Not long ago, telling someone you make a living online was akin to telling them you were some kind of archaeologist. Sure, many people knew it was possible to work online and make money, but if you told them how easy and lucrative it was, they still gave you a sideways look.

Nonetheless, times have certainly changed. The advancements in technology and the broader use of the internet (especially during the pandemic), have made online business ventures more lucrative than ever. Today, you can purchase (or sell) a wide range of products through various eCommerce platforms. For example, everyone knows how well Amazon is doing to fill consumer demand having cornered almost every niche on the market!

Even so, while you can sell both physical and digital products online, the latter tends to be more popular and profitable. This article endeavors to give you an overview of what digital products are and why they are in great demand inside a multi-billion dollar industry. After reading this article, it will be easier for you to decide which approach you should choose in becoming an online business.

What are digital products?

Simply put, a digital product is any product, whether for sale or not, that is in an intangible format as a digital file. These products can be downloaded, streamed, or translated into mediums such as templates, software or eBooks. However, the primary point of interaction with digital products is through the use of technology and the internet. The most sold digital products include online courses, eBooks, software, graphics, website themes, photographs, and artwork. Physical products, on the other hand, are tangible and you need to ship them out to your customers. These include a vast-range of merchandise that need to be manufactured, labelled, packaged, stored and delivered.

6 Main Reasons why digital products are gaining more popularity in the online entrepreneur space than physical products:

When considering becoming eCommerce sellers, many people tend to veer towards traditional, faithful physical products. But not so fast. You may be missing out on some critical time and money savings. Below are some of the greatest benefits you can get from selling digital products:

1. Lower Operational Costs

When selling digital products you'll eliminate numerous costs you would have incurred had you been selling physical products. Here is a quick summary of some operation expenses that you'll either incur way less of or do away with entirely:

• No more shipping, handling and storage costs or hurdles like border inspection

• No manufacturing and purchasing inventory (the highest business expenses)

• No need to sell on competitive e-tail sites or set up bloated eCommerce stores

• Insurance isn’t necessary for digital products. Insuring physical products can get complicated and very expensive quickly, especially if those products don't sell fast or when a disaster strikes like a fire.

• No costly overhead. You will need to invest in an internet service, a fast running computer and a few other tools to create digital products, but considerably less than setting up shop for physical products.

2. Less Recalls & Refunds

When dealing with digital products, you have complete control over your sales process. You won't need to handle numerous product recalls that are common when selling physical products, or risk losing precious retail shelf space. It is unlikely that someone will recall an ebook because the editor missed a typo. On the other hand, if a physical product has any malfunction or fails to meet a customer's preference, they will likely request a refund. Recalls are not only expensive but can also drive away customers from buying your future products. With digital products, you'll have fewer dissatisfied customers, which helps build a positive image for your brand.

3. Quick Setup Time

Setting up a digital product for sale and out to market is much easier and demands less time compared to physical products. As is the case with physical products, you won't have to contend with processes like designing a prototype, negotiating with various manufacturers, or finding a fitting fulfillment company when setting up a digital product. In most cases, all you have to do is create the digital product once and set it up for sale on your own dedicated website.

4. A Convenient Purchase

Purchasing digital products is more convenient, given that after completing the purchase process, the customer can immediately have access to the product. They don’t have to wait for days or weeks to access their purchase, as is the case with most physical products sold online. Your customers will only need to press a few buttons, and walla, they have the digital product right on their computer.

5. Infinite Merchandise

With physical products, you'll have to replenish your stock continuously as they are purchased. The cost of restocking bulk inventory can be outrageous, especially in the apparel and footwear space. Digital products, on the other hand, are infinite, intangible goods. After creating a superior digital product, you can continue to sell it forever. You will neither run out of downloads for your digital product nor will you have to incur expenses such as storage or logistics.

6. Higher Return-on-Investment (ROI)

Digital products have an ROI of approximately 80-90%. This incredible return-on-investment is one of the main reasons internet marketers everywhere are tapping into this goldmine. As long as the product is adding value and solving a problem for the customer, they are way less prone to recalls. Without the usual costs incurred in setting up a traditional business, selling digital products online far outweighs the profit potential of selling physical products.

Final Thoughts

Here’s the Bottom line: digital products can be made inexpensively and sold at great profit margins. They are more resistant to hit or miss trends; eliminate the common barriers to purchase; involve fewer if any middlemen; and most importantly, keeps control squarely in the hands of the business owner. You don’t have to be worried about opening hours or being tied up to one local market either. The internet is borderless and you can reach tens of thousands of consumers with similar interests – something that would be nearly impossible with a physical product.

Most internet entrepreneurs start their online businesses by selling either ebooks, audiobooks, ecourses, coaching memberships or a combination of these, which involve little technical skills. If you would like to learn more about how to successfully set up your own digital product business that will prove both enjoyable and profitable, then please check out my book The Digital-X Product Formula at the link below.