What is Digital Product? Types of Digital Products [Dtange - Introduction]

What is Digital Product?

Digital products are intangible assets or content that are sold and/or distributed online. They’re distributed digitally meaning that they don’t actually get shipped to customers which means that they can instead be downloaded, streamed or accessed immediately by the purchaser on their computer, smartphone or tablet. According to file formats digital products come in roughly eight different varieties such as text files, image files, audio, video, animation, software, website and games.

Digital products have so many different advantages, many of which make them a desirable alternative to selling physical products. In general, digital products are simple to make, easy to distribute, are a sustainable business model, and have a high profit margin earning potential.

Like physical products, selling digital products also has some advantages as well as disadvantages. Let’s look more closely.

The pros of selling digital products

Passive Income: You don’t have to make a product every time a customer orders from you, you simply make one product, automate the selling process, and then earn income passively

Personal Freedom: You can sell from anywhere, to anywhere — digital products put no limits on your lifestyle

Lower Overhead Costs: Costs to produce digital products are generally low and there’s no need to hire a warehouse to store inventory

Easy to Reach Target Market: You’re not bound by a brick-and-mortar location where your only potential customer base is dependent on who lives locally to you. There are few limitations to the audience you can reach online

No Inventory Management: There’s no need to store products, manage inventory or SKUs

Easy Manufacturing Process: There are no MOQs when ordering products from a manufacturer

No Shipping Process: No need to pick, pack, and fulfill orders or hire a warehouse to do it for you

Low Product Return Rate: No damaged products and a lower chance of customers receiving a faulty product

Easy Automation: Pretty much the entire process of selling digital products can be automated

No Shipping Limitations: Some physical products — like beauty products, food products, and machinery products — have limitations on where and how they can be shipped but digital products generally have no distribution limitations

Lower Barrier-to-Entry: It generally costs less to create digital products and anyone can create a digital product

Independence From Suppliers: Usually when creating a physical product you have to work with a supplier to actually manufacture the product and bring it to life but, with digital products, they don’t have to be created by anyone else unless you want them to be

High Profit Margins: Because digital products are generally inexpensive to make and you just have to create the product once and then it can be sold an unlimited number of times — plus, there are generally low overhead costs — digital products usually have the potential for a very healthy profit margin

They Don’t Break, Perish or Wear Out: Digital products can last a long time because they’re not subject to the same kind of wear and tear that physical products experience

Always In-Stock: You can’t sell out of digital products so you’ll never miss out on sales and you’ll never over-sell your product

Immediate Distribution: No need for customers to wait for their product to arrive, digital products are sent directly to the customer after the purchase goes through so customers don’t have to wait for the product to arrive

Easy Refunds: Your customers don’t have to ship the product back to you to return it, simply refund their order if they’re dissatisfied

Offer Free Trials: It’s much more difficult logistically to offer free trials for physical products but providing free trials is a great way to get potential customers to purchase your digital products

Low Risk: Selling digital products is a much lower-risk option than many other types of products.

The cons of selling digital products

Easy to Replicate: Since digital products are sent out online, they can be easy to copy, duplicate, replicate, and share with others. There are ways to limit this, such as by using expiring links, license keys, watermarks, source code protection, PDF stamping, and digital product distribution platforms that offer product-specific security features
Not Tangible: Digital products can’t actually be held by a customer (unless they’re able to print out the product for themselves), which may bother some customers. Some customers prefer a tangible product they can experience in real life
Some Customers Don’t Understand Digital Products: Some customers still expect all products sold online to be physical products that they’ll receive in the mail, so it’s important to be quite clear and direct on digital product pages when an item is, in fact, only distributed digitally, just to clear up any misconceptions a customer might have
Lower Perceived Quality: Consumers may perceive digital products to be less valuable because they exist in an intangible way
Competing Against Free Products: It’s likely that consumers can find similar versions of digital products online, but for free, so you have to make sure your product can compete against what kind of content is already available for free
No Repeat Buyers: Once customers buy a digital product there’s no need to re-buy it (unless it’s a digital membership/subscription service)
Competitive Market: Because creating some digital products has such a low barrier-to-entry, it can be a very competitive landscape to exist in as an ecommerce merchant

Some Restrictions Apply: While digital products may not face the same shipping restrictions that physical products can face, digital products face some sales channels restrictions like not being permitted to sell through Facebook or Instagram. Right now, Facebook and Instagram list “primarily selling physical goods” as a criterion for their business approval requirements, which means that business Instagram accounts must be for companies that primarily sell physical goods only.

