If you have just discovered dropshipping then the chances are that it is probably the model involving AliExpress products. Using Aliexpress for drop shipping comes with some great advantages. You have access to literally hundreds of thousands of products at wholesale prices. But there are also downsides such as long shipping times (which leads to angry customers) and unreliable suppliers.
But this article isn’t aimed at discrediting the AliExpress dropshipping model. In fact, I made my first six-figure income online using Aliexpress for dropshipping.
Instead, this article will outline another method of Dropshipping known as High Ticket Dropshipping (HTDS).
When dropshipping from AliExpress, most teachers advise sourcing a product that you can sell for $20-$50. This is classified as “Low Ticket Drop Shipping” (LTDS) and uses sweet spot pricing aimed to trigger the impulse buying instinct in the consumer.
You’re looking at $3000-$4000 profit a month from only 10 sales!
HTDS is essentially the opposite of that and focuses on selling dropshipping products for $500-$2000 (Editor’s note: Or higher, if you sell things like car parts!). But instead of using Aliexpress as your supplier, products are sourced from domestic suppliers in the United States with a 30-40% price markup.
So what does that look like exactly? Let’s say you’re dropshipping an air hockey table and the supplier product cost is $1000. You can go on to sell this item for $1300-1400 and that $300-$400 is your profit. Now imagine selling 10 air hockey tables a month. You’re looking at $3000-$4000 profit a month from only 10 sales!
Of course, there are other costs to take into account such as advertising and transaction fees. But even with a target advertising cost per purchase of $50 (which is very achievable) you’re still looking at $2000-$3000 profit/month.
Compare this to the LTDS model with a net profit of $10/order. To hit the same numbers in profit to the above example would require 200-300 sales a month. Quite the difference in sales volume between the two models.
Users who are on Facebook and Instagram are not there for the sole purpose of shopping online. In fact, that could be the last thing on their mind.
Now here is the second biggest difference between HTDS and LTDS: How you advertise your products online and the psychology behind it:
- LTDS will primarily focus all advertising on Facebook and Instagram using elements of pattern interruption and attention-grabbing visuals.
- HTDS focuses on using Google for advertising through its shopping network and AdWords search results.
The reason behind these differences in advertising methods is because of the buyer’s intent and human nature.
Users who are on Facebook and Instagram are not there for the sole purpose of shopping online. In fact, that could be the last thing on their mind. So they have a lower buyer’s intent. Products priced between $20-$50 require less buyer’s intent and consideration in the purchasing decision. This is why advertising on social media works well for LTDS. Many LTDS also have tighter margins and social media advertising is usually the cheaper option to reach their target market.
Now onto HTDS. Products priced at $500 and up require a definite buyer’s intent. There is no question about this. So advertising on Facebook and Instagram (to cold traffic) does not make sense as the likelihood of targeting someone scrolling their newsfeed and getting them to commit to a $1500 sale is unlikely.
However advertising via Google Shopping, Google Search Engine results and other search engines (Bing, Yahoo etc.) does make sense.
Users on these advertising platforms have a much higher buyer’s intent because they are actively searching for products to purchase online. Someone who is searching for “air hockey tables online” via Google search is far more interested in buying than someone who sees your ad on Social Media (digital window shoppers). By utilizing these platforms correctly, you can have your products show up at the top of these search results and drive more active buying traffic to your website.
Both methods of Dropshipping have their pros and cons. One method isn’t necessarily better than the other. But one of the biggest advantages HTDS has over LTDS is the profits. Hitting your target monthly profit requires fewer sales with HTDS. Fewer sales mean less advertising management, less customer service and greater passive income from your business once the wheels are rolling.