Imagine running a successful business or a lucrative side hustle that didn't require making, stocking, or shipping anything—at least anything physical. If that sounds great, an online business selling digital products might be right for you.
Digital products are simple to market and sell, and almost anything can be sold as a digital product in some form. Read on to learn about this great way to start an online business, enhance your current product line, or take your idea from startup to success.
What are digital products?
Digital products are items that don't exist in a physical form. Instead, they're digital files only and are usually delivered to buyers electronically via an app, email, or direct download from an e-commerce site. Anything that can be sent or downloaded digitally is a digital product.
Digital vs. physical products
At first, digital and physical products might seem very different. Physical goods are products that can be touched, seen, and interacted with physically. A book is a physical product but an e-book is a digital product. A board game is physical, while a game app downloaded to a phone is digital.
However, these two types of products also share similarities. They can both be purchased and sold through e-commerce websites or marketplaces online. In both cases, it's possible to own the product—the physical item itself, the digital file, or a subscription that gives you access to the material for a certain amount of time. And they're both options for developing a successful online business.
The benefits of going digital
If you're considering creating digital products to sell online, read on to learn about the benefits of turning your idea into a viable business.
Worldwide customer base
When you sell products that don’t need to be shipped, selling to anyone anywhere is easier. There’s no need to worry about postage, navigating customs laws, and arranging returns or exchanges. Even your marketing is easier. With the global reach of a social media account, your customers can be next door or on the other side of the world.
Passive income
Many digital products are great if you want to generate passive income—money earned with minimal or no ongoing effort. If you're selling an e-book or stock photography, those items only need to be created once and will continue to generate income each time someone buys them.
If you provide a service like web design or tutoring, you'll need to do the work each time someone makes a purchase. But you can still have materials prepared ahead of time and to use over and over, like web design templates or teaching materials.
Ad sales
In addition, if you create online content like videos or a blog, you can sell ads that will bring in additional revenue every time they're viewed. Sites like YouTube make it easy for eligible videos to include income-producing ads.
Scalable
Many digital products are scalable, meaning you can add more customers and make more sales without an equal increase in the amount of work.
Scalability is similar to passive income, although it does require some work. For example, if you sell downloadable software, you will need to do regular updates and provide customer service help for buyers with questions or problems.
No limit on products or stock
Because you don't need to manufacture, store, or ship your products, you don't need to rent storage space, keep track of inventory, or make tough decisions about what products deserve limited shelf space.
You can even personalize or customize products quickly and easily. For example, if you design building plans for woodworking projects, you may have several standard plans. But you can also offer customers the opportunity to choose from several modular elements or buy a hybrid of a pre-designed pattern and a consultation with you to personalize it to their needs.
Work from anywhere
Not selling physical products means that you can run your business wherever you like. Selling digital goods is particularly popular with people who want to work from home.
In addition, online entrepreneurs who travel extensively or move often find that selling digital products is a good option. Your customers won't know if the product they buy was created and uploaded from your home office or a beach vacation home, so you can work wherever makes the most sense for you.
No fulfillment costs
Unlike physical products, there's no need to manufacture enough items to keep in stock, manage inventory, process returns, or deal with the costs and hassle of shipping.
In addition, many businesses that sell digital products work from home offices, coworking locations, or small rented workspaces. All you really need is an internet connection. And because customers don't come to a physical location to make a purchase, paying for a retail location isn't necessary.
Challenges of digital-product sales
While there are many benefits to selling digital products instead of physical products, there are challenges as well. Plan ahead and you’ll be ready when they arise.
Crowded marketplace
Because selling digital products often requires less setup, there are a lot of people doing it. This shouldn’t stop you, but you can give yourself the best chance for success by making sure you stand out from the crowd. Showing that you have experience and approaching your work professionally will help you succeed.
Think about what makes your product or service unique or better than the competition. If you’re a graphic designer, do you have certification in certain software programs that show your expertise? Have you worked with recognizable clients or people who would be willing to provide positive testimonials?
Competition with free products
Because digital products can be relatively easy to produce and deliver, there are often free versions available. These may be products used as promotions for other products or services or added value for a blog or website.
In addition, since digital products don't involve tangible items, consumers sometimes question their value and look for free options. Here's where your expertise and experience come in.
