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What to Sell?January 30, 2004When we first decided to open an internet business, we were excited. We saw people selling all kinds of things online... basically anything you can of! And there were suppliers all over the country who were willing to help us sell their products... we just find the customers, and the supplier will do the rest. Well, making money is never that easy.How much do you want to make?One of our first ventures was selling gift baskets. We found some suppliers, set up a website, and started making some sales. We also set up a patio furniture website and did the same. You know what we discovered? The effort to sell a patio chair was the same as to sell a gift basket! For the same effort, would you rather make $10 or $50? Us to, and you will notice that we do not sell gift baskets anymore!Picking a product based on markup potentialIt can be challenging to find a product that you can mark up a lot and that will sell. Brand name software can be marked up a lot... shareware can't be marked up much if at all. Books don't have a high markup, but people tend to buy several at a time. Birdhouses have a high markup, but making 100% profit on a $4.00 product isn't very impressive.All of the articles we read said to look for products you can mark up by at least 40%. I disagree. It's not the percent of the markup that will make you money, but the dollar amount! If you want to make $50/hour (before expenses), pick a product that you can mark up by $50, independent of the percent markup. I would rather mark up a $500 product by 10% than a $20 product by 200%. But, if you really want to sell the $20 product, I recommend selling it in bulk. That way, even if you only make $5 per item, but you will make $50 per order. But then, finding bulk customers is more difficult.Determine your commitmentThe other factor to consider is how much effort you want to commit to a single order. Do you mind dealing with customers? Shipping companies? Customs (for international orders)? It's a fact that items get lost and get damaged, and someone has to deal with it. The question is whether it will be you or the drop-shipper. If you are fortunate enough to find a drop-shipper who will deal with all these difficulties, it will be less effort for you per order. But, keeping your distance won't win a regular customer... but your drop-shipper might win one!How about returns? Will you be willing to coordinate returns? or are you selling your products as is? Is the warranty honored only by calling the manufacturer? Or will you compensate the customer for their troubles even when the manufacturer/drop-shipper will not?Remember that loyal customers are won by properly handling mishaps as much as by preventing them. But, if the drop-shipper handles the mishap, the customer will not be loyal to you but to the drop-shipper. And when it comes time to make a referral, your customer won't recommend your business, but the drop-shipper's.If you don't need to make much money, then find a drop-shipper who is willing to deal with customers, and accept the fact that few customers will purchase from you again. There is nothing wrong with that either... the reward is that you get to keep more of your time for yourself. To compensate for your lower commitment level, you should choose a product with a higher markup potential... measured in dollars not percentages.ConclusionWhile you cannot decide exactly how much money your are going to make on the internet, there is lot you have control over. Factors such as what you sell, who you purchase from, the need for repeat business, and your level of commitment will all impact your choices. High markup percentages don't always make you money, and low commitment might not earn you much either, though both could be right for you. Just consider your choices carefully, pick a direction, and go for it!© 2004
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