The Blogger labels gadget is a default sidebar gadget that displays a list of your categories in a list format, either alphabetically or as a word cloud. Although the gadget does not include an option for configuring the display of categories in a drop-down menu, you can achieve this effect by editing the HTML of your blog design.
1. Navigate to Blogger and sign in to your account.
2. Click the account drop-down menu and select "Layout."
3. If the "Labels" gadget is not already include in your layout, click the "Add a Gadget" link in the location where you want the categories menu to appear and then click the "+" icon beside "Labels."
4. Select "Template" from the left sidebar.
5. Click "Edit HTML" and then click "Proceed."
6. Click the check box beside "Expand Widget Templates."
7. Find "" in the code and replace it with:
8. Click "Save Template."
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