Yes, there may be many free digital art options or website templates out there, but don't hesitate to be your own best sales agent. Let customers know why your digital art products are worth paying for, including information like your education, satisfied-client testimonials, top-notch customer service reviews, and ability to design just what they need rather than relying on a generic template.
Piracy
It can be easy to copy and redistribute digital products. Physical items can also be counterfeited, of course, but at a much higher cost and hassle. There are ways to guard against unauthorized copying of digital items (like encrypting PDF files). You may also consider using a trademark or copyright to protect your work.
How to decide what to sell
The variety of digital products to sell online is nearly endless. Before you jump in, take some time to explore what makes the most sense for you. There are numerous digital product ideas, so you'll be able to find one that's perfect for your background, experience, skills, or passions.
Examine your skills and experience
Any professional, educational, or personal experience can be a great place to find digital product ideas. If you've owned or managed a retail business, you probably have great insight into in-store sales, marketing, or customer service that you can share in online courses. Have you volunteered as a fundraiser with a community group? An e-book about community fundraising for nonprofits can draw on that experience.
Think outside the job title
Many of the skills you’ve learned probably aren’t reflected in your official job description or volunteer duties. If you were an executive assistant, your work may have included project planning, writing, editing and proofreading, desktop publishing, and many other things. Your experience in those areas could be a great place to find skills you can use in your digital products.
Focus on your interests
Don’t restrict yourself to your employment. Anything you enjoy doing can be the basis for a business.
If you’re the one always taking pictures for your friends or family, consider offering your photography editing skills or selling photos via a stock photo website. If you play a musical instrument for fun, you produce a series of short videos that teach the basics to children.
It might even be something you don’t know how to do yet. If you’ve always wanted to learn to play tennis, how about starting a blog that documents your journey, with tips for other beginners? You can monetize your hobby by selling a subscription or making an e-book out of your posts.
Research the marketplace
Before you open your online store, it makes sense to do a bit of market research. Look at other sites selling similar things to understand what's out there. What is the target audience? How are the products being promoted? What price points and pricing structures seem to be common? Think like a customer and explore the landscape.
In addition, take advantage of research done by marketing companies. Some of this is a digital product itself, while other research is available for free. What product categories are expected to grow? How is the creative market expected to change over the next year or so?
Finally, spend some time on e-commerce platforms that make sense for your target product. If you're writing a novel, which e-books top the bestseller lists and what can you learn from that? How are other professionals offering online courses making sure their offerings stand out?
Do a trial run
When you decide to sell digital goods, you can start small. Much of the cost of launching a physical product goes to the initial design, prototype, and manufacturing. With digital items, you won't have many of those expenses.
If you're considering offering professional services through your own website, you could start by creating a profile on a site that helps connect service providers with customers for the product you want to sell. You may be giving up a percentage of your earnings, but your startup costs and effort will be much lower and you'll get a good sense of what the market is like and what sales approach works well. You can also collect customer reviews and generate word of mouth to help promote your own site later.
In addition, if you're planning to write a series of novels, don't wait to finish all of them before you launch. Post the first one (or even the first couple of chapters) to build an audience who can't wait to see what happens and will return to buy the rest of your series.
Seven great digital product ideas
You may already know exactly what digital products make sense for you, but if you're still deciding what to sell online, we've assembled some ideas from popular categories.
But don't limit yourself. The digital product marketplace is constantly growing and changing. If you have an idea for something new and unique, jump in. Being one of the first to open a business with a new product idea can be a great path to success that others will want to follow.
1. Graphics and digital art
If you have experience with art and design, you can monetize your creative process. Graphics, art, and other products like templates and filters can be sold on their own or as upgrades to graphic design sites or social media services.
2. Software and games
Almost everyone has wished there were an app that fills a specific need. So why not create one?
Designing games for use on a desktop computer or mobile device is also a great way to develop a revenue stream—either through selling downloads, offering in-app purchases, or offering them on membership sites.
3. Web-based applications
Also known as software as a service (SaaS), these applications are stored in the cloud and customers buy online subscriptions to the service instead of installing software on their own computers.
This model allows customers to access the program from any device with internet access. It also means you can update and maintain the program in the cloud without requiring users to download and install updates.
