Digital products can’t be held, tasted, or touched, but everyone consumes them—from music to videos, ebooks to online courses, and more.
Many entrepreneurs build entire businesses around these intangible goods, due to their popularity and ease of distribution, or launch digital product lines to complement the physical items or services they offer. And it's easy to get started, considering there are many ways to set up a free online store with Shopify.
What makes digital products especially appealing, however, is they can be created once and sold repeatedly to different customers without having to replenish inventory, making them ideal for creatives, artists, educators, and freelancers looking for new income streams that require less effort to maintain.
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What are digital products?
A digital product is an intangible asset or piece of media that can be sold and distributed repeatedly online without the need to replenish inventory. These products often come in the form of downloadable or streamable files, such as MP3s, PDFs, videos, plug-ins, and templates.
The benefits of creating digital products
Digital products have many advantages that make them uniquely attractive to sell:
- Low overhead costs. You don’t have to hold inventory or incur any shipping charges.
- Extremely high profit margins. There’s no recurring cost of goods, so you retain the majority of your sales in profits.
- Potential to automate. Orders can be delivered instantly, letting you be relatively hands-off with fulfillment.
- Flexible products. You can offer free products to build your email list, monthly paid subscriptions for access to exclusive digital content, or licenses to use your digital products. You have a lot of options as to how you incorporate digital products into your business.
- E-learning is the future of education. You have a massive opportunity to expand your business and impact with e-learning, an industry expected to be worth $331 billion by 2025.
But digital products also come with specific challenges you’ll need to watch out for:
- You’re competing with free content. With digital goods, consumers can probably find free alternatives to what you’re selling. You’ll have to think carefully about the niche you target and your product descriptions, offer premium value with your products, and know how to build your brand in order to compete.
- You’re susceptible to piracy/theft. You need to take precautions and reduce these risks by employing the right tools to protect your products.
- There are some restrictions on how you sell. For example, you must sell physical products through the Facebook and Instagram sales channel, according to their commerce policy.
Most of these challenges can be overcome, however, if you employ the right tools when designing your digital product business.
Learn more: Trending Products to Sell in 2020
7 apps for selling digital products
If you’re building a digital product store or are looking for ways to add digital products to your existing store, there are a number of digital marketing tools you’ll want to consider, depending on your needs:
- Digital Downloads. This free app by Shopify offers a simple way to sell digital products in your store. Upon purchase, customers can download their file immediately and receive a link in their email.
- Sendowl. For more complex digital product businesses, Sendowl comes with a variety of features and useful automation, like expiring links and auto-generated license keys, to power your products.
- Single Music. If you’re a musician selling music, Single was made with you in mind. Not only does it bridge the gap between physical and digital music sales, it also lets you easily include clips on your product page for customers to sample.
- Thinkific. This app lets you monetize your expertise and grow your audience by adding online courses to your Shopify store. You can upload and drag and drop content to create a course curriculum. A free plan is available allowing you to create up to three courses.
- FetchApp. FetchApp is another digital download delivery app that offers fewer features than Sendowl but has a free plan available (5 MB of storage) and gives you the ability to attach multiple files to a single product.
- Sky Pilot or Bold Memberships. These apps are ideal for building a membership program. You can sell files and exclusive video streams to customers. Customers can then access all of their previously purchased files through their own customer accounts.
- BookThatApp, Tipo, or Sesami. These three apps are perfect for businesses that offer one-to-one or small group interactions and need an appointment booking solution to schedule consultations or coaching sessions with customers. All three apps have a free plan available.
Beyond these digital product delivery systems, there are other Shopify apps to power and protect your digital goods, such as:
- Recurring Order & Subscription. This is an app for weekly or monthly subscriptions. Use it to automate recurring orders, invoices, and digital subscriptions for online memberships or programs.
- Photolock. If you want extra protection for visual products like stock photos, this app offers most of the security measures you may need, from watermarks to source code protection.
- Disable Right-Click. When your content is your product, this app helps you protect it from theft. You can lock images and text so they can’t be saved or copied without your permission.
Depending on your needs, these apps and more can be used together to help you incorporate digital products into your Shopify store and execute any of the digital product ideas below.
Note: When creating digital products in Shopify, be sure to uncheck “This is a physical product”.
6 digital products you can sell online
1. Sell educational products like ebooks or courses
Online courses are best suited for in-depth content. They require some effort up front, from creating a presentation to recording a video walk-through. When creating an online course, start with learner outcomes: what do you want the learner to know or be able to do at the end of your course?
You can include quizzes, knowledge checks, and interactive activities within your courses to help break-up learning content and make your e-course more engaging. Consider learning and implementing a teaching model like ADDIE.
If you consider yourself an expert on a particular topic, digital products are a great way to package that information and sell it to others looking to learn.
If there’s an abundance of free blog posts or tutorials on YouTube about what you’d like to teach, you can compete by delivering content that promises not education but transformation. In other words, don’t sell the product—sell the customer’s own potential after buying your product.
You can leverage an existing reputation as an expert to garner attention for your products, or if you’re starting from scratch, you can create and give away free content to generate interest and leads for your paid digital products.
2. Sell licenses to use your digital assets
From stock photos to video footage to music and sound effects, there’s a global ecosystem of licensable digital assets uploaded by creatives for other creatives to use in their work.
By offering licenses to individuals and businesses, you can charge for the use of your photos, videos, music, software, and more in your own store and through online marketplaces, such as stock photo sites. In exchange for exposure, some of these marketplaces can take up to 50% in commission for every sale, however. If you want to build your own destination for digital assets, you can use Sendowl to power this type of business with unique auto-generated license keys.
