Physical or Digital Products – What to sell in your Online Stores?

selling digital products or physical products

eCommerce has come a long way since Amazon sold its first book: “Fluid Concepts & Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought” in year 1995 (source: mashable.com. At the same time Mark Fraser bought eBays’ first item which was a broken laser device in the year 1995 (Source: mashable.com) In the recent years, while eCommerce is growing steadily despite economic fluctuations, more and more products and services are being made available online. With more and more people seeing the benefits of buying and selling online you might be one of those who is thinking about opening your first eCommerce store or simply reevaluating what you are currently selling online.

Before we begin to talk about what products to sell, be it digital or physical products, one must first have the proper avenue for selling and for most beginners you don’t even have to be a techno-geek to build your first online store and start. As of today, there is a wide range of open-source eCommerce solutions available

Best Open-Source eCommerce Platforms for WordPress

source: http://wordpress.org 

There was a time when creating your own website was an expert’s job. However, in 2003 when WordPress, a free and open-source content management system (CMS), was launched it made creating a website so much easier and today as of April 2018 30% of all websites are run by it. WooCommerce and Easy Digital Downloads are the most commonly used eCommerce solutions for WordPress and both also benefit from countless of templates and plugins developed by a wide range of third-party developers.

In the world of online selling your business’ success and failure, coupled with your marketing strategy, depends on how sellable your products are. Although physical goods still dominate the world of eCommerce, digital products are on the rise and choosing between digital or physical is going to come down to the amount of time you will invest in the business and of course the passion that you have for a specific product.

Selling a Physical Products

Not everyone who wants to become an online entrepreneur is a great writer or a genius software developer. If truth be told there is only a small percentage of people who can produce intellectual digital products about their expertise. Physical products are products that are tangible and real. From the time eCommerce has taken flight physical products such as shoes, bags, babies’ clothes and women’s apparel still hold the majority of all online purchases (Source richdad.com)

source: http://www.thinkgeek.com is an online shop selling physical products

The PROS of Selling Physical Products

So what are the main arguments why you would consider selling a physical product? – Here are our collection of the most commonly used arguments:

  • Easy to Start – online retailing has been made easy as suppliers are readily available to find. Once you find a reputable supplier of the goods you intend to sell you can immediately start selling in your online store.
  • You don’t have to be an expert – unlike selling software, apps, eBooks or tutorials, selling physical products is a matter of finding the right supplier and the perfect niche in order for you to have goods to sell.
  • Physical Products have greater Perceived Value – with tangible products that the customer can physically hold, physical products are perceived as real and are seen with a greater or higher value than products that are intangible.
  • Easier to Market – physical products are easier to market in a sense that they are easy to explain. Products like clothing, housewares and the likes often does not need any further demonstration as to its usage and purpose as these things are straightforward.
  • You can sell consumables that people need to reorder again and again – although selling consumables mean that you would have to compete with other sites selling the same thing you can still succeed with competitive rates and great customer experience and service.

The CONS of Selling Physical Products

Selling a physical product not only has advantages but also comes with some disadvantages:

  • Capital Investment in Inventory – When selling physical products, you require inventory unless you run a dropshipping business where you only do the marketing and inventory and delivery is handled by a third-party supplier. Stocking inventory requires capital invested which can make it more expensive to start your own webshop. Therefore, having to invest in inventory can put you at a disadvantage compared to selling e.g. a digital product which does not require any physical stock.
  • Shipment & Logistics – You need a well-functioning inventory and shipment system to ensure you have sufficient products available to fulfill customer orders. If you run out of products you will need a quick solution to replenish your stock. In addition, you need a shipping solution to handle all purchases and to make sure that your products arrive safely at your customers. This can be quite time-consuming and is one of the most difficult part of selling physical products. There are a lot of shipping companies out there but one must be able to use an affordable shipment supplier to ensure shipping can be tracked and that they indeed arrive at your customer’s home. Shipping is also an added cost and sometimes no matter how much cheaper it is to buy online, at the end, when shipping fees are added to the purchasing costs, a customer might end up leaving the item in the cart because of outrageous shipping fees and long delivery times.
  • Limited Markets WorldWide – The number of countries you can sell your products to is heavily limited by the availability of cheap shipping services, shipping times and costs for customs. Each country has different custom tariffs, meaning it can be too expensive for customers to buy and import your products in a certain country.
  • Fragility of Items – Some items are fragile, have a limited shelf-life and cannot be shipped which limits the range of products you can sell online.
  • Product liability & Returns – you will need to comply with applicable product liability laws in each country you sell to and also offer a solution to return or even replace damaged products.
  • Competition – competition is heavy, especially for commodity products which can be sold by anyone. With everyone wanting to join online retailing you have to be adept with the best marketing strategies to make sure than you are able to compete with all the online stores selling the same products are you are. In this sense you have to be highly competitive with regards to your marketing tactics, your pricing and customer service.
  • Price Points – Especially if you run a small eCommerce store with a brands customers are not familiar with, you have to face an ongoing challenge for credibility and winning the trust of your customers. On average, customers are only willing to buy products online from an unknown store with products priced up to $40 per item or purchase. Having products with higher price points is very difficult. Selling high priced items will require you to create additional trust and credibility among your customers.

