ads go, yes, you can do retargeting.

Sure you can do retargeting on other platforms of course you can do social media as well with high ticket generally speaking you're going to find the customers your the low-hanging fruit is going to be customers through search engines like google and bing so i'd definitely get those going first for the ads and then organic rankings in those search engines as well so backlinks and content so that's the main thing good thing is there's some wonderful apps that use ai that make

it easy for you to make really good quality content and also you know it makes it easy to get backlinks as well. Just, you know, basic guest post backlinks will be good enough on high DA sites. And you want to design them as if they are resource listicle, you know, like a best product category, you know, article, that kind of thing is going to rank well, and then it's a high DA site. So it's going to link back to your site. And that's what you want.

So to start off with, obviously, it's really important you find the right suppliers that match the high profit margins that you're looking for that have really quality products and fast shipping time and really good customer support. It's hard to find. A lot of suppliers are one or the other. They have best-selling products, but maybe they're lower margins and they have bad support or they have a lot of shipping damage issues, things like that.

Or they're really high margin suppliers, they're best sellers, all that. But, you know, there's something else going on. Maybe the customer support isn't so good or the follow up, you know, whatever it is. So the suppliers are usually always going to have some issues. There's never a perfect supplier out there. But the best thing you can do is just have a plethora of suppliers to choose from. So what I recommend is usually looking to get 20 to 30 suppliers, maybe up to 40 or 50 at the most.

But I wouldn't really go beyond that because once you do, it's sort of hard to manage all those different catalogs of inventory and price updates and things like that that are required to operate one of these businesses profitably. So 30 suppliers around that is about good. And usually you just want to extract who the best sellers are from your competitors. And then that way you'll know exactly, you know, which suppliers to focus on

getting. And once you get them, you know, their best selling products. And so you know which products to focus on optimizing driving links to and all that. Of course, this really depends on competitiveness as well. How many competitors are in your niche? It's going to be really difficult to rank organically. Is it going to be cost a lot to get up to the top spot in the ads. So, you know, if it is competitive, that means your cost per acquisition is

going to be higher. And then that means your margins are going to be lower. So if you get into a competitive niche, try to figure out a way that you can be unique or different or better than your competitors.

Otherwise, look for a less competitive niche. So also when it comes to making really good margins, it really just depends on your conversion rate. I think your conversion rate has a lot to do with it. Because if your conversion rate is consistent around 0.5 to 1% or higher, you're going to do just fine, even if your margins are a little bit lower.

But if your conversion rate is low, like 0.2%, 0.3%, that kind of range, it's going to be difficult because you're going to spend a lot of money on ads and only a few sales. Now, if your margins are really high, that's going to offset the low conversion rate, obviously, and you still might be able to pull decent income from it. But what you really want is you want high margins and a high conversion rate. It's easier said than done.

And especially for competitive niches can take a lot of time to get there and a lot of work. And that's definitely why you want to hire a VA because you want to have somebody consistently working on your site, optimizing content, getting links for you. But on your site as well, you want to make sure you have all your conversion optimization things in place like reviews.

An expiring coupon code, a you know a nice clean fast loading website clear call to actions financing available all stuff like that yeah and then you know i think one of the main things you want to focus on too of course is really good sales and customer service and you want to train your va on this because if you get calls and people are interested but at the end of the day your va isn't that great at closing sales and they lose the sale then obviously your business isn't going to do very well.

So what I would do definitely is learn sales yourself and then teach your VA how to do it. And then your VA will do it better.

And then just check on them up on them regularly, have them record their own calls so that, you know, you can provide feedback and stuff like that. Or use a phone service that records calls for you. As far as phone services go, I recommend Grasshopper. Grasshopper is a really good system. I use them myself and I like them. And if you're interested in signing up for Grasshopper or checking them out, just use my referral link at ecommerceparadise.com slash grasshopper.

All right. And that's pretty much it, guys. I think there's a lot of things that you can do with this stuff. But those particular things I talked about are the things that are going to make or break your business. So there's a ton of things beyond this. But I mean, really, when you dive into it, those are the main things. So just focus on the profit margins, focus on good suppliers, and focus on driving targeted traffic, low hanging fruit, and getting those sales.

And if you guys are looking for help, I have a few offers for you. I have a mini course and niches list that is free. You can go to ecommerceparadise.com slash niches to get that. I have a high ticket dropshipping masterclass, which is a full course. You know, it's for beginners. It's for advanced people as well. It's got everything from start to finish and it's really, really good and laid out cleanly. So go check it out, ecommerceparadise.com slash masterclass.

And at the moment, I'm offering 20% off.

Coupon code is ACTIONTAKERS. So just enter that and check out. Then if you're looking to get a done-for-you service where we build your entire store for you, it's going to cost a little bit more money, but it's going to save you a whole lot of time and hassle. Anyway, just go check it out. It's a really good service. ecommerceparadise.com slash turnkey.

You can sign up for a call and get on the phone and we'll talk to you about your goals and see if we can come up with a package that matches your budget. All right. And then I also offer ad management services. You can go check that out at ecommerceparadise.com slash ads. I offer SEO optimization, ecommerceparadise.com slash SEO. I offer a virtual assistant recruiting and training service. So ecommerceparadise.com slash VA and private coaching as well. So ecommerceparadise.com slash coaching.

All those offers are things that I know and I've experienced and done myself. And I provide the services myself with the help of my team. So if you want basically help from somebody who's got experience in high ticket dropshipping, not just some random agency that helps other types of businesses and sort of applies the same things to high-ticket dropshipping, I'm the one to go with because I've actually got the specialized knowledge that it takes. So, you know, check it out.

Ecommerceparadise.com is the website. Thanks so much for watching, guys, and I'll see you in the next one. Take care.