Digital Products vs Physical Products

While digital products have many appealing advantages like their high profit margin earning potential and their easy distribution methods, they do have several disadvantages as well which we listed above.

Physical products, on the other hand, also have many advantages such as it being easier to demonstrate the value of a tangible product so their perceived quality may be thought to be higher than digital products, but physical products are time-consuming to manage, not to mention expensive to source and ship.

What it comes down to, ultimately, will be your own product ideas, the niche market you’re serving, your risk tolerance, and how much of your business you want to be automated. Let’s discuss this in more detail.

If You Have Product Ideas: If you already have an idea of what kind of product, or products, you want to sell online then you’ll probably already know whether it’s a digital product or a physical one. Depending on your product idea it’ll likely fit better into one category rather than the other, so that will help you decide.

Think About Your Niche Market: Some niche markets are more likely to be open to purchasing one product type rather than the other. Think about your niche market’s age demographic, for example: Are they primarily people who have access to computers, smartphones, and tablets where they could download and stream digital products? Or is your niche market made up of people who don’t prefer to use smart devices to access content or products and they’d rather have a physical copy to hold in their own hands? Taking your niche markets’ preferences into consideration can help you decide between physical and digital products.

What’s Your Risk Tolerance? If you’re a low-risk, slow-and-steady kind of business builder then digital products might be a great choice because they’re generally less expensive to create, and you don’t have to purchase inventory upfront which means you have less to lose if sales don’t go well.

Do You Want Your Business Automated? Ecommerce stores that sell digital products and physical products can both be completely automated, however, it will depend on the types of products you sell, the ecommerce platforms you sell through and the level of support you’ll have to perform to keep your customers happy. Generally speaking, stores that sell physical products usually have some aspect to them that requires more hands-on work because there are more moving parts in the process — like picking and packing the orders, shipping the items, warehousing the products, managing returns, etc. — while stores that sell digital products don’t have to manage quite as many of those steps and for the steps they do still have to manage, usually they’re simpler.

Types of Digital Products (According to File Types)

There are eight major kinds of digital products that can be sold online. Those are - Text, Image, Audio, Video, Animation, Software, Website and Games. And each major type of digital product can be divided into several categories and even subcategories. There are wide varieties of digital products, the only limit is your imagination. Here's a list of what kind of digital products can be sold online.

Types of Digital Products

1. Text
     a. eBook
     b. eMagazine
     c. eComics
2. Image
     a. Stock Photo
     b. Graphic Templates
     c. Vector Illustration
     d. Digital Painting
          i. Photo Art
          ii. Fine Arts
          iii. Concept Art
          iv. Manga
          v. Illustration
3. Audio
     a. Stock Music
     b. Audiobook
     c. Songs / Music Album
4.Video
     a. Stock Footage
     b. Video Course
     c. Short Films
     d. Web/T.V. Series
     e. Movies
5. Animation
     a. Motion Graphic Templates
     b. 3D Models
     c. Music Videos
     d. Animated Short Films
     e. Animated Web/T.V. Series
     f. Animated Movies
6. Software
     a. Codes
     b. Computer Software
     c. Web Application
     d. Mobile Apps
7. Website
     a. Website Templates
     b. Wordpress Themes
     c. Wordpress Plugin
     d. UI Design
8. Games
     a. Computer Games
     b. Console Games
     c. Mobile Games
etc.

What is Dtange.com ? (Dtange - Introduction)

Dtange is a community, where we are going to discuss all about digital products. The term Dtange comes from “Digital Intangible”. It’s all about digital intangible products and services.

On this online community or blog Dtange (http://blog.dtange.com) different valuable topics will be discussed such as - how to create digital products, how and where to sell digital products online, how to earn money online selling digital products and build your career, how to establish your own successful online business of digital products and become financially free etc.

Stay connected.

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