FUTURE MAP 2025-2045: Discover the Crucial Trends Consumer Brands Must Act on to Prosper in this Massively Transformation Era. See that here.
This is a Quora question I was asked to answer. My response is below.
There are a ton of free resources online about drop ship ecommerce. One is Drop Ship Lifestyle.
Finding the best products is the million dollar question. But you find these products using many tools and processes to help, one of which I will outline below.
I am copying this directly from a piece I have available here: The best growth approach for consumer product startups and product launches
Development #3: MSRP/AOV/CLTV – How to get insanely profitable products without having to sell a lot
When you have higher priced products, or higher average order values (either because the customer buys more of your product or adds other products to the cart when they buy from you), or repeat purchasing that raises your customer lifetime value, then your backend operations become a lot easier to manage because it’s fewer orders, less inventory to manage, fewer customers, with fewer customer service issues, and you can spend more taking care of fewer customers.
Ideal is to get your MSRP or AOV above $100 but below $1000 (any higher and it may require personal selling to close a sale). Minimum should be around $100.
Aim for at least a 30% repurchase rate from new customers. If you cannot get that, it makes it harder because you have to constantly find customers to replace ones you are losing, and that may indicate something wrong with your offering because you cannot keep customers.
I use offering to general mean not just product, but customer service, and anything else about your business where you are touching your customers. For some reason, they are not choosing to buy from you again, and you need to find out why.
Maybe you have products that are priced much less and you cannot hit this range, and that is OK after you have revenue, profits and cash flow, but when starting out, try to get these figures up as much as possible.
You may not be able to do all 3, but do the best you can, or if you cannot do any at all, then go back to product development to come up with a product(s) that can get you in this range.
As you grow, get sales, cash flow and profits, then you might be able to better afford to have lower prices products, but not when you are starting out.
This simple example demonstrates same front end conversion, but with a lower priced product, revenue dramatically goes down. You will need 4x the customers to get the same revenue.
If you want to understand more about this particular equation and how it fits into context of the money flow in your business, please see this post and the download associated with it.