High-Ticket Drop Shipping vs. Low-Ticket Drop Shipping
Which one is really the better choice?
Drop Shipping is a lucrative business. However, between High-Ticket Drop Shipping and Low-Ticket Drop Shipping, which one proves to be the better choice? This is the usual question that most entrepreneurs ask - and that’s what we’ll be answering in this blog.
By now, you should already have an idea of how a drop shipping business works. It’s a kind of eCommerce business wherein you don’t keep your inventory and rely solely on your supplier’s fulfillment. Also, you work as the middleman between the supplier and end-consumer.
What is Low-Ticket Drop Shipping?
The typical set up in dropshipping is the Low-Ticket Drop Shipping, wherein you only sell low-cost items that are fast-moving. In this setup, since you’re selling low-cost items, your margin for each product is also low. Hence, you can only expect to have low profitability per product. The key here is to sell in bulk so that you can arrive at more significant profits – put it, you can only enjoy profitability from volume purchases.
Now, let’s go to High-Ticket Drop Shipping...
What is High-Ticket Drop Shipping?
High-Ticket Drop Shipping is the exact opposite of Low-Ticket Drop Shipping. In High-Ticket Drop Shipping, you only sell high-ticket items - these include expensive products like jewelry, gadgets, and even furniture. High-ticket drop shippers are the ones selling products that cost around $1,000 on average. Thus, it can be concluded that since high-ticket items are the expensive ones, these sellers get higher margins and, in turn, enjoys high profitability.
From the overview alone, you can already see that the high-ticket drop shipping model offers higher profitability even with fewer customers. In contrast, in the low-ticket drop shipping model, you need to sell your products first in significant volume to attain great profitability.
In the next section, we’ll discuss the main differences between the two dropshipping models to understand better which one works better for you.
In dropshipping, one of the main aspects you need to consider is your chosen product’s marketability – you don’t want to sell a product that’s not in demand since your goal is to sell. Marketability differs in high-ticket drop shipping and low-ticket drop shipping since the latter sells cheap products, it has higher marketability than high-ticket drop shipping.
Don’t worry though, it’s easy to achieve marketability in high-ticket drop shipping – all you need to do is choose a product within a specific niche with a vast market and combine it with a good marketing strategy.
Low-ticket drop shipping is not the best choice if you’re looking for a market that you can easily penetrate. Since low-ticket drop shipping sells small and cheap items, many other sellers are readily available – and since you’re only selling the same products, customers typically move from one seller to another quickly.
On the other hand, high-ticket drop shipping has lower competition since it’s more challenging to sell high-priced items, which drives away many sellers. With high-ticket drop shipping, you can be confident that the market is not saturated, which allows you to secure your space in the market effectively. Hence, the better potential of selling to your target customers.
In terms of market size, it’s indisputable that low-ticket drop shipping has a more significant customer pool because of its affordability. In contrast, high-ticket dropshipping has a relatively smaller market size because of its high price point, which not many consumers can afford.
While it can be quickly concluded that low-ticket drop shipping wins in having more qualified customers than high-ticket drop shipping, that’s not entirely the case since you still need to consider both models’ competitive landscape. Besides, even if low-ticket drop shipping has a bigger market audience, the market is highly saturated, preventing you from selling to as many customers as you wish.
As earlier mentioned, high-ticket drop shipping wins in terms of profitability mainly because of the value of its products. To illustrate this point, here’s an example:
- Store 1 sells hair buns with a $3 profit for every sale
- Store 2 sells surfboards with a $300 profit for each sale
In just one sale, Store 2 is already earning way bigger than Store 1. Store 1 needs to sell at least a hundred pieces of the hair buns to match the profits of Store 1 – which was made just for selling a single surfboard. Hence, if you are Store 1, you can only imagine the time it will take to sell a hundred pieces of hair buns and match the profits of Store 2. That’s even assuming that Store 2 can only make a single sale for every 100 sales of Store 1. How much more if Store 2 can sell its surfboards regularly?
While it’s true that selling high-ticket items is not as easy as selling cheap products, the level of effort needed to make a sale for both models is just the same. Basically, with high-ticket drop shipping, you get a more extended period in making a sale, but you make more money than in low-ticket drop shipping.
Finding a low-ticket item for your dropshipping business is very easy since you can sell almost anything from trendy products like fidget spinners to cosmetic products to household items like light bulbs. That is precisely the reason why many drop shippers prefer low-ticket drop shipping business - because it’s easy to find new products to sell. While that is somewhat true, it brings about a common misconception that high-ticket items are restricted to gadgets, furniture, jewelry, and appliances only, which can be misleading.
There are tons of products available for high-ticket drop shipping. From lifestyle products to office supplies to gardening tools, high-ticket item selection are also vast, so you don’t need to worry about running out of products to sell. If you’re still unsure about which product to carry, then check out our niche list for high-ticket drop shipping.
Delivery & Shipping
Typically, high-ticket items are more challenging to ship since they are usually bulkier and thus come with a higher shipping fee. This is in contrast with low-ticket items, which are pretty easy to deliver and ship. This negatively affects your profitability when dealing with returns. Hence, your pricing and terms with your supplier must be set in a way that anticipates this kind of situation to avoid incurring losses.
Low-ticket drop shipping is busier in terms of Customer Support since you’re dealing with more customers in this drop-shipping model. This contrasts with high-ticket drop shipping, where your customer support is more relaxed since you only deal with a smaller market. So, suppose you’re in the low-ticket drop shipping business. In that case, you can expect that most of your time will be spent attending to customer inquiries instead of the occasional inquiries in high-ticket drop shipping.
Key Takeaway: Why High-Ticket Dropshipping is Better
In general, both low-ticket drop shipping and high-ticket drop shipping offer some benefits over the other. However, the high-ticket drop shipping model poses like the one with better potential and a bigger room for growth.
If you’re patient enough to take the extended and tiring road, then low-ticket drop shipping might work for you. However, if you’re looking at efficiency, high-profitability, and long-term growth, then a high-ticket dropshipping business is the best choice for you.
What do you think of this article? Leave us a comment below!
eCommerce Paradise was created by Trevor Fenner of Seattle, Washington in 2015 to help you, the entrepreneur, to start and scale your own eCommerce business. Trevor owns multiple 7-figure eCommerce stores and is a digital nomad, traveling the world while working remotely with the help of his team of virtual assistants from around the world. Trevor is currently located in Bali, Indonesia, and is a passionate skateboarder, surfer, scuba diver, photographer, environmentalist, outdoorsman, fitness and tattoo enthusiast.
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