In addition, it's easily scalable. The more customers you have, the more storage and processing capacity you can add for minimal cost.
4. Books
If you're an aspiring author, e-books are a popular and easy way to reach an audience. Whether it's how-to guides for backyard gardeners or a series of sci-fi novels, online e-book sales bypass the lengthy and difficult publishing process and keep more of the control (and income) in your hands.
5. Stock photography
Whether photography is your profession or just a hobby, your photography skills can earn income online. Stock photos are licensed by advertisers, publishers, and others to use in their content. You can either sell exclusive rights to your images or offer them under a royalty-free license, allowing the photos to generate income over and over with each sale.
6. Online courses and tutorials
When people want to learn a new skill or expand their knowledge, an online course is a convenient, simple option. You can develop your own online course in a variety of formats—a live webinar, a series of videos, or even one-on-one teaching or tutoring. You can also create educational products like workbooks to go along with your course to enhance the experience.
7. Services
The services that can be offered online as digital products are nearly limitless. Are you a math whiz? Offer study help or test prep sessions.
Other service ideas include travel planning, home design, and career counseling. Depending on your field, make sure you research any regulations or licensing requirements for the place where you do business or where your customers are located.
Digital product success stories
Whether you're ready to sell digital products today or are still figuring out what you want to offer, you might find some inspiration from the following stories of people who have launched successful online digital product businesses.
E-book publishing
Whitney Hill, author of the bestselling Shadows of Otherside fantasy series, started self-publishing her books through Amazon's Kindle Direct Publishing in 2020. She's since published numerous other books that have won awards and topped bestseller lists.
Photography
While stock photography isn't John W. DeFeo's main job (he's a media and marketing executive) he earns a side income selling his photos. He's even put together a guide to his best-selling photos to help you understand what might sell best and why.
Online courses
Kelan and Brittany Kline started their personal finance blog in 2016. Since then, they've built it into a six-figure income stream of courses, workbooks, and other educational products that help families manage their finances.
Popular e-commerce platforms
There are many general e-commerce sites for those who have digital products to sell. Following are some of the most popular digital product sites that offer a wide range of product types.
Mailchimp
Mailchimp has all the tools you need to launch your online store right away. In addition to making it easy to set up your website, you can customize web elements like landing pages and even get help finding potential customers with built-in marketing tools.
Mailchimp also automates many of the tasks of digital product sales, allowing you to keep orders coming in without constant hands-on management.
Etsy
Many people know Etsy as a place to buy handmade and vintage products from around the world. Etsy also supports the sale of digital products on their site.
One particularly successful product category on Etsy is printables—digital files that can be printed by the purchaser at home. These include things like stationery and invitations, patterns for sewing and crafting, and wall art.
Shopify
Shopify is an all-in-one service for e-commerce businesses. It allows users to create an online store and sell products in other places like social media or their own website.
You may decide someday to add physical products or that you want to offer a digital product for sale at a pop-up store, event, or conference. If so, Shopify also offers point-of-sale services.
MemberPress
Designed to work with WordPress—an online content management system—MemberPress lets you set up a paywall and charge membership fees for online courses, e-books, software, or other digital products. It allows you to easily sell online without having to set up a separate account or integrate another service with WordPress.
Gumroad
Gumroad is a dedicated e-commerce site where you can set up your own online store. Gumroad focuses mostly on downloadable digital products like templates and designs, but you can sell tickets, memberships, and physical products as well.
Specialty platforms for digital products
In addition to sites where you can sell digital products in almost any category, there are marketplaces focused on specific products like online courses, graphic design, or memberships that provide access to exclusive content. We've highlighted a few of them below to get you started.
Books
Amazon's Kindle Direct Publishing allows authors to self-publish their books and make them available for purchase through Amazon's Kindle e-book store. Writers post their books at no cost to themselves and Amazon takes a percentage of the sales price when copies are sold.
Amazon isn't the only e-commerce platform where you can sell your books. Smashwords was founded in 2008 specifically for writers to self-publish e-books. Smashwords also lists books on popular sites like Barnes & Noble and OverDrive.
Photography
Posting and selling your stock photos is as simple as uploading your shots at sites like iStock, Shutterstock, or Getty Images. It can be a crowded marketplace and the expectation of quality is high, so your vacation snapshots probably won't make the cut.
