Now that I’ve been in this business for a while, I’m realising more and more how important it is to choose the type and kind of product you sell carefully. There are a few reasons for that, but here are the major factors that will affect your performance:
Market Size – how many people demand the product
Fragmentation of market – how easy is it to get hold of these people? A market may be huge, but if your market is highly fragmented, it’ll be much harder to market to and devleop
Average Order Value (Product Value) – all things being equal, a higher value / priced product will generate more revenue than a lower priced / value product. Go too high though and you’ll see conversion rates drop, but within the $100 – 200 range seems to be pretty good from hearsay. Our experience has shown that if your products average around $40 – 50; you’ll almost double your average cart value compared to products in the $25 – 50 range.
Competition – not much required to discuss here
Uniqueness – if you have a product that others can’t find / locate / buy anywhere else, you have a much higher conversion rate than others. This is great when you can manufacture or otherwise sole-source a product which has high demand and often the reason for breakout successes fir small companies.