When starting an e-commerce business, you’re not limited to selling physical products. Digital products offer an excellent opportunity to build an online business and generate income.
Digital products come in many forms: online courses, licenses, creative works, software solutions, and exclusive content. These can provide either passive income or form the foundation of a full-time business.
There are plenty of great advantages to starting a digital product business, including the absence of physical inventory, shipping, and logistics concerns. With no physical goods to manage, operating costs are typically much lower than traditional retail businesses.
While you can turn your existing skills into various digital products, building a successful business still requires careful planning and execution.
We are here to guide you through the process and educate you on how to start a digital product business.
What Makes Digital and Physical Products Different?
Physical and digital products serve different needs and audiences, each with distinct characteristics and requirements.
Physical products are tangible items that customers can hold and examine. They require warehouse space, careful inventory management, and regular restocking to maintain adequate supply. Customers evaluate these products through their senses – touching, seeing, and sometimes smelling or testing the items before purchase.
Digital products, by contrast, exist only in electronic form. This fundamental difference eliminates many traditional business expenses, such as inventory management software and storage costs.
Once created, a single digital product can be sold repeatedly without needing replenishment, making it an incredibly scalable business model. Customers typically evaluate digital products primarily through their experience using them.
Making improvements to physical products typically presents more challenges than updating digital ones. Physical goods require new production runs for each modification, which can be both time-consuming and expensive.
Digital products, however, can be enhanced through simple updates or patches, allowing for quick evolution and improvement based on customer feedback. And since they have lower startup costs, they’re an attractive option for entrepreneurs looking to enter the market with minimal financial risk.
Digital product businesses can be very lucrative. One company generated $400,000 in revenue within three months solely through its information products. So, you can imagine the potential to generate revenue if you choose to start selling digital products.
Types of Digital Products to Sell Online
There is a wide range of digital product ideas you can consider when you start your online business.
Once you’ve identified a viable product, you can start exploring a wide range of niche markets.
The following are a few profitable digital product ideas that you may want to consider when starting a business.
Online Courses
Did you know that by the year 2029, consumers in the online learning industry will reach over 1.1 billion?
We live in a fast-paced world where flexibility has become a priority. People want to grow their skills and learn new things in a flexible and convenient manner. That’s why online learning has become so popular.
Online courses allow students to acquire the skills they need while still keeping up with their work and personal lives.
Online learning also provides online entrepreneurs with an opportunity to make money online by selling educational products. All you need to do is leverage your skills to create a digital course that provides value.
To attract potential customers, you can leverage third-party e-learning platforms, such as Udemy and Coursera, to launch your digital product.
Another way of getting buyers for your online course is to announce it through a standalone website. This digital product business idea is viable if you’re an expert in your respective field and have a reputation in the industry.
People are more likely to purchase and even introduce your digital course when they know you’re the best at what you do.
Digital Licenses
Another effective way entrepreneurs can make money online is to sell digital licenses for useful resources or digital assets. These licenses authorize you to commercially use someone else’s digital property without encountering infringement issues.
The downloadable products may encompass stock footage, stock photos, sound effects, digital templates, website themes, and infographics.
You can promote these licenses and attract ideal customers through online marketplaces and third-party stock photography and videography sites. Another way is to start your standalone website and publish informational content to engage your target market.
Creative Content
If you’re an artist, you can start your small business by monetizing your talents. You can sell digital art or any other type of content with artistic value.
For example, you can leverage online platforms like Etsy and accept digital art commissions.
Selling creative content is an excellent business model targeting a huge market. The content creators just need to identify a fitting niche or buyer personas.
Digital Solutions
Another great idea is to sell digital solutions or tools that make the job easy for different professionals.
People may find it difficult to perform certain tasks or consider it a daunting activity. Your digital products will carry out the tasks for potential buyers or help them through the process.
The solutions you offer may encompass digital templates, automation tools, or custom branding kits.
The goal here is to help your target audience achieve their goals and make their lives easy with your digital solutions.
Memberships
Creating a membership site is an efficient way to cater to the pain points of diverse buyer personas by facilitating their access to exclusive content or digital products.
