Pros and Cons of Selling Digital Products

July 12, 2022
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Should I sell digital products? While digital products have been around for decades, this market is still uncharted territory for many businesses. The e-commerce experts at SamCart are here to break down some of the pros and cons of selling digital products online.  

What are Digital Products?

Digital products are items that you create and sell in a digital format. While you cannot hold them in your hands, these products still contain a tangible value for the end-user. In fact, some consumers prefer the convenience of digital products to physical variants. Examples of digital products include:

     
  • An ebook copy vs. a printed book
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  • Graphic designs and online templates
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  • Online services, like coaching and consulting
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  • Digital downloads of music rather than a CD or vinyl
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  • Online classes or courses
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  • A printable PDF of artwork instead of a hard copy
Pros and cons of selling digital products

5 Pros of Selling Digital Products Online

1. Inventory Issues Become a Thing of the Past

Balancing and managing inventory is a constant challenge for businesses at every level—from the smallest start-ups to the largest corporations. Creating too much merchandise can be incredibly costly, while an inventory shortage can leave money on the table. Because digital files can be shared on-demand for each purchase, they eliminate this pricey and stressful inventory balancing act.

2. Easy Delivery: No Shipping Required

Shipping can be an expensive and time-consuming task for online sellers.  

     
  • Costs: Not only do sellers have to pay for postage, but they also have to pay for packaging materials and shipping insurance.
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  • Time: The time it takes to carefully package materials, drive to the post office, and wait in line can create challenges and opportunity costs for businesses.

Meanwhile, digital products can be delivered automatically to a customer’s inbox—for free—giving you more time, money, and headspace to focus on growing your business.

3. Endless Sales Potential for Each Product

When selling handmade physical products, you must carefully craft each item to perfection. Digital products work on a more universal scale. Most digital products can be sold repeatedly without much effort—creating passive income for businesses. Each product you make has unlimited profit potential.

4. Product Diversity for More Sales

Selling digital products can help you meet customer needs and boost sales. For example, let’s say you are an artist selling art prints. Physical copies may be limited to specific sizes based on your inventory. If a customer has a frame they need to fill with new art, your physical print copy must meet their dimensions to close the sale.   Conversely, selling the digital copy allows customers to locally print whatever size they need—opening the doors to a wider variety of sales. Best of all, customers get exactly what they want without putting extra work on you.  

5. Happy Customers

Many of the benefits you can expect from selling digital products also benefit your customers:

     
  • Seamless, automatic delivery for you also means customers do not have to wait for their purchases.
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  • As mentioned above, buyers are sure to get exactly what they want out of the sale.
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  • Digital products can be more accessible. For example, visually impaired readers can enlarge ebook fonts or use their device’s text-to-speech reading functions.
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  • Without the cost of shipping and other physical product expenses, customers can enjoy a lower price.
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  • Digital products also offer a sustainable transaction (no shipping or emissions) that eco-friendly customers prefer.

Happy customers correlate to high shop ratings, referrals, repeat buyers, and more sales.  

Are There Any Cons to Selling Digital Products?

1. Competitive Market

For all the reasons mentioned above, selling digital products online can be easier for businesses to maintain. With that, you might find a more competitive market. It is important to help your brand stand out with an attractive sales page highlighting what makes your digital products unique.

2. Smaller Payouts Per Transaction

Some creators prefer physical products for a higher payout per transaction. High-quality homemade items are often worth higher prices. Meanwhile, digital products are often priced more affordably than their physical alternatives. However, digital products do often offer a lower upfront cost for your business, and they can lead to more frequent sales. Your profits will ultimately depend on your market and your payment structure.  

3. Digital Product Piracy and Protection

Another common concern of digital product sales is piracy. Some creators fear their products will be duplicated and sold from another vendor. While this is a problem in both digital and physical product sales, digital products are an easier target. You can rest assured that this process is illegal, and there are steps you can take to protect your work:

     
  • Keep Track: Save all original files and versions of your work to help you easily prove that it belongs to you.
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  • Receipts: Document when the work was first created and listed for sale.
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  • Register Copyright: You naturally own the copyright to all of your original work. However, you can choose to register this copyright, which will entitle you to additional compensation if your work is stolen.
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  • Watermarks: When you list your work online, you can use a watermark over the image to assert your copyright and make it harder to steal.

Retailers will often remove listings when presented with evidence of theft. If all else fails, you can take legal action against any piracy—whether it be for digital or physical products. Scott Moran of SamCart offers further piracy insight on our YouTube channel here.

4. Physical Product Bias

More traditional buyers may prefer a physical product over a digital product. Limiting yourself to digital products only could isolate these customers.  

Digital and Physical Products: Sell Both With SamCart

Some creators prefer the ease of digital products, while others prefer the traditional physical product sales. Thankfully, you don’t have to choose—because SamCart lets you do both! The SamCart e-commerce platform supports online sellers in every format, including digital products, services, online courses, and physical products. You can get started for free with a SamCart trial today!

Frequently Asked Questions

Are there any legal considerations I should be aware of when selling digital products?

Yes, it's important to be aware of legal considerations when selling digital products. These may include copyright and intellectual property laws, privacy regulations, and tax implications. It's advisable to consult with legal professionals or seek appropriate legal advice to ensure compliance with all relevant laws and regulations.

Can I offer refunds for digital products I sell through SamCart?

Yes, you have the flexibility to set your own refund policy for digital products sold through SamCart. You can establish specific terms and conditions regarding refunds, taking into account factors like product type, content access, and individual circumstances. It's important to clearly communicate your refund policy to customers to ensure transparency and avoid any misunderstandings.