The Ultimate Guide To High-Ticket Drop Shipping For Beginners Lesson 1: What Is Drop Shipping?
This is the ultimate guide to dropshipping for beginners.
I have been doing dropshipping for over 15 years now, and I absolutely love this business model. I still have a few profitable niches, high-ticket dropshipping stores, and I coach clients on managing, scaling, and automating their eCommerce stores.
Thanks to dropshipping, I can travel the world and live anywhere there is an internet connection.
I love helping others achieve location independence; that is why I decided to create some learning materials to teach you exactly how you can start your dropshipping store today with very little upfront investment.
At the end of this course, there will be an offer to join my High-Ticket Dropshipping Masterclass and Group Coaching Program. I highly recommend joining as that's where I put all my in-depth over-the-shoulder training videos, as well as showing you behind the scenes of my profitable dropshipping stores.
I look forward to helping you become successful with high-ticket drop shipping!
If you have any questions feel free to comment below, and I'll personally reply.
Founder of eCommerce Paradise
Lesson 1: What Is Dropshipping?
Hey, guys. Trevor here with eCommerce Paradise. Welcome to the very first lesson in the "What is Drop Shipping" mini-course.
This whole course is filled with lots of information for you to understand drop shipping in-depth and what it's all about. Dropshipping is a pretty simple business model and, yet, it can be very confusing for those who have never done it before. eCommerce is just basically selling products online, right? Dropshipping is the fulfillment method to which you get those products from the supplier to your customer.
Understanding what drop shipping is and what it isn't is important. I'm going to go over some pros and cons for you to get a better idea of what dropshipping is and how it can benefit you.
The coolest thing about dropshipping is that less capital is required. It doesn't require a whole lot of upfront investment. Typical business models, especially franchises, can cost tens to hundreds of thousands of dollars to invest in. For instance, you want to start a franchise of Mcdonalds. A franchise of Mcdonalds would cost you a quarter-million dollars just to apply. That doesn't include other things like building and design.
As far as business models go, an eCommerce store with a drop shipping fulfillment method can be a very low-cost startup, otherwise known as a lean startup. Dropshipping is also a very easy way to get started online compared to other business models.
No Need to Create Own Products
You don't have to create your products with dropshipping. You will use products that other people have already created and marketed, and you'll just sell them and market them in new channels. You can also re-market them on the same channels and help the customers while the supplier fulfills the order for you. As far as managing or paying for any kind of warehousing, you don't have to do that. You don't have to pack and ship your orders. Your suppliers will do it all for you. Almost 99% of the time, you don't handle any returns or inbound shipments. And, of course, continually ordering products and managing stock level isn't a concern when you're doing drop shipping because you don't have to manage your stock.
Now, there are some exceptions to that. If there's a really popular selling product on your store and it's out of stock, you might want to mark that out of stock or at least put on there a backorder notice. This is so the customers won't get annoyed when you tell them that you're actually out of stock.
Another cool thing about dropshipping and eCommerce is that you really have a very low overhead. Overhead is this thing where you have to pay for all these expenses to run your business. If you have a physical store, you have to pay for the rent, display, employees, insurance, and utility bills.
A home office is part of your home, and that's where you'll be running your dropshipping a lot from. It's very inexpensive to run a home office. In fact, it can be within the same costs as your everyday life. You can also work in a coffee shop. It costs somewhere between $2.00 and $5.00 on average for a coffee, and you can use that coffee shop for as long as you need or for some coffee shops for a few hours, and you get your work done there.
You can also have a very flexible location when you're doing dropshipping, like in a coffee shop. You can travel around the world because you just need a place with wifi to run your business. You can make wifi calls and emails from a wifi location. You can travel to Thailand, Europe, Central South America, anywhere there's good wifi, you can run your business from. It's the ideal lifestyle business for someone who wants to travel because it's easy to start up, low overhead costs, and it's very flexible as far as your location goes.
Wide Selection of Products
Another cool thing about doing eCommerce with drop shipping suppliers is that you have a really wide selection of products.
This comes in handy when you want to scale your business. You can get new suppliers, add their products to the site, optimize those product listings, and market those product listings. It really doesn't cost much more than doing the marketing efforts. The ads will run on their own once you get them all set up, and, eventually, you'll start ranking organically, and you'll get free traffic to those listings. When you sell them, all you have to do is send the order to the supplier, and the supplier will send the product to the customer, and the customer will get the product and be happy and leave you a nice review. That's the ideal situation.