When coming up with assets to create, it helps to work backward from the needs of your intended audience. Start by thinking about what kind of assets they’d want to use in order to create products that are actually in demand (and thus easier to sell).
Also, be sure to protect your digital products with watermarks and other security measures, especially if you want to sell photos online.
3. Sell membership for access to exclusive digital products
Instead of selling individual digital products, you can bundle them together and lock them behind a paid subscription to generate recurring revenue.
This approach is ideal if you plan to maintain a growing library of premium content and nurture a community of passionate members. In some cases, paid digital subscriptions can even create an opportunity to directly monetize your existing content marketing efforts.
Since this content is behind a gate that only paying subscribers can access through their customer account, you can also host exclusive content that can be streamed rather than downloaded.
4. Sell digital templates and tools
Digital products can also come in the form of intangible tools that equip professionals to do tasks that either fall outside of their skillset or take up a lot of time. You can sell digital solutions to the common pain points and needs of a specific audience.
Some examples include:
- Product mockup files for entrepreneurs
- Resume templates for job-seekers
- Software for businesses
- Adobe After Effects plugins for video editors
- Icons, fonts, or UX Kits for web designers
If you already have a freelance business, it might be worth considering how you can turn your skills and services into digital products to create passive streams of revenue.
5. Sell music or art
If you’re a musician or an artist, chances are you’ve explored ways you can monetize your talents or the audience you’re building. While t-shirts or prints are always an option, there are also plenty of possibilities in digital downloads.
A musician can sell ringtones of their best songs alongside their merch. Or a cartoonist could turn their art into purchasable phone wallpapers. Since you don’t have to hold any inventory, you can experiment with different formats to see what your audience wants without much risk.
6. Sell your expertise or services
Services tend to pair well with digital products because services are essentially their opposite—with services, your "inventory" is limited to the number of working hours you can accommodate.
Plus, customers often receive digital products as part of their "purchase" with many services. A designer will deliver logos. A personal trainer might deliver a workout plan. Leaning into this, you can position certain services as packages containing valuable digital products.
For example, you could offer a consultation for a fee, along with a personalized report or Excel spreadsheet, and then upsell your customers on your other services or products. Or you could offer a free downloadable product to generate leads for your email list, a tactic that many online businesses employ today.
If there are common tasks you complete as part of your service business that are easy for you but valuable to your customer, you can consider productizing them to create revenue streams that require less of your time and effort to maintain.
How to find digital product ideas that sell
While it’s easy to get stuck waiting around for a eureka moment, finding a good business idea is more of a process. It’s great to have an idea that excites you, but if you want an idea that sells, you’ll want to follow a process of brainstorming, research, and validation.
Generate ideas to start with and write them all down. Don’t be too critical. Bad ideas can lead to good ideas and vice versa. The key to brainstorming is to avoid over thinking things.
If you’re looking for a spark, here are some questions to ask yourself:
- Can you teach customers how to use your products? For example, if you sell knitting products, you could offer appointments to teach advanced knitting techniques.
- Are there things you can help your customers with related to your overall industry? For example, if you sell surfboards, you could create a workout program to help your customers stay in surf shape at home.
- Think about the values you’ve built your business on. What are topics related to that? For example, if you sell sustainable apparel, you could create a course teaching your customers how to live a more sustainable life.
- In what ways could you bring your community of customers together? For example, if you sell kitchen supplies, you could run a virtual guided wine tasting event.
- What are you good at? For example, if you’re really great at product photography, you could teach other people how to get better at product photography too.
Do some research to add to your list of ideas. Look for pain points your customers have related to your product, industry, or values, as well as topics they love or get excited about. Both present great opportunities to provide value in the form of an educational product.
Here are some good places to get started doing research:
- Facebook groups. There are Facebook groups dedicated to every niche and audience imaginable, making them a great place to learn what your potential customers care about.
- Industry forums. Forums dedicated to hobbies and communities in your industry can help you learn more about what people want and need in your broader industry.
- Product reviews. Read both the reviews for your products and competitors’ products to get ideas. These could come from the reviews on product pages as well as stand-alone reviews on blogs and other websites.
- Blog posts and comments. Read the blog content your community might be reading, as well as the comments, to get even more ideas. For example, if you sell auto parts, dig around on automotive blogs.
- Emails from customers. Finally, don’t forget to go back and reread any emails or messages you have gotten from customers over the years. The people who took the time to contact you with thoughts and concerns are usually “high intent” customers and they might have shared some really useful insights.
Before committing too much time to an idea, you want to validate it and make sure your idea is solid before you spend time building it. The last thing you want to do is invest a lot of time or money in a new venture without knowing it will be successful.
There are a couple of ways to validate your idea:
- Keyword research. Use a keyword tool to see how many people are searching for your topics. This will give you an idea of the opportunity size of each one.
- Google Trends. Search your topics on Google Trends. Look for topics that are growing in interest. This means the opportunity size will keep growing.
- Ask for feedback. Contact your customers directly, either through email or social media. A poll or survey is a great way to collect customer feedback.
- Start small and iterate. Sometimes, the easiest way to validate an idea is to experiment with a smaller version of the idea with room for growth. The goal is to get something out into the world as soon as possible so you can put your idea to the test and improve from it from there.
No matter what industry you’re in, you have unique strengths and knowledge that would be valuable to your customers.
Get creative with your own digital products
Without the need to hold inventory or the overhead associated with selling physical products, businesses based on digital products can be launched and tested with little risk.
There are countless ways you can create your own digital products and incorporate them into your business. With a little ingenuity and upfront investment of time, you can serve up irresistible value that can more than pay for itself over time.