A membership site is a platform you create to make money online by offering access to exclusive content, like coaching and consulting services, online courses, or fitness classes.
Launching a membership site is a great way to introduce your whole product range or sell a single digital solution. These sites help introduce your offerings to the target audience and, at the same time, build a strong community for your brand.
How to Start Selling a Digital Product
Now that you are familiar with the different types of digital products that you can sell online, let’s talk about how to start your business.
1. Select a Fitting Niche
You must conduct thorough research to start a successful online business. The goal is to decide on the type of digital products you can sell with ease.
Start by assessing your strengths and see if you have a skill that you can monetize. Write down all the ideas that come to your mind and shortlist the ones that pique your interest.
Strive for the right balance. Here’s what I mean.
Your business idea should align with your passion and show promise to engage the target market. Also, you can monitor the latest trends for inspiration and explore the pain points of potential target audiences.
Don’t forget to keep an eye on existing digital products that are already doing well, as this can sometimes be the spark of inspiration you need.
2. Analyze Market Demand
To come up with a good business idea, you need to analyze the demand and potential competitors you’ll be up against. Sometimes, an idea may seem lucrative, but the reality is people just don’t want it as bad as you think they do. Or, they are not willing to pay for a solution.
Successful brands can thrive because they know what their customers want and continuously take steps to meet their needs.
But be mindful that market trends can impact demand, for better or worse. Think about how quickly every SaaS program you know jumped on board with AI. This highlights just how quickly things can change.
To start analyzing marketing demand, explore social media groups, online communities, and forums to get acquainted with the needs or interests of online learning consumers. Industry reports may also help you shortlist a fitting idea for your digital product business.
3. Know Your Customers
There are countless e-commerce platforms out there that sell more or less similar solutions to what you offer. The best way to stand out from other players in your respective industry is to understand your ideal customer base and develop fitting strategies to connect with them.
Market research helps you identify potential buyers. You can start things off with secondary research, where you access industry reports, government data, market studies, and relevant publications.
These are useful sources of information. Use them to explore the potential needs and preferences of diverse audience segments.
You can also conduct competitor analysis to know your customers. Exploring the social media pages of your competitors and listening to what their followers say may help you understand their pain points and know if their problems resonate with the solution you want to offer.
Additionally, run surveys to identify a fitting target audience for your business. Focus group discussions and brainstorming will prove useful in learning about your audience.
It may be tempting to chase a huge market. However, targeting a wider audience doesn’t guarantee your success. If anything, it makes it harder to tailor and promote your product. So, try to find a niche market in which you can specialize.
Targeting a specific audience segment increases your chances of meeting your customers’ expectations and offering solutions that solve their problems. Use the insights from your research to create a buyer persona that helps you visualize your ideal customer.
Being familiar with the characteristics that define your target audience also helps you come up with a stellar content marketing strategy. You will be able to convey your message with ease and engage the intended audience segments.
4. Pick a Platform to Sell Your Digital Products
You have a variety of options when it comes to selling digital products. You can create a WordPress website, leverage third-party platforms, or reach out to potential market segments through social media. The effectiveness of the platform you choose may vary depending on the type of digital products you wish to sell.
For example, if you’re a content creator who wants to make money, leveraging social media platforms may be the right call for you.
Or, if you’re a skilled photographer who wants to make money by selling an online course, consider engaging your audience through third-party e-learning sites. If you wish to paywall exclusive content, creating a membership site may help you get better results.
Of course, there are some pros and cons associated with whichever approach you choose to go with when selling your digital products.
Udemy is one option. This platform gives you market exposure, as it has millions of users. So, setting up a course on Udemy and attracting students is fairly easy. The downside is that you have minimal control over setting the price for your course. Udemy often has discount campaigns going on. So, people barely buy the courses at their actual price.
On the other hand, you have a platform like Kajabi, which offers complete control. You get to design the course the way you want and market it at the price you see fit.
The downside of picking Kajabi is that, unlike Udemy, you need to subscribe to the platform’s premium plans to get started. Plus, you’re responsible for marketing your course and attracting the intended audience.
You get access to a limited community, though. But, they’ll allow you to join only when you’re a paid member.
