Monday, February 9, 2015

Selling Online: A Physical Product Vs. A Downloadable One

For people who want to start an online business, one of the first decisions that must be made is whether to sell a physical or downloadable product. There are advantages and disadvantages to either approach. What is important is to find either the best physical product or the best downloadable product for the business. 

Physical Products: The Pros and Cons

Physical products have obviously been around for a lot longer than digital products. While the internet has brought about many drastic changes, it has not made physical products obsolete. The success of companies such as Amazon, Zappos and many others is proof of this. People still spend many millions of dollars on items that require shipping and this will continue. 

One advantage to focusing on physical products is trustworthiness. Even in the digital age, there is still some suspicion about products that must be downloaded. While this is becoming less true each year, there is still greater trust regarding physical products. People who sell them are less likely to be viewed as potentially shady “internet marketers” and simply as businesses that sell traditional products online.

Selling physical products also gives you a wide variety of choices. There will always be essential and practical physical products, such as food, healthcare products, exercise equipment, clothing, jewelry and lots of other items. These are all necessary or desirable items that cannot be downloaded -at least not yet!

There are, however, several disadvantages to selling physical products. They must be manufactured. They take up space and must be shipped. This creates expenses for both sellers and buyers. Businesses must either have space for storing items or arrange for drop shipping. Perhaps the biggest overall downside to physical products, however, is the relatively low profit margin created by production costs.

Downloadable Products: Pros and Cons

Like physical products, there are vast numbers of products that can be downloaded. Many of these fall into the category of information products. Entertainment, whether in the form of books, music or movies is another huge category. Because digital products do not need to be stored or physically built, there is no need for manufacturing or storage facilities. In some cases, however, producers may need to invest in technology to produce high quality digital products. 

One of the major advantages of digital products is the high profit margins sellers can reap. The cost of producing a hundred or even a million digital files is not significantly higher than producing only one. Finally, there are no shipping costs. Customers like the fact that they can instantly download their purchase. Neither the customer nor the seller has to worry about shipping.

On the downside, some people simply prefer objects they can handle, even when there is a downloadable version. There has been a certain backlash against digital products, which can be seen in the resurgence of old fashioned LP records. Furthermore, certain categories of products, such as food, clothing, jewelry, healthcare products and many others cannot be turned into digital products. A business that wants to sell such items has no choice but to sell physical products.

What Type of Products Are Best to Sell?

There is no one right answer when it comes to the choice between selling a physical or downloadable product. It’s more a question of which products are right for a particular business. All of the above factors are relevant, but it really comes down to a company’s specific objectives. Many businesses have achieved success with either model -or with a hybrid model that includes both. What really matters is choosing the most appropriate products for the market. The best physical product or the best downloadable product for a business is one that meets the needs of the customers. 

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