How to Sell Digital Products Online 2024? – a Complete Guide

2024 is an era when eCommerce is ruling the market, and it continues to grow as we speak. The market is now full of eCommerce websites and mobile applications, each claiming a share of this multi-billion dollar pie.

Selling digital products is one such business idea. Unlike physical products, which require continuous inventory replenishment, you can create a digital product once and sell it repeatedly to as many customers as you’d like. It’s clearly less work and better money if you know how to sell digital products online the right way.

Who wouldn’t like to run an eCommerce business that doesn’t even require shipping and inventory?

This article will give you an understanding of how to sell digital products online, what to sell, and how to build a personalised digital products store. We will also discuss the challenges you might face while selling digital products and how you can handle them. Let’s begin.

What are digital products?

Simply put, a digital product is an electronically deliverable asset with some value that people want to purchase. Based on copyrights and licensing agreements, you can sell/resell a digital asset repeatedly without replenishing the inventory. Some examples of digital products are images, songs, videos, e-books, software solutions, etc.

Generally, eCommerce sites or businesses that sell such intangible assets deliver them in open-source file formats, such as MP3, PDF, PNG, MP4, MKV, and AVI, or proprietary formats with encryptions.

Note: We can see an example of a proprietary file format of a digital product in music or video streaming applications. Some applications deliver music/videos in encrypted formats to be opened or played only on their proprietary apps, not any other streaming application.

Downloadable files are not the only way to deliver a digital product. Based on your business and revenue model, you can also deliver via the cloud, such as SaaS-based software solutions, or buffers, such as video-on-demand and live streaming.

Benefits of Selling Digital Products

Digital products are one of the easiest things to sell on the internet. That’s why everyone wants to sell digital products online and bag the benefits of running an eCommerce business.

The process of purchasing is almost the same as physical products. Hence, you don’t have to teach anything new to your customers. Besides, you get the benefits of hassle-free product delivery through instant downloads, cloud delivery, or buffer stream.

There is a low overhead cost; you don’t have to spend extra on storing and managing the inventory physically. The same intangibility of the digital assets maximises your profit margin, as you can resell the same product multiple times and generate most of your income without investing in the pre-sale and supply chain process for each sale you make. 

Moreover, the post-sale process is extremely convenient and ensures instant delivery of the order electronically without an investment in the logistics and shipment.

Challenges of Selling Digital Products

Although digital products are easier to sell, they are not easy to manage in a business environment. You will face some unique challenges that could break your business if you do not handle them wisely.

·         Harsh Competition

The rule is simple: The easier it is to start a business, the more competitive it becomes. The benefits of selling digital products are accessible to everyone in the market. Hence, it’s inevitable that you will face competition from many other digital product sellers. Unless you have a unique and valuable product to sell, it’s not easy to generate sales.

·         Free-Alternatives

There is always a chance that someone is providing a free alternative to whatever you are selling. It might not be as good as your product, but consumers generally do not care if it’s getting the job done. For example, despite there are so many amazing, premium WordPress themes in the market, some website owners go for less efficient but free WordPress themes. You have to offer some big value with your products to acquire a trusted image, as people still consider trust as more important than free alternatives.

·         Piracy/Theft

Digital products are always susceptible to piracy or theft. Whether it’s a software solution, e-book, music track, or video, pirates are always the biggest threats. To avoid piracy, you must be very careful about your business model, eCommerce platform, delivery channels, and file encryption. 

Can you recall what we talked about proprietary/encrypted file formats? This could be one way to avoid piracy. Another way could be using a cloud delivery channel if you sell software solutions, such as SaaS.

·         Marketplace Restrictions

The marketplace ecosystem for digital products is not as open as for physical products. There are various restrictions and intellectual property rights laws to follow. 

You cannot resell a product that you purchased from someone without permission. If you are not selling your own products, you might face restrictions on the number of times you can sell them based on your acquired rights for distribution or reselling. Besides, popular direct selling channels like Facebook and Instagram marketplaces are not accessible to digital products.

Luckily, none of the challenges can stop you from making profits by selling digital products. With the right business solutions, revenue model, marketing, and customer acquisition strategy, you can overcome these challenges.