As far as scaling goes, there are many ways you can scale. Obviously, adding suppliers and products is the best way. Another great way is to add more content to your website and build out sales funnels from those content pieces to the related products. You could hire writers for writing round-up articles for the resources that are within your niche. You can hire writers to write how-to content like how to solve a problem that that product sells, and say, "Buy this product if you want to solve your problem."
There are all sorts of cool things you can do, and it is really easy to scale. It's very cost-effective compared to other business models, and it is the best way to reach people these days because everybody is either on their smartphone or their computer and they're shopping, and they're very used to it.
Dropshipping does have some disadvantages, and I wanted to go over that because it's vital. When you understand drop shipping, that means you understand both the pros and the cons. You want to be prepared for this because you're going to need to deal with this later. My best advice is to understand the systems that you need to have ready when you're going to encounter these things and how to deal with them. These are called standard operating procedures, and whenever something happens, you should have an answer to that.
The first thing about drop shipping is you'll have lower margins than you would if you were to sell your own product. If you were to sell an imported product from China, or if you were to create your product like an information product or digital product, the margins are generally around 10 to 30%, maybe even higher. Sometimes it depends on the niche, and those are somewhere between gross and net as well. Usually, your gross margin is somewhere between 30 and 40, maybe 50%, and then your net margin, which includes shipping costs, fulfillment costs, advertising costs, will be closer to as low as 5% to as high as probably 25 or 30%. It really just depends on the product and supplier.
Understand that it is an easy model to start with, very cost-effective. But since you're not actually creating the products and not actually marketing them the way the manufacturer does, you're just doing it as a retailer, the margins are lower. This changes from supplier to supplier. Some suppliers offer better margins because they want you, as the retailer, to do more marketing for them, and some suppliers offer lower margins because they've already done a ton of marketing. They have their fulfillment all set up, and all you need to do is market the products. It just depends on the supplier, and it can change.
The other issue is inventory. When you're doing drop shipping, you won't be connected to the supplier's inventory a lot of the time. The supplier may send you inventory updates via a spreadsheet or some feed or just an email saying this is out of stock or that's discontinued, but that's usually the best you'll get. In fact, sometimes, suppliers don't even send any updates at all. The way you can handle this kind of incident is to have a standard operating procedure in place.
When you take an order on your website for an item that's either out of stock or discontinued, you can have a way of talking to the customer that tells them that there are other items available in your store that are similar. It could be either from the same brand or different brands and, if they would like that, you could offer some incentive to go with it. It really depends on the customer.
Some customers don't care. Some will try to eat you alive and try to get as much of a discount as possible, and it's up to you as the retailer how much you want to give away or are willing to give away. When they're first getting started, I usually tell people it's a good idea to take on the same idea that Amazon had when they got started. That is to get as many customers in the door as possible. That is so you can re-market to those customers, even if that means losing a little bit of money or breaking even. Hopefully, those customers will, if you do marketing correctly to them, refer you or talk about your company to everybody else around them.
The key is to get as many people in and out the door with one of your products. If there happens to be something out of stock and there's an inventory issue, you cover it up. Give it to them for cost or even a small loss, and you have a customer now. You can then ask that customer for referrals. You tell them, "Could you please tell all of your friends and family about it?" Take pictures of the product, even do a video review of the product for you, that kind of thing.
The other thing about drop shipping that can be a big issue is shipping complexities. This especially comes into play when you're doing high ticket drop shipping. When you're selling expensive products, shipping companies will often need to ship these expensive products that are often large in LTL freight instead of regular UPS or FedEx parcel. That comes with the territory. You're selling a couch instead of a phone case. There's going to be more shipping complexities to deal with. You're often going to have to hire your own freight forwarder or shipping company, which is not that hard. There's a lot of really great services that do this and make it super easy for you, but it is something you're going to have to set up, and it's an extra few phone calls or emails, and that's just the way business goes. Understand that when you're getting into drop shipping that, sometimes, you're going to have to deal with that shipping because it isn't always the supplier that handles everything. You're going to have to take over.
Like, for instance, sometimes we have shipping damage issues, or maybe the product didn't show up on time because of the LTL company. LTL stands for Less Than Truckload. It's a type of shipping where you put a large product on a pallet and then load it on to a truck with five or ten other pallets on there, and they drop it off in that zone of cost-plus money and all that stuff. But at any rate, what happens is that sometimes their freight company will lose track of the shipment or it just didn't make it on to the truck for whatever reason, and the customer will get upset with an LTL freight shipment. You have to call the freight company and schedule that delivery and, if the customer isn't around for the delivery, there's fee and storage fees and stuff like that. You have to be upfront with your customer and tell them, "Hey, this is what to expect, and if for some reason the freight company makes a mistake, then you have to deal with that."
