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Today’s guest is your friendly neighborhood forklift driver turned e-commerce entrepreneur.
Over the last nearly 10 years, Ben Knegendorf from DropshipBreakthru.com has started, grown, and sold several different online stores. (Check out the free on-demand webinar for more.)
Ben advocates for a model of “high ticket dropshipping,” where he acts as a virtual retail storefront for brands. Those brands or their distributors ship products to his customers without him ever having to touch the inventory.
Tune in to the Side Hustle Show interview to hear how:
- Ben sold his first online store
- he differentiates himself from other sellers
- you can start your own online business in the next 30 days
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What Is High Ticket Dropshipping?
Dropshipping comes in many different flavors. The specific type Ben has in mind is what’s called “high ticket dropshipping.”
In broad strokes, dropshipping is where you sell a product on behalf of a brand but don’t touch the inventory. When you make a sale, the brand ships the product to your customer on your behalf.
Unfortunately, many people who dabble in dropshipping source generic, low-quality products from Chinese manufacturers and provide little to no customer service.
“It’s a terrible experience,” Ben says. “And so you’re not going to be around very long and you’re not going to have a business that’s an asset.”
With high ticket dropshipping, you sell good-quality products from brands that people have already heard of. The goal is to become a bona fide retailer of those products, possibly even a source of information that people go to when they want to learn about a product.
“You’re building a real sellable asset that you can then sell on … any of the brokerage sites out there.”
Inspiration to Start a Dropshipping Business
At 29, Ben worked at a Walmart distribution center driving a forklift.
He finally got the coveted first shift after seven years, only to find that everyone else working first shift looked like they didn’t want to be there.
Something had to change.
So, Ben took an extra bathroom break one day and tapped out a quick note on his cellphone. It read:
I MUST begin setting goals and formulating a plan for the future. Working for this place is slowly driving me insane. Find your passion and begin. Set goals. Set an action plan. Begin the first steps immediately!
Ben started listening to podcasts about how to make money online and eventually came across high ticket dropshipping.
He took a course, built his first business, and sold it for one year’s pay at his job.
How to Choose a Dropshipping Niche
What are you interested in?
You simply can’t reach and sell to everyone, so choose a niche that you’re interested in.
Ben, for example, loves golf, and the biggest business he’s been part of was a golf business. His business co-founders also love golf, so he knew how to speak to them and understood their pain points.
Who do you want to serve?
Think of the “who,” i.e., the people you want to serve.
“Marketing is fun … But if I don’t understand the person behind the screen, it’s not going to be as fruitful as somebody who understands that person and loves marketing,” Ben explains. “They’re just going to have an edge on me that I don’t have.”
What Products Do Your Target Customers Buy?
Think of the products that your target customers buy.
Say you want to target people who keep fish as pets. What products do they buy? They likely buy fish food, filters, aquariums — those types of things.
What about people who ride horses? So on and so forth.
What’s Your Dropshipping Pricing Strategy?
When it comes to pricing, Ben sets the bar at $800.
Anything less than or equal to $400 is low ticket. “What we don’t want to do is sell low-ticket products simply because there’s just not enough margin there to move the product.”
For example, if you want to make $30,000 in revenue next month and you sell $30 products, you need to sell 1,000 products. But if you have a $3,000 product, you need to sell only 10.
“It’s just a different type of marketing,” Ben says. “It’s demand capture versus demand generation.”
Meanwhile, anything between $400 and $800 is no man’s land, where there’s just enough margin for you to make sales but no margin left for you to make a profit.
Ben learned that the hard way with StandingDeskNation.com — a business that made $1 million in revenue but $0 in profit because there was just no margin left.
If you sell a $500 product with 30% margins, for example, $150 of that goes to things like shipping fees and advertising costs.
But if you have those same margins on an $800 product, you’ll have $240 for your business fees, or $900 if you have a $3,000 product. You can then pocket any leftovers as profit.
“The higher the price, the better in this scenario.”
The Touchpoint Test
The touchpoint test is an easy way to work backwards.
For example, look for products that are above $1,000, then figure out who would buy those products.
Ben used this strategy to turn someone’s composting toilet business into ShopTinyHouses.com, serving people who want to buy tiny houses.
Criteria for Choosing Dropshipping Products
1. Ease of Shipping
Different products require different shipping methods.
If you’re new to dropshipping, you want to choose products that are easier to ship, not products that need to go on a freight truck, for example. But that can be an opportunity to differentiate yourself from other dropshippers.
“If you are willing to solve problems that other people aren’t willing to solve, you’re going to bring value to the marketplace that wasn’t there before and you’re going to be rewarded handsomely.”
Just be prepared to face challenges if you choose products that require freight shipping.
2. Presence of Enthusiast Markets
You also want to consider enthusiast markets — markets targeted at customers who are not afraid to buy what they want, not what they need.
Going back to the golf example, no one needs golf equipment, but there are people out there who want it.
3. Number of Real Brands Available
When people hear “dropshipping,” they typically think of Alibaba and similar platforms.
But that’s not what Ben is about.
For example, on PelletGrillPros.com, a business he started in 2016, Ben sells seven different brands of pellet grills and smokers.
“I’m not … just looking for a no-name thing. I’m looking for brands that exist in the market.”
Ben advises choosing 5 to 10 brands. But if you can find more than 10, that’s even better.
