How to Sell Digital Downloads as an Ecommerce Business
The ecommerce business model you choose heavily depends on what sort of goods you’re selling.
Digital goods and services can involve everything from apps and music to online courses and software-as-a-service (SaaS) products. Consumers can download or stream these products and services online. Most often, deliverables come in the form of templates, plugins, videos, MP3s, or PDFs.
This ecommerce business model might be best for you if you’re an artist, educator, musician, writer, programmer, or just an entrepreneur with a clear idea of a digital good or service that’s needed in the market.
There are several benefits to this model. However, there are also some drawbacks.You can give your ecommerce business the best chance of success by understanding both and adjusting your expectations and strategies accordingly.
Let’s dig into how to sell digital downloads in terms of the advantages and disadvantages of this particular business model.
Advantages of Digital Products in Ecommerce
The advantages of digital products are myriad — especially if you already have a product that lends itself to online distribution, such as books or software.
Managing overhead costs is crucial for any small business’s success. By focusing your business on digital goods or services, you can keep your overhead to a bare minimum. Unlike a traditional retail store, you’ll be completely cutting out the cost of physical storage space for your inventory.
Along the same lines, you’ll never need to replenish your inventory.
Unlike an oil painting — which you can only sell once before needing to paint another— a digital product can be sold over and over again. This means that you can create a single digital product and continue to reap the financial benefits from it for years to come.
There is an extremely high-profit margin to digital products and services because once you have created the original product, there are minimal costs associated with continually selling it.
For example, you do not have to buy more ink, paint, brushes, or paper and t-shirts to print your art on. This allows you to retain the majority of the profits from your sales.
You don’t have to deal with shipping costs either, because digital goods are delivered to consumers online.
This is particularly important in the age of Amazon Prime free shipping. A Consumer View report from the National Retail Federation revealed that 75% of U.S. shoppers expect shipping to be free for their orders.
Hidden costs — such as shipping — are one of the primary culprits for shopping cart abandonment. If you don’t have physical products to ship, you simultaneously avoid the hassle of going to the post office and lower your rate of shopping cart abandonment.
Disadvantages of Digital Products in Ecommerce
Though there are plenty of benefits to learning how to sell digital downloads, there are also some downsides to consider.
In reality, your digital products will be competing with a vast amount of free content. For example, if you’ve created a stellar online course on marketing, you’re going to face stiff competition from similar courses being offered for free.
Think of it this way: is a paid product going to be worth $50 to a consumer if it’s only 10% better than a free product? Maybe not.
The challenge is to distinguish your digital goods from free alternatives so consumers can justify making a purchase. You can partially overcome this challenge by building a strong brand and having a keen awareness of the niche market you’re targeting.
The availability of free products highlights another primary problem with digital goods — lower perceived value. Digital goods are often seen as less valuable than physical products because they aren’t tangible.
Because of the upfront commitment to developing digital goods for your business, you should take every possible step to protect yourself from theft.
The cost of digital piracy is enormous. A study by Nera Economic Consulting and the Global Innovation Policy Center estimated that global online video piracy costs the U.S. economy more than $29 billion in revenue every year.
It won’t hurt your business if you sell a physical product, such as a car, and it’s stolen from the customer. However, if you are selling an ebook and someone makes it available online for free, that can be devastating.
Thankfully, there are plenty of resources and tools to help you protect your intellectual property and digital goods. However, even if people aren’t stealing from you, there is still exceptionally stiff competition in the digital goods market due to the low overhead and startup costs.
Though the market isn’t saturated, this level of competition is certainly hard to overcome.
The last major drawback to setting up this kind of business is that product development is time-consuming.
If you want to build a brand that will last, you need to release high-quality products as soon as you launch. You can’t roll out new iterations of your product or patches every couple of months and expect consumers to continue to support your business.
So, despite the low overhead costs, the lead up to launching your business can be very costly with regard to your time and energy.
Tools You Need to Launch a Digital Goods Business
Once you have your digital goods developed, you still need to launch your business. To do this, it is essential to have the right tools in your toolbox. These run the gamut from WordPress plugins that expedite the shopping experience to safety features that protect your products from theft.
Another culprit of shopping cart abandonment is an overly complicated checkout process. Amplify Plugins’ Quick Checkout extension reduces checkout time, increases conversion rates, and improves checkout flow. It’s a must-have tool for your digital goods business if you are running a WordPress site.
Final Thoughts: How to Sell Digital Downloads as an Ecommerce Business
If you are looking for an ecommerce business model with low overhead and high-profit margins, providing digital goods and services could be the right choice for you. However, to make the business a success, you must be willing to put in a substantial amount of work upfront and develop digital goods that meet a real need in the marketplace.
Of course, once you’re ready to launch your product, you’ll need to have the right business infrastructure in place to make it work. In ecommerce, this means a powerful website with all the right integrations to provide an optimal user experience.
Talk to the experts at Amplify Plugins today about what tools you might need to make your eCommerce business a success.