You may choose to go with a different approach altogether and create a membership site or sell online courses from a WordPress or other Content Management System. This, too, has its pros and cons.
Building a website may cost a lot. Plus, it requires some technical skills and you would be responsible for marketing your course all by yourself.
However, you’ll get complete control over the way you design your course and the price you charge your students.
You can pick any platform as long as your selection resonates with your niche and helps you achieve your goals.
5. Promote Your Digital Products Across Channels
Once you have developed a digital product and identified the right channels to sell it, the final step is to promote it.
Here are a few useful tactics that digital businesses often use to promote their product offerings and engage the right audience.
Leverage Content Marketing
One of the best ways to engage your audience and promote your online business is to create relevant content that helps people find fitting solutions to their problems. It’s where content marketing comes into play and helps you connect with your target audience to establish a strong bond.
You can do it by creating relevant content in the form of:
- Blogs
- Infographics
- Videos
- Animations
- Podcasts
- E-books
- Webinars
And share it through different content distribution channels like:
- Social media
- Newsletters
- Online communities
- Forums
Programming with Mosh, a YouTube channel, serves as an excellent example here. He’s a software engineer who readily posts useful content on YouTube to attract people who want to start their coding journey.
He posts beginner-level content, good enough to pique the interest of his target audience. He offers value and showcases his capabilities at the same time. You can access his YouTube courses for free. However, if you want to dive deep and be an advanced-level programmer, you’ll need to pay a premium subscription. That’s content marketing in action for you.
Digital content fuels the visibility of your online business. Your potential customers are more likely to find your product offerings as you publish relevant content related to their search queries.
It’s a fitting strategy, especially when you create a website to promote your product range. People are less likely to visit your website directly. They generally leverage search engines to find products that meet their preferences.
Publishing high-quality blogs targeting relevant search queries allows you to engage and drive relevant traffic to your platform.
Create a Digital Community
Creating a digital community around your brand is an excellent strategy to engage your target audience. There are two ways of doing it.
First, if you have a membership site, you can create a forum to give your visitors a sense of community. Second, you can make use of third-party platforms or social media apps, such as Reddit, Quora, LinkedIn, Facebook Groups, and Discord, to build a digital community.
Communities help you build a strong connection with your target audience. Your potential customers can ask you questions directly and inquire about your product offerings.
Your community members also share their experiences with your products and the industry at large, which fuels your social proof.
Stay Active on Social Media
People don’t just use social media to stay in touch with their friends and family. They often use social media apps to find solutions to their problems and research about their preferred brands.
Being active on relevant social media apps helps you learn about your audience preferences and promote your digital products.
Sharing high-quality content on relevant social media apps boosts your reach and helps you generate awareness about the solutions you offer.
You can also take advantage of features that different social media platforms offer to sell your products without having to build a website. For example, you can create a private group on Facebook and start an academy where only paid members of the group access your content.
It’s a recommended strategy for business owners with a limited budget, as it significantly reduces your startup costs.
You can also use social media to promote your course on your website or an e-learning platform. For example, LearnWebCode is a YouTube channel that posts helpful guides and tutorials about coding on YouTube. The owner of the channel uses YouTube to attract a relevant audience.
Through description, he promotes his website where you can access all his curriculum by paying for a monthly subscription or a one-time fee.
Leverage Email Marketing
Email marketing is a cost-effective marketing channel you can use to promote your digital products. All you need is an email list to get started.
Once you have collected enough emails, you can segment your list of email subscribers into smaller groups based on different characteristics to send personalized messages.
You can then proceed to promote your digital products by offering special discounts or free trials.
You’ll need an email marketing tool like GetResponse to get started. It’s also important that you don’t use email just to sell your products. Make it a communication channel. Focus more on the value you can provide for free to your email subscribers. Then, promote your digital product once in a while.
You can learn more about using email marketing in this guide.
You’re All Set
In this article, we discussed a step-by-step process that can help you start a digital product business. We covered different types of digital products that you may want to consider when starting your entrepreneurial journey.
That included online courses, memberships, digital licenses, and creative content like digital art. You can sell digital products through a standalone website or leverage third-party platforms like Udemy and Coursera.
It’s now time to take action.