Profitable Revenue Models to Sell Digital Products Online

Based on the prospects and challenges, we have classified the revenue models into two major categories. You can form an overall business model on one, two, or all of these revenue streams:

Free, Freemium, and Premium Channels”

There are three main ways to make money from the revenue channels in this category:

• Free: You can offer your products free of cost to your customers and make money from associated sources, such as showing Ads or collecting email data. For example, let them download an e-book free of cost by signing up for email newsletters. The best example is YouTube. It lets us see the videos without paying anything, while it shows us Ads to make money.
• Freemium: This the most common revenue model followed by the digital products sellers. They offer something free of cost and keep a more valuable aspect of the same for premium streams. For example, trial versions of premium software solutions. Software vendors offer restricted versions of their solutions free and ask customers to purchase premium versions for a better experience. YouTube fits in this category too. YouTube’s Premium service is an example of how you can combine your free and premium revenue channels to drive all kinds of customers.
• Premium: As the name suggests, everything in this model is for selling; nothing is free of cost. The revenue course in the income from sales made. For example, Netflix. However, you can sophisticate your premium model further to attract more customers, which we will see in the next classification below.

One-time Purchase and Subscription Model

You can adopt one or a combination of following revenue models to maximize the profits through direct selling channels:

• One-time purchase model: The model lets you make money from each sale individually. Just like physical products, customers will be paying you an upfront cost each time they purchase a digital product from you. These purchases often provide customers with ownership of the products. Examples include open-source code eCommerce platforms, premium pay-per-movies etc.
• Subscription model: Instead of selling products individually, a subscription model enables customers to use your products under contract for a limited time. Spotify, Amazon Prime, Grammarly, and Shopify are a few popular examples.    

Digital Products Ideas to Sell Online

A decade ago, the choices were limited to selling only downloadable products. Today, we have cloud computing, which has made selling digital products easier than ever. Cloud computing has opened the door to numerous business models and revenue channels, allowing us to sell a variety of different digital products. You can sell:

• Online courses in both pay-per-course and subscription models.
• E-books and subscription packages for digital magazines.
• Licences to use your digital assets, such as stock photos and music.
• Memberships for access to your digital assets, such as SaaS solutions.
• Memberships for access to different services, such as gym or swimming club.
• Templates, plugins, and themes for different eCommerce platforms. 
• Your content and streaming rights to digital products, such as music, podcasts, and videos.

Platforms for Selling Digital Products Online

The range of platforms differs widely depending on the product and business model. The market is full of both free and premium solutions to sell digital products online. Some platforms are dedicated to digital products, while others can sell physical and digital products. Here are some of the most popular platforms you can use to sell digital products online:

• Selz: A dedicated solution for digital products with a complete website and shopping cart package.
• SendOwl: A digital product delivery solution that integrates with your existing website. You need a website to use this solution.
• Easy Digital Downloads: A dedicated shopping cart plugin for digital products that convert your existing WordPress site into a digital products eCommerce site. 
• PrestaShop, Magento, OpenCart: Free-to-use eCommerce platforms supporting physical and digital products.
• Shopify, Wix, BigCommerce: SaaS-based eCommerce platforms supporting physical and digital products.

While these platforms are useful for selling digital downloads, they do not support the sale of subscriptions and memberships for certain products and services, including digital magazines, music streaming, video streaming, and live streaming. 

Consider selling subscriptions or memberships through a good turnkey solution, such as a Netflix, Spotify, or YouTube clone script. There are different vendors in the market who sell these scripts. You can search online to learn more about them.

General Product Safety Regulation

The General Product Safety Regulation (GPSR) is a new EU law that will replace the General Product Safety Directive (GPSD) and Food-Imitating Products Directive (FIPD) on 13 December 2024. 

Its primary purposes are to ensure the safety of all consumer products, including digital products, on the EU market (both online and offline) and to establish improved rules that better enforce, protect, and survey products. 

Here are some of the various changes the GPSR will be making that you should be aware of:

• The safety of each product must be entrusted to a responsible economic operator in the EU (EU manufacturer, importer, authorised representative, or fulfilment service provider).
• New safety aspects must be considered, including the product’s effect on other products, cybersecurity features, and evolving, learning, and predictive functionalities.
• Each product must provide the minimum safety and traceability information.
• Online marketplaces must process all notices from consumers, competitors, and consumer associations within three business days and follow orders from market surveillance authorities to remove all dangerous products from their platform within two business days.
• Economic operators and online marketplaces must send recall notices to all affected consumers as soon as possible.
• Economic operators and online marketplaces must ensure compliance with the GPSR by 13 December 2024.