Component 1 – The Product

To find out if your product is good for online selling you have to answer to the following questions.

1. Is it hard to find locally? Does Walmart (or other huge chain retailer type) sell it?

2. Is it expensive enough that shipping isn’t outrageous?

3. Is the item expensive enough so that people shop around for it?

4. Is the item durable and easy to use?

5. How much of the item will you have to keep in stock? Is the item expensive enough to make a decent profit with each sale?

1. If its a common product able to be bought at any store, or found at the local Mall, then people will be less apt to look for it online and that means fewer sales for you. The more unique or collectible an item is in general the better it is to sell online. Crafty type things for instance do very well online.

2. If you ship with UPS or Fedex the minimum it will cost you is around $5-$6 to ship something, even across town, and across the country it could be $10-$12. The most common size for USPS priority mail is $5.95, though that’s the same price regardless of distance. Personally when you’re accepting credit cards you really should use a trackable service that gets a signature, so I recommend UPS. The point though is that even small cheap things can be expensive to ship. No one is going to pay $10 to ship something that’s only worth $5. People don’t like paying $10 to ship something only worth $10-$20. However if what you’re selling costs $200 and only costs $10 to ship, well people hardly notice.

3. If people shop around before buying an item there is a greater chance they will look online first. This is the only reason why the small cut-rate electronics ecommerce stores stay in business. If someone is buying a Plasma TV they shop around a lot first, and if they find it at some no name ecommerce store that happens to have the lowest price, they might just buy it. However, electronics are actually a poor item to sell online.

4. You do not want to spend all day dealing with returns and customer support. Consumer electronics are going to result in a lot of both. In contrast a wooden birdhouse isn’t really hard to use, or prone to breakage during shipping. Always consider the potential for breakage, difficulty in packaging, and the potential for needing to provide customer support.

The more profit you make per sale the better. This means you’ll need to make fewer sales each day, which means less work for you, and it also means you’ll need to keep fewer numbers of items in stock. Now sure, more expensive items are often larger than cheaper items. Also cheaper items might sell more than expensive items, but trust me it’s not that cut and dry.

For instance regardless how expensive an item is you’ll have to spend the same 5-10 minutes shipping it, maybe 3 minutes once you get good or if the item is already prepackaged for shipping. Assume 10 minutes for easy math if you only make $5 in profit per item then you’re only making $30 an hour, without even considering all the other work you do to keep your business going. If in contrast you make $50 per sale you’re making $300 an hour, which even after all the other work would probably still end up being over $100 an hour. That’s not too shabby.

5. On the storage side of the issue, smaller cheaper items might get lost more easily, or be harder to organize logically. Now when I say large I’m thinking of something the size of a pillow and when I say small I’m thinking of something the size of a soup can. I personally prefer dealing with the pillow, it fits nicely one deep on a shelf and I can easily see at a glance what inventory I have.

Finally, smaller cheaper items have more competition. I’d much rather sell an expensive item even if I make fewer sales in a day.

Of course you also need to worry about your storage capacity, make sure you have enough room to store enough of the product you wish to sell.

The Book