Search

How Much Money Can You REALLY Make Dropshipping?

Hey it’s Spencer here.  I just wanted to give a brief introduction to this guest post from Joseph Brusca.  Joseph is someone that I had on the Niche Pursuits podcast recently (along with his brother Mike).  

These guys have been involved in dropshipping for a long time and shared alot of their tips for getting started in this podcast interview.  

Today, Joseph dives into high ticket vs. low ticket dropshipping and how much money can be made pursuing these options.  If you are interested in getting even more tips from Joseph, you can check out his Instant eCommerce Training right here.

Either way, enjoy the article!

If you’ve been reading about different online business models to get started with, then there’s no doubt that you’ve run into dropshipping. For over a decade, there’s been buzz around this seemingly simple ecommerce strategy.

However, there are very few resources on the subject that don’t seem like “hyped up” sales pages or videos trying to pitch you on something.

If you’ve ever been on YouTube, you’ve surely seen some of the video ads that show just how “easy” it is to start a dropshipping business with Shopify.

But as you might imagine, the truth is much less flashy and grounded in reality:

Dropshipping when done right is probably the easiest and quickest way to start generating income online and creating a web-based asset that you can sell.

But when done wrong, a dropshipping can cause you waste countless hours and lose thousands of dollars.

In this article, we’re going to explore how much money you can actually make dropshipping in the most realistic sense possible.

Let’s get started…

What is Dropshipping?

Dropshipping is nothing more than a method of fulfillment.

Seriously, that’s it.

The term refers to when the business who makes the sale to the consumer (or business) does not actually ship the goods that were purchased.

Instead, the goods are shipped directly by the manufacturer or brand.

The obvious advantage to the seller is that they do not need to buy inventory.

For the shipper, it allows them to not have to focus on marketing and selling. Instead, they can put a bigger emphasis on supply chain and inventory management.

For certain products that are heavy and/or expensive to ship it’s a win-win for both parties.

It’s practiced that’s utilized by businesses of all sizes. Even huge retailers, such as Amazon, utilize dropshipping as part of their retail business (more on this later).

Different Types of Dropshipping

I like to group dropshipping into two different categories: low ticket and high ticket. If you read the definition carefully, then you might already have a guess for which one I prefer.

Let’s break them down…

Low Ticket Dropshipping

Low ticket dropshipping is probably the business model that you’ve seen pushed heavily in those online advertisements I mentioned earlier. The business model breaks down like this…

While this might seem easy to do on the surface I absolutely detest this business model. So much so, that when I see others claiming success with it, I have a hard time believing them.

Side Note: I’m certainly not stating that it is NOT possible to make money doing low ticket dropshipping. This is merely my personal experience and what I’ve observed when I’ve seen other people try to make it work.

Here’s why I think it’s a terrible business model:

High Ticket Dropshipping

High ticket dropshipping is by far the better way of doing things if you want to build something that’s sustainable. Here’s how the business model looks on paper…

I've been selling products on Amazon since 2014.

Want to know the research tool I've been using since I've started (and still use today)? Get my latest tips and how to guide for using this tool.

See the Full Jungle Scout Review

Now there are a few major reasons why this makes for a much better business…

Why We Prefer the High Ticket Model

Makes sales, commissions or any sort of revenue online is continent on one thing: getting traffic.

Plain and simple if you can’t make traffic then you can’t make sales.

But the thing is that getting traffic costs money. No matter how you slice it, there is some form of investment that you need to make in order to get people to come to your website. All of the following are different ways of getting traffic that cost money one way or the other.

In business, you’re essentially spending money and time now in hopes that you’re going to get a greater return later.

But the fact is that only a small percentage of the traffic that comes to your website is going to result in any sort of return.

This is true no matter how good your copy is or how fantastic the products are that you’re selling.

By selling high ticket items, a single sale can be worth a lot of money. All of the sales we make on a daily basis can profit us anywhere from $50 – $5000 or sometimes even more.

Compare this to selling a T-shirt or making an affiliate commission from something like a juicer. At best, you’re going to be making $5 – $15 or something in that range.

Now, I understand that these are two different business models and it’s hard to compare them in this way.

But considering that the methods of acquiring traffic for a low ticket and a high ticket business model don’t really change much, I’m of the opinion that selling things that can have huge returns gives you the biggest bang for your investment of money and time.

Setting Expectations for Income

No matter how good a business model is, it’s important to understand that it’s never truly “easy” or a straight path forward.

You need to set reasonable expectations, do work consistently and adapt to any curve balls that get thrown your way.

But with high ticket dropshipping, it’s not unreasonable to say that you can be making anywhere from $200 – $3000 in the first month or two of making your store if you put in the work and happen to get a little lucky along the way.

Sidenote: Yes, there is an element of luck to EVERY business, but the impact luck becomes less and less the more you work at it. As you start to get your hands dirty, you’ll develop your own little methods of doing things that work for you and make small tweaks over time to your specific business model that makes luck much less of a factor.

