Why Are Tech Gadgets the Hot New Straight Sale Vertical?

We’ve all seen them––the storefronts popping up selling dropshipped VR headsets, smartphone lenses, and miniature drones via straight sale. But why tech gadgets, of all things? Turns out, tech gadgets are a perfect example of the ideal straight sale product category, and here’s why:

They’re trendy

limelight straight saleEvery few months, there’s a new “it gadget” that customers want to get their hands on. Customers are actively seeking out the newest, let’s say, virtual reality food processor, so demand is high, and display ads featuring glossy wristwatch holograms catch the eye more than a timeless essential like a black T-shirt or toilet paper would. Trendy categories like tech gadgets are also ideal for dropshipping: it’s essential to be able to quickly set up a storefront while solar-powered coffee tables are still hot. 

Manufacturing is still really cheap

If you’re thinking, “okay great, but the profit margin can’t be great–no way is it that cheap to manufacture complicated electronics,” think again. While manufacturing electronics does take more precision than, for example, a plastic frisbee, you’re still working with the same advantages that make all Chinese manufacturing cheap: lower cost for labor, factories with easy access to raw materials acquired at a cheaper per-unit price thanks to bulk purchases, and in some cases, a government sponsored rebate on value-added tax. Tech gadgets are also usually lightweight, which reduces shipping costs when compared to, for example, auto parts, or even clothing.

Customers expect high prices

While you pay less for the product, the advantage of selling tech gadgets is that customers expect them to be expensive. Not so expensive that they won’t snap up a cloud-connected pair of sneakers in an impulse buy, but a fair chunk of change. In fact, offering a gizmo at too low a price looks suspicious and may even discourage customers from buying. Customers have an internal reference price, AKA a benchmark price that they would consider “fair” for a certain category of product, that they refer to when shopping. A sticker price way above that reference price raises red flags, but so does a price way below. After all, who trusts that a $17.99 pair of “noise-cancelling headphones” is actually going to cut out sound?

The combination of a wholesale price that stays low thanks to dropshipping, plus a customer base that expects high prices, equals a pretty nice profit margin for you.

The combination of a wholesale price that stays low thanks to dropshipping, plus a customer base that expects high prices, equals a pretty nice profit margin for you.

…and?

As risk-free trial/continuity models become more risky for merchants as MIDs for those businesses dry up, straight sale is a natural direction to turn. Straight sale is an opportunity to get involved with product verticals like tech that aren’t natural choices for a subscription model, (nobody wants a new drone each month,) but still hold a lot of potential for profit. Keep in mind, the ingredients that make tech a good product for straight sale–low manufacturing cost, high value to customers, popular and trendy, not a great fit for subscription–can apply to plenty of other verticals. There’s a lot of room for growth out there.

LimeLight offers merchants billing freedom: the ability to set up any type of pricing structure for your customers, from straight sale to recurring billing, variable billing periods, subscription packages for a set number of months, upsells, cross-sells, and more.