“The beauty of high ticket dropshipping is you are selling brands people are already searching for,” Ben says. “You can win really quickly by hitting those bottom-of-the-funnel keywords.”
4. Search Volume
If a product has a low search volume, you won’t have a lot of competition, but there likely won’t be many suppliers of that product either.
In contrast, a product with a high search volume will definitely have many suppliers, but you’ll have a much harder time competing with other sellers.
Those elements combine to create a bigger picture, one that will tell you whether a product’s worth selling or not.
Ben is a big fan of Google Ads’ Keyword Planner for doing keyword research, but there are many similar paid and free tools you can use, such as Ahrefs, Semrush, and Ubersuggest.
Finding Suppliers
Fear of failure (and fear of success) is something that Ben had to grapple with when finding suppliers for his first few online businesses.
But what helped him muster up the courage to call suppliers is knowing that he’s doing brands a favor. “You’re helping them sell products … so come from that position.”
The pitch he likes to use goes something like, “Hey, my name is Ben from MySaunaSite.com. I’m wondering who I can speak to about becoming a retailer for your brand.”
A pitch like this will usually get you to the right person. But if the supplier says they’re not taking on new dealers, you can say something along the lines of, “That’s great. I’d love to start building that relationship for whenever in the future that comes to be.”
Ideally, you already have a website before you start calling suppliers. A website is one of the few things that will differentiate you from your competitors, and it only costs $50-$100 to build.
Some points worth mentioning to prospective suppliers include:
- You’ll honor MAP (Minimum Advertised Price). MAP is set by the manufacturer to protect the brand’s value and profits.
- You only sell on your website. Selling products on third-party websites like Amazon or eBay is a red flag that suppliers look out for.
- We can represent your brand well. Show the brand how you’ll feature them on your website. For example, write articles about the brand or create relevant landing pages.
“Give them an opportunity to say yes to you, rather than an opportunity to say no to you.”
How Do You Stand Out From Your Competitors?
To further differentiate himself from his competitors, Ben offers product bonuses and bundles. These allow him to honor MAP and provide value to customers.
With pellet grills, for example, Ben can throw in the grill cover or a year’s worth of pellets for free with each purchase.
The idea is to create an offer around your product that’s different from what the manufacturer and other sellers are offering.
Getting the Product to the Customer
Even if the brand or supplier handles shipping on your behalf, the process of getting a product to a customer has a couple of steps.
- Get the order from Shopify.
- Email the brand or supplier. You may need to follow up, depending on their availability.
- Process any paperwork you need. You can be a sole proprietor in the US, but if you want to form an LLC, you’ll need an EIN (Employer Identification Number). Note that brands and suppliers differ in terms of their requirements.
- Once the brand or supplier sends their pricing, you can reach out to them if the margins aren’t in the 20-40% range. Don’t be afraid to push back and mention any business fees you’ll need to cover.
- The process ends here if the brand or supplier covers shipping. Otherwise, be prepared to handle shipping.
Every brand is completely different, so Ben advises creating Google documents of each brand’s process and pricing.
Don’t be afraid to personalize the products themselves. No one will want to buy from you if your products have the same descriptions as the brand’s or supplier’s.
What’s Driving Traffic and Sales?
For Ben, SEO is the name of the game as far as traffic and sales are concerned.
He writes product reviews, product comparisons, and product alternatives content to send prospective customers to his website’s collection pages and move them further down the conversion funnel.
He also uses Google Ads to target keywords and have his products show up on the Google Shopping carousel.
“Google Ads is gonna get you started … SEO is what’s gonna take you to eight figures.”
The cost per customer acquisition varies per brand, but Ben likes to limit his ad spend to 10% of his revenue. If you’re selling a $2,000 product for example, you could realistically expect to spend $200 to acquire a customer through ad channels.
Any Customer Service Issues?
Products can get damaged in shipping, but not all suppliers do returns.
As a business owner, you have to create a damage and return policy that understands that but still works relatively well for you.
Remember there is a cost of doing business, so if someone falls into that return window and you have to take the return, you may need to just eat the restocking fee.
Alternatively, you could sell the damaged item and recoup most of your money.
This is one of the major drawbacks of the dropshipping model, but it comes with what you signed up for.
“There’s a reason you want to be a business owner,” Ben says. “You’re willing to take more risk, which inherently brings more return if you can solve the problems that come with that risk.”
Any Surprises Along the Way?
A key lesson Ben learned over the last nearly 10 years of doing dropshipping is there are many ways to go about it that isn’t just selling products.
Dropshipping also presents you with opportunities to learn skills that you can leverage in many different places, such as copywriting and SEO.
What’s Next for You?
Ben is currently working through putting on their first live event for DropshipBreakthru.com
“If I can throw this amazing event in Minneapolis in July this summer and bring people together … I think that’s going to be really special.”
Ben’s #1 Tip for Side Hustle Nation
“Just take action.”
Sponsors
- LMNT – Claim your free 8-serving sample pack with any purchase!
- Notion – Try Notion AI for free!
Links and Resources
- DropshipBreakthru.com/sidehustle
- The Dropship Podcast
- StandingDeskNation.com
- ShopTinyHouses.com
- PelletGrillPros.com
- Google Ads
- Ahrefs
- Semrush
- Ubersuggest
- Shopify
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