The amount of income you make hinges on one major factor: How many good suppliers you can secure and develop relationships with.

There are other important factors involved, but this is the thing that makes it all possible.

Realistically, all it takes is one supplier’s products to take off and you can start profiting 5 figures per month.

And there is a middle ground as well. Not every supplier will be a huge win, but you can also have a bunch of smaller suppliers that add up.

Your income is going to have a direct relationship with the suppliers you’re securing. The more attempts you make to secure suppliers, the more successful you’re going to be. Whether this takes place over a 1 month period, a 6 month period or a year long period is all up to you. The faster you move, the easier it is to find and scale the winners.

Expenses Breakdown

Probably the biggest advantage of high ticket dropshipping is that the expenses are extremely low. The biggest cost in your business is going to be Google ads, but when done correctly, there’s a very small chance that they won’t be profitable.

This is simply due to the fact that you have so much room for error. Making a sale for $500 profit can wipe away lots of mistakes from your ad campaigns that you can correct going forward to become even more profitable.

So here’s a breakdown of the expenses that you should expect…

Scaling Into a Full Time Business and Beyond

Assuming you’re willing to stick at it and put the work in, it should be relatively straightforward to make $1000-$5000 profit per month.

But then you need to start thinking about scaling it into a full time business.

This is where you’re going to have to start to develop those universally important business skills such as outsourcing and creating systems.

Want To Build Smart & Relevant Internal Links...Quickly?

NichePursuits Rating

Link Whisper makes it simple to boost your site’s authority in the eyes of Google. You can use Link Whisper to:

  • Bring out your orphaned content that isn’t ranking
  • Create smart, relevant, and fast internal links
  • Simple yet effective internal links reporting: what has lots of links and what pages need more links? 

Click here to revolutionize your site’s way of doing internal links

Build better internal links with Link Whisper

There are two main sets of tasks that you’re going to want to outsource if you want to begin to really scale: product page creation/uploads and customer service.

Product Uploads

Once you have someone that’s able to upload products for you, it removes a lot of the burden of supplier acquisition. It’s not a problem if it’s your first group of suppliers. In fact, we’d recommend doing it all yourself at first just so you can learn and develop a process.

However, uploading products can get quite tedious and before you know it, it can become a full time position.

This is especially the case if you’re scaling and suppliers at a rapid rate like we are doing currently.

Customer Service

As you begin to make more sales, it’s only natural that you’re going to get more inquiries from customers about their orders or about placing an order. This doesn’t take a huge amount of time when you’re first starting, but as you scale it can REALLY start to add up.

We recommend hiring people from the Phillipines at around $3 an hour to handle the bulk of the customer service work. This includes anything from handling live chats, phone calls, emails or even closing sales over the phone.

It’s important to understand that you aren’t going to open your first store and have to worry about doing all of this outsourcing right away. You can get off the ground and make a basic income as a single person, but if you want to really scale then you’re going to need help along the way.

Focusing on Business Development

Once you get the tedious tasks of operating your dropshipping business in the hands of your employees, it will allow you to focus on the things that bring the most growth to your business…

Example of Taking Dropshipping to the Highest Level

Many people don’t realize that dropshipping can be the start to a billion dollar business. Are we at this level? No, of course not – and I’m not sure that I’d ever want to be.

But I can always point to one major company’s case study that began with dropshipping and still has very strong roots in it today.

That company is Wayfair.com and seeing their history is as simple as looking on their Wikipedia page which talks about their history of two guys Niraj Shah and Steve Conine getting started on the humble domain of racksandstands.com.

If you use the WayBack machine to look at this website, it’s very clear that this is a dropshipping site.

I know this because I had a look at the shipping and return policy. It states:

“Send your return using your preferred shipping method, to the address you are provided. Note: this may be our main office or to a distribution center.”

In my humble opinion, this means that it’s going to be most likely sent back to the manufacturer or brand that it was originally dropshipped from.

We also know that Wayfair does a lot of dropshipping because we work with suppliers that also work with Wayfair.

The point is this…

If Wayfair can take a simple dropshipping store and turn it into a publicly traded company, it shows that it is totally possible.

By developing systems, investing in teams and doing all of the things that high level businesses do, there’s no reason why you can’t scale a work from home dropshipping business to a massive company.

Frequently Asked Questions

Is Dropshipping Really Worth It?

In my opinion, high ticket dropshipping is the number one way to get started in online business simply because it allows you to generate profits in a way that is quick and reliable.

It’s also not NEARLY as capital intensive as other business models such as FBA. Not by a longshot.

If you need to start generating positive cashflow quickly without investing much capital, high ticket dropshipping is one of the few business models online that allows you to do this.

However, the downside to dropshipping is that it’s not as easy to scale it in an exponential way the same way you would an FBA business.

