Choosing an ecommerce product (part 2)
November 13th, 2007 by KenricSo how did I choose my product? I chose to sell a physical product. I got alot of information from the book, The 4-Hour Work Week. I think that reading that book made me lazier. A couple main points from that book were drilled into my head.
- Select a product which ranges from $100 to $200 - The reasoning behind this according to Tim Ferris, the book’s author is that the margins in this price range are relatively high enough for a low volume product to become successful. In addition the price range is not too high for people to have to think about the purchase.
- Select a product with low customer service - This is fairly self explanatory. If I were selling DVD players or camcorders, I can expect a fair amount of returns of defective products and many questions on its operations. Your product should be low tech and low maintenance.
- Use a dropshipper or if you are creating your own product, outsource to a distributor when volume permits - I think this is where everyone wants to be eventually. What good is an online business if you’re stuck at home packaging boxes all day. The beauty of online is being online in Vegas, at the beach or in France.
In his book, he uses an example of a health club yoga instructor creating an Yoga for rock climbers DVD. The instructor spends a day creating the DVD and then sells it online for $99 each. Each DVD costs her about $2 to make, creating a $97 profit per DVD. Based on these numbers, this low volume, low tech product could produce an income of $25,000/yr if she can sell 5 per week. This is the model I’m trying to mimic.
Based on the above criteria, I selected a line of products that would produce an approximate profit of $50 per $150 purchase. My ultimate goal for this ecommerce site is to make one sale a day with an average gross sale of $150. $50 X 365 days = $18,250/yr.
I’m not going to get rich with this site. I don’t think it has the potential of making much more than $18,000/yr.
My plan is to create 10 of these sites, in 10 different niches, making $180,000/yr. The hard part is finding the niches. This is not passive income as I will have to market, place and take orders and answer emails everyday. But it will afford me the freedom of being tied to a location.
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I had a dream last night that the product you were selling was a left-handed, heated ice cream scoop. I’m left-handed myself, so I am curious as to what the left-handed item you are selling is, which must be why that part stuck in my brain.. And about 7 years ago, I bought a bunch of heated ice cream scoops wholesale and sold them on eBay, so I guess that’s where that came from. Mine were not hand-specific though :-)
By Shaun on Nov 13, 2007
I’m selling left handed forks and knives. :)
By Kenric on Nov 15, 2007
Who would buy a $99 DVD?? Especially when there are hundreds of other yoga dvd’s out there for under $20. Seems a bit unrealistic to me. You need to price items competively or else no one will buy them.
By Mindi on Nov 16, 2007
Mindi, the book’s example was a niche DVD, Yoga for rock climbers. This yoga DVD is targeted towards a very small portion of people. It’s not going after the general yoga market.
It’s an example of finding a niche within a broad market.
By Kenric on Nov 17, 2007
I still find it hard to believe somone would pay that much. Unless you are the only one selling that specific type of product (and monopolies are rare), I’m sure you will have at least one other competitor. If not, then you soon will!
By Mindi on Nov 17, 2007