But if you have a good camera and a bit of knowledge about photography techniques, you can post photos once and earn money every time they're licensed.
Courses and training
If you've got expertise to share, Podia specializes in online courses, memberships, and other educational products. Podia has tools designed to feel like a real classroom, making it easy for your customers to use.
You can also provide teaching and tutoring services one-on-one through platforms like italki for language learning or The Princeton Review for standardized test prep.
Selling on your own website
There are also good reasons to create your own site to sell your digital products: Maybe there isn't a site that's a good fit. Or you'd rather not part with the commissions or fees that the site charges, although website owners will have their own costs. Even if you start out on a marketplace, once your business is up and running it might make more sense to have a standalone site with your own domain name and design.
There are many services that will help you design your site, host it, and offer e-commerce solutions so customers pay you directly rather than going through a third-party marketplace.
Marketing strategy tips to sell digital products
Once you’ve gotten your business up and running, the key to making it a success is to build a customer base. Consider joining an online community of digital sellers to exchange tips and learn from their experiences or read on for some helpful suggestions.
Perfect your pitch
The marketplace for digital products can be crowded. In order to market your products as successfully as possible, make sure you know what makes them stand out. Do you have specific experience or expertise in artificial intelligence that makes your e-book about AI a must-read? Have you designed websites for well-known companies or nonprofits? If so, featuring that work will show that you know what you're doing.
Don’t be shy about showing off, but. be honest. While you shouldn’t oversell your skills, you also shouldn’t be afraid to be your own best sales agent too.
Master search engine optimization
Even your best digital product ideas will go nowhere if customers can't find you. Make sure that when people search for whatever you're selling, your business comes up in their search results. Learning how to write your site content and what words to include will help your business come up at the top of the most useful and relevant searches.
Use social media
As a beginning entrepreneur, you may not have a budget for advertising. But with social media, you can get the word out there for free and focus on the right audience at the same time.
Besides its worldwide reach, social media is a great place to target the customers you're looking for by using hashtags or marketing to online communities on sites like Facebook.
Encourage referrals
Another way to bring potential customers to your business is to harness the power of word-of-mouth advertising. Once you have a few satisfied customers, ask them to pass the word on to their friends, family, or social media contacts. You can even offer a discount on future products for each new customer or mailing list sign-up they bring in.
Offer free samples
When customers buy physical products in a store, they can assess their quality or try on clothes to see if they fit. Even when they buy physical products online, most stores offer easy ways to return them if they're not right.
It's a bit more complicated with digital products. You may offer refunds to unhappy customers, but with most digital products, it's not possible to return them.
Instead, reduce the possibility that a product isn't quite what someone is looking for by offering a free sample. Many streaming services offer a free week or month when customers first sign up. If you offer a subscription product, you can do the same.
If your product is an e-book, give the first chapter away as a sample. If you design digital templates, you might offer a few basic designs for free.
The future of digital product sales
Since the coronavirus pandemic, more people have learned that it's possible to do so much digitally. Amazon's subscription services like music and digital video are growing almost twice as fast as their sales of physical products.
Whether it's online education, software licensing, or mobile apps, expect this trend to continue. Following are some possible areas of growth. If you sell digital products in one of these markets, you might be a future groundbreaking success story.
Screenless software
Screenless software is software that can be interacted with via voice. Smart speakers like Amazon's Alexa are one example that's currently in use in many homes.
Screenless software opens up new opportunities for digital product sales. Already some language learning apps like Duolingo can listen to a user and determine whether they're speaking correctly.
Digital experiences
Many people prefer spending money on real-world experiences like travel instead of physical products. Online consumers are starting to realize the potential of digital experiences as well.
Digital experiences may be sold as either one-time fixed-price services, membership sites, or subscriptions. They may even take advantage of multisensory experiences. Imagine watching a perfume-making course and being able to smell the product!
The opportunities to sell digital products online are plentiful and growing. For software developers, web designers, writers, and anyone else offering digital products via an e-commerce platform, a membership site, or a self-created online store, the time to take advantage of the market for digital items is now.
After examining our digital product examples and the online tools available, get started on a plan to create digital products and sell online today!