Are you re-evaluating what you sell online? Or looking at the options for a new ecommerce start-up?

Ecommerce is booming. Physical products (books, toys, clothes, etc.) dominate the market and make up the bulk of online sales. But digital products have their place too. Digital commerce products (eBooks, software, online courses, etc.) are hugely popular and make up a sizable chunk of ecommerce sales.

The question for budding ecommerce entrepreneurs is this: what’s best to sell online, physical or digital products? We’ve broken down the pros and cons of each to help you decide for yourself.

Digital Products

Pros

  • No inventory: Digital commerce is traditionally low risk. Because you don’t have to invest in inventory you avoid storage costs and don’t have to worry about ordering enough units to meet demand.
  • Infinite scale: Digital products can be scaled far quicker than physical products and without the need to invest in additional storage space (or staff) to deal with the growth.
  • Simplicity: Forget time consuming stock management and shipping calculations. With digital products, all you have to do is click send.
  • Instant ‘free’ delivery: Perhaps one of the biggest benefits of selling digital products online is that delivery is virtually free and instant. Say goodbye to long post office queues and lengthy delivery times.

Cons

  • Harder to demonstrate value: Selling a digital product requires a great deal of time and effort. Getting buyers to the point of purchase generally involves more planning, explaining and demonstrating than physical products.
  • Lower perceived value: Digital products aren’t tangible; they aren’t ‘real’. As a result, they often have a lower perceived value.
  • Product development is time consuming: Getting a digital product ready for market takes a great deal of planning and testing. For a digital product to be launch ready it must be thoroughly tested and of extremely high quality from the outset.
  • Competitive: Digital commerce is booming. Everyone wants to do it. Free delivery. No shipping costs. Minimal overheads. What’s not to love? Expect stiff competition from the outset.

Physical Products

Pros

  • Demonstrating value is easy: It’s far easier to demonstrate the value of a physical product because its purpose is usually clear and easy to explain.
  • Higher perceived value: Physical products are real and tangible. As a result, they are often associated with a higher perceived value.
  • Create unique products: Anyone can sell a digital product online, but if you design and create your own products online only you can sell them. People will have to come to you if they want to buy your physical products because they will not be able to find them anywhere else.
  • Straightforward transactions: Selling a digital product or service often involves a certain amount of follow-up and explanation if the user struggles to get started. Physical products can be shipped with instructions and require minimal follow up.

Cons

  • Shipping and handling fees: With physical products comes physical delivery. That means packaging cost, postage costs and handling fees.
  • More overheads: Physical products require more storage, staff to manage and track them, as well as more upfront investment.
  • Harder to scale: Scaling a physical product is much slower than scaling a digital product.
  • Time consuming: Digital products and services can be managed and delivered with a few clicks. Not so with physical products. Managing inventory, staff and orders is a serious time drain.

Do you want to sell online? Whether you’re just starting out or you’re an old hat at digital commerce, Fluid Digital can help you sell more online. For a closer look at our award-winning Magento design and development solutions, take a look at our recent project.

Posted in Ecommerce on 30th Aug 2017