You have to call the supplier and talk to them. You also have to call the shipping company and talk to them. And call the customer, of course, talk to them, which is pretty much your role. You get to work from home or work from aboard, but the thing is you have to be managing all this stuff. And one of the best things you can do, later on down the road, is to build the system to outsource and automate all of these daily tasks effectively eventually.
The last thing that can go wrong is the supplier can make an error. If you're selling complicated products or products with a lot of different variants, like colors or size, then your supplier might accidentally ship out the wrong size or wrong color. Sometimes, the customers can get really upset about this. Sometimes, they don't even care. They'll just keep it. It really just depends on your customer.
You have to be just extra diligent when you're sending in your purchase orders. Make sure that you make it very clear as to what the variants are and, if you added any gifts on to the order, make it really clear on that purchase order to add on those accessories and they'll charge you for them and ship them. And of course, you can make things as clear as possible, and someone over at the supplier might not be doing their job, and that just happens. You have to actually take responsibility for that when you're talking to the customer, and you have to be able to say that your warehouse made a mistake. You don't say the supplier; you say your warehouse.
I'll get more into that later when it comes to running your dropshipping business, but those are just some things to look out for and be aware of to be mindful of. I mean, you are doing what a regular retail brick and mortar storefront does, but you just happen to be online only. You're going to have to run the sales call center.
After all is said and done, there are more pros and cons I could go into, but you may have to ask yourself, is it worth it? Is it something that you're really interested in doing or not is up to you, honestly.
Do you want it badly enough?
Are you a newbie to internet marketing, and is this type of business model something that's ideal for you, sort of to learn the reigns and how it works?
Are you advanced, and have a lifestyle that requires location independence and, yet, you're not like the most advanced internet marketer out there creating your own info products and doing launches and stuff like that?
If you want an easy to run, sustainable, real business to run and build, then drop shipping is great. It's a fulfillment method to run and build an eCommerce store and scale indefinitely as much as you want to.
I mean, I've seen some of these eCommerce stores doing hundreds of thousands of dollars in sales per month, and it's truly incredible as to what level you can get these stores.
To warn you guys, the more you scale your business, the more hassles you're going to have to deal with, and the more customer service you're going to have to deal with. Businesses do turn into this huge thing. Like I said from the beginning, you have to set your goals and you have to set up standard operating procedures so that you understand what's going to be required in the future and how to scale and so you don't have as many growing pains as you might if you didn't.
That's it, guys. Now's the time.
Make up your mind, whether this is something you want to continue doing or not. If you do, if it is something that you decide that you want to do, that's right for your business, lifestyle, needs, family, then definitely continue with this mini-course.
Get into that next video and, if you just got the free mini-course, didn't buy instant access to the whole course, that's fine. You can wait until tomorrow to watch it and, if you did buy instant access, definitely get into that next video right now, and we'll get on to the next step.
See you there.
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 selling high-ticket products online with the drop shipping fulfillment method so you can make more profit per sale, have a sustainable and evergreen online business, get started with very little upfront investment, and live a location independent lifestyle. Trevor owns multiple 7-figure High-Ticket Drop Shipping eCommerce stores and is a digital nomad, traveling the world while working remotely with the help of his team of over 10 virtual assistants from around the world. Trevor is currently located in Bali, Indonesia. Trevor is also a passionate skateboarder, surfer, scuba diver, photographer, environmentalist, outdoorsman, fitness and tattoo enthusiast.
AFFILIATE DISCLOSURE: Some of the links on this page may be affiliate referral links. I will get a commission from the vendor when you make a purchase after clicking them at no added cost to you. As a result, many of them also provide you with a special discount just for using my link. You can go directly to their support if you have any issues with their software or product.
Step-By-Step Training for High-Ticket Drop Shipping
Here are the next steps you'll need to take to start your high-ticket dropshipping business:
- Lesson 1: Research The Market And Choose Your Niche
- Lesson 2: Start Your Shopify Website and Legal Business Structure
- Lesson 3: How To Find And Recruit The Best Suppliers
- Lesson 4: Optimize Your Shopify Website and Sales Funnel
- Lesson 5: Launch Your Store With Paid Traffic
- Lesson 6: How To Manage Your Business
- Lesson 7: Automate and Outsource Your Day-To-Day Work
Resources for Starting A High-Ticket Drop Shipping eCommerce Store
These are the resources I've created to help you start your own high-ticket dropshipping eCommerce store:
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