What to Consider Before You Sell a Digital Product

Alyssa Gregory

Selling a digital information product online is a very attractive way for businesses, freelancers and other professionals to enter the world of e-commerce for relatively little risk.

This does not mean digital products are entirely without risk. Despite the fact that there are a number of benefits that come with selling a digital product online, you could face a number of undue challenges if you don’t consider all of the possible implications of e-commerce, including those that are specific to digital products.

The Benefits of Digital Products

It’s not a surprise that many businesses opt for digital over physical products. There are a number of reasons why selling a digital product is so attractive, including:

  • Digital products are less expensive to create, and you don’t need access to any special software or hardware to produce a digital product.
  • The development process of a digital product is faster so your product can be sold faster.
  • Digital products are typically provided to the customer immediately after purchase, which is attractive to many purchasers.
  • There is no need to store inventory with digital products.
  • Digital products can come with a high profit margin because the cost of development is so low.
  • There are a lot of options when it comes to shopping carts, payment systems and resellers.

While there are certainly bells and whistles you can apply to enhance your digital product, to get started you don’t need much beyond an idea, a desire to create and the time to get it done.

Commerce Considerations

When you sell a product — any type of product sold in any format — you need to consider a number of factors before getting the product out there. Regardless if you are selling a physical or a digital product, once you have identified your target market, you should conduct market research into these factors:

  • Demand for the product
  • Competition
  • Advertising potential and cost
  • Overall marketing plan
  • Potential price points
  • Order fulfillment
  • Payment options

In most cases, the research should be completed well before you develop the product in order to qualify that there is actually a market for it.

Digital Product Considerations

If your product is a digital product, you will need to consider most of the items above, in addition to the following:

  • Format of the product – Will your product be an ebook, report, video, audio, or a private membership web site?
  • Bandwidth – If your product is especially large or if you have reason to anticipate significant web site traffic, you will need to make sure your hosting plan can accommodate this.
  • Mass distribution risk – You may have some level of security in place, but you can’t completely control what a customer does with your product once they have purchased it.
  • Payment processors – How will you accept payment and distribute your product? Will you use an all-in-one system like 1ShoppingCart to sell, distribute and manage your product? A simpler buy-now  service like PayPal or Google Checkout for processing payment? Will you use a stand-alone shopping cart combined with a payment service, or something else entirely?
  • Seller protection – Many payment processors offer reduced protection (if any) to sellers of digital products.
  • Affiliate program – Will you have an affiliate program for your product? If so, this will be one of the primary factors in your decision about payment processors so you will need to explore the options in depth.
  • Laws and regulations – Does the country in which you are located have specific laws in terms of selling digital products, to customers in-country or abroad?

In looking at the list, you can see that there is a lot to consider when deciding to sell a digital product online. Of course, many online sellers bypass much of the preparation to quickly get the product online and hope for the best. But by fully exploring all of these options and thinking through the life cycle of the product, from idea to sale, you will be able to position yourself for greater success.

Image credit: arinas74