Why not Selling a Digital Product?

A typical product to sell online would be an eBook such as the products sold at eBooks.com.

source:  http://ebooks.com online shop selling eBooks

But selling a digital product is not only limited to eBooks. There is a wide range of possible digital products available which can be sold online. These include video courses and tutorials, podcasts, software, plugins, themes, templates, audio files, pictures, fonts, services, gigs and many more. In many cases, if you have something in your mind that you think others would be interested in hearing or learning about you can turn it into a digital product and sell it online. For WordPress, there are two solutions to sell digital goods, either via an additional plugin installed to WooCommerce or by installing Easy Digital Downloads. Easy Digital Downloads appears a bit leaner as the software has no legacy for shipping workflows. Check previous article: EDD Stores Vs. WooCommerce – which one Excels at Selling Digital Downloads?

source: easy digital downloads is an eCommerce store selling digital products

The emergence of selling digital products online has paved a way for influential public figures, writers, top professional bloggers and technological developers to make a living out of their expertise by producing products with the use of their computers and laptop and even at times only their mobile phones.

The PROS of Selling a Digital Product

The main arguments for deciding to sell a digital product instead a physical product are the following ones:

  • No Inventory Needed – since you do not have something physical to keep, selling digital products does not need inventory, and since it is digital, you never run out of stocks.
  • Shipping – one of the greatest pain of selling a physical product is having to deal with shipping and handling, the logistics and the fees relating to it. By selling digital products you do not have to worry about shipping cost or worry about your customer not getting the product on time as delivery is almost immediate once payment has been received. Easy Digital Download or EDD Stores make it easy to transact business.
  • Sell WorldWide – as long as your customers have access to the internet, there are no borders or customs which makes it impossible to sell your product to certain markets. Therefore you can benefit from selling your digital products worldwide and you are not limited by available shipping options and excessive shipping times.
  • Updates can be sold – since digital products can easily be updated you can sell updates to your customers in order for them to always be up to date. Software’s for example often need updating to newer versions. This means you have an option available to transform your business model from a one-time sales model to a subscription based model, generating recurring revenues.
  • Services can be sold – In addition to selling a digital product or product updates, training, eCourses, podcasts even vouchers and etickets are considered services that you can sell online as well, on top of your other income.
  • Overhead cost – Since Digital products are produced without raw materials and can usually be done at the comfort of your home using your computer or laptop, digital products are basically cheap to make which also makes it easier to get a good Return on Investment (ROI).
  • Independence – in selling digital products one can be totally independent where they do not need to depend on other people to have goods to sell. Products can be easily managed and third-party suppliers can be taken out of the equation if wished so.
  • No Depreciation Cost – unlike other goods, selling digital products online are not subject to depreciation cost. Digital products do not go through wear and tear and the likelihood of it being return for damage is null. Digital products can always stay up to date with automatic upgrades hence the value remains the same if not increasing.

The CONS of Selling Digital Products

Since choosing to sell digital products or services is low risk and requires minimal capital there is honestly very little cons to it but here are a few that comes to mind that can even be easily provided with solutions.

  • Require Expertise – since digital products are mostly intellectual products, one must be an expert in order to produce quality content. However, some of the creation of digital products in some cases can be outsourced like writing eBooks, apps and software. As an entrepreneur it is not necessary for you to also be the creator of these products but you can simply be the distributor of the one selling it and assemble a quality team of authors and creators who might lack the marketing skills.
  • Products don’t become depreciated – most digital products can be used for a lifetime and does not diminish in time or with use hence reorder is most of the time does not happen unless you are able to produce a better and a more updated content or your digital product has a limited use license.
  • Can be copied and distributed – unlike physical goods, digital products can easily be forwarded, distributed or copied illegally in case there is no solution to protect them from unauthorized distribution. Although digital content protection is not 100% foolproof there are a number of ways to make intellectual theft much more difficult these days, especially when you are de-facto depending on obtaining latest product updates in case of selling WordPress plugins.

Conclusion

With the recent technological development it is quite easy to start an online store and takes so much less time than creating a traditional brick and mortar business. After learning the difference between the two main product types – physical and digital products – that can be sold online, it is a matter of your personal preference as to which products you decide to sell online in your eCommerce store. Based on the list we could obviously say that selling a digital product seems to offer quite some advantages, especially in terms of ease of transaction, risk, lower capital investment and opportunities to better differentiate the products compared to the competition. There is a growing market for intellectual content all over the world and it eventually can be quite attractive to sell a digital product which has no purchasing costs and offers additional opportunities to add product extensions and services. There are already quite a good number of Easy Digital Downloads (EDD) Stores available that have proven business models and could generate great success stories.

We hope we could shed some additional light on the impact of the different types of products you can sell online. Let us know your thoughts on the best products to sell or your experiences with selling products in your own online stores in the comments section.

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