What do I mean by this?

How I Built A Niche Site That Makes $2,985 Per Month

NichePursuits Rating

Want to start a niche site that can bring in $3,000 per month… or more? Here I discuss:

  • The tools you’ll need
  • How to start on a budget
  • Best ways to generate an income fast

Interested? Click here to learn how to start your own income generating niche site.

Start your own niche site today

When you start to scale a high ticket dropshipping business, the processes have a lot of nuance. You’ll be dealing with multiple suppliers with different points of contact

The good news, is that outsourcing can alleviate a lot of the headaches, but it’s simply that scaling it can start to add more layers of complexity to deal with, especially once you get beyond the $10,000 profit per month mark.

With an FBA business, the way to scale is VERY straightforward:

Sidenote: Just because I said those two bullet points are straightforward does not mean that they are easy by any means. To have a successful FBA business requires a lot of time, research, testing and money to get right. You can also LOSE a ton of money along the way. It’s just that once you get it right it can scale very quickly.

So our recommendation is this: Use high ticket dropshipping to generate cash to fund capital intensive business models like FBA or a niche/authority.This is exactly how we operate our portfolio business to date. Rather than trying to decide on something like whether you’re going to do Dropshipping vs FBA understand how you can use one to compound the other and how they both fit into a long term business strategy.

What Companies do Dropshipping?

For whatever reason, many people make the mistake of starting their dropshipping journey by looking in “directories” or other membership places to find suppliers. There is absolutely no reason to do this. There are countless companies that do dropshipping that you can simply reach out to and join their dealer program.

All of the best ones aren’t advertised on big platforms or directories. They are just regular companies and brands. You might even have some of their products lying around your house or apartment.

Just think whether something is efficient to ship multiple times. If it’s not, then there’s a good chance that a company will do dropshipping as part of its existing wholesale or dealer program. It simply makes logistical sense for them to do so.

Is Dropshipping Illegal in Any Way?

As stated earlier, dropshipping in itself is simply a method of fulfillment. There’s nothing illegal about it.

The only reason people ask “Is Dropshipping Legal” is because of the shady practices promoted by gurus in the industry such as selling copyrighted images or trying to deceive customers into thinking that you’re not shipping directly from China.

This is the kind of stuff you want to stay away from. Focus on building real relationships with real companies/brands who dropship in your country and you don’t have anything to worry about.

Do You Need a Business License for Dropshipping?

To do high ticket dropshipping the way that we recommend, the answer is that you do need a business license. Suppliers are only going to want to speak with you if you’re a business so going out and registering one is a small step you need to take before they’ll work with you.

If this seems overwhelming, consider the following…

How Do I get Paid From Dropshipping?

Many people often get confused about when you actually get paid when you’re doing dropshipping. I commonly get asked about whether you need huge sums of money to start out, a credit card, etc.

With Shopify, you get the option to choose multiple payment gateways, but the main options Shopify Checkout (which is Stripe), PayPal or Amazon Pay.

We mainly use the first two in conjunction with a separate service called Klarna which allows customers to finance their purchase.

But anyway, as soon as the customer checks out on your website, their payment gets deposited directly into your payment gateway. Shopify Payments pays out every 2 business days or so and PayPal usually pays out pretty quickly as well. The trouble with PayPal is that they sometimes will put a percentage of your cash on reserves when you’re just starting out if it’s a new account. I’ve heard of Shopify doing this too, but I don’t think it’s ever happened to us.

But either way, most of the time you get that cash from the customer within 2-3 business days.

When an order is placed, you obviously need to pay the supplier to get it shipped ASAP. The large majority suppliers will accept credit cards, but for others you may have to do a direct bank transfer.

So what you can glean from all this is that you get paid pretty quickly compared to most other business models. No need to wait 60 days for an affiliate commission payouts or even 90 days for some ad networks!

Quick Tip: If using a credit card make sure you get something that has a good rewards program!

So How Much Money Can You Make Dropshipping?

Considering everything that we’ve covered, I think you’ll agree that there’s really no straightforward answer. But if I absolutely had to make an educated guess, here’s how I’d break down how much a given individual could make (in profit) at high ticket dropshipping if they were to put in the effort…

But there is one final thing to consider: selling your store.

If it’s intimidating to you to move beyond the $10,000 per month mark there is an alternative: selling your store.

Creating and flipping dropshipping stores is a great way to up your income substantially. You can sell stores for 20-30x their monthly earnings on Empire Flippers, so focusing on building and flipping is an alternative model to only focusing on growth.

Pick a path, stick with it and good luck!




Amazon FBA & eCommerce

By Spencer Haws
September 17, 2019 | No Comments

Want to learn step-by-step how I built my Niche Site Empire up to a full-time income?

Yes! I Love to Learn

You may also like

View all

No Comments

Join the conversation

Leave a comment

Recent Posts

View all