The advent of the digital era has revolutionized the way we do business, presenting countless opportunities for entrepreneurs to expand their reach and earn a profit. When it comes to selling digital products, having an online store is not just an advantage - it's a necessity. Aspiring entrepreneurs and e-commerce newcomers keen on selling digital wares often face a significant hurdle when choosing how to create their online marketplace. In this in-depth guide, we'll explore a few options for selling your digital products online, each with its own set of pros and cons.
The digital marketplace has seen an explosion in growth. This surge is particularly evident in the sale of digital products — from budgeting spreadsheets and how-to guides to Canva templates. The burgeoning demand for digital goods has not only opened new frontiers for creators but has also laid the foundation for a fiercely competitive market.
There are more and more channels to sell digital products. What are the options for newcomers, and which direction should they take? Let’s look at a few of them now.
Here are various channels to selling digital products online:
Why find your own traffic when you can tap into the massive user bases of sites dedicated to selling? Amazon has 310 million active users, and 80% of them are in the US. Etsy has 96.2 million buyers in the US. Marketplaces do (most of) the marketing for you, and buyers trust that the sellers they transact with are legit, through marketplace protections and seller/product reviews. Optimizing your product listings coupled with algorithms that support discovery of new items can help you quickly get more visibility organically.
One large trade-off of using a marketplace is that sellers must pay higher platform or transaction fees. Amazon charges a 15% referral fee plus $0.99 on sale you make of a media item. Etsy charges a 9.5% in fees (6.5% transaction plus 3% payment processing) on each item sold.
With marketplaces, you’re also constrained in your ability to showcase and differentiate your brand. Most users are searching for specific items or browsing a category — all they see are short product descriptions and a small thumbnail image. If you’re a business built on supporting working moms, for example, you’ll have a harder time conveying that brand story.
Finally, marketplaces have high competition which tends to drive prices downward. Buyers on these platforms frequently look for the lowest priced item they can get for a decent value. Expect to sacrifice on cost for the higher volume of purchases.
Summary of pros and cons of listing on e-commerce marketplaces:
Pros
Cons
Platforms like Shopify provide a more independent approach. They offer a set of tools to build your website and online storefront, giving you total control over design and branding.
Shopify makes it easy for you to design and customize your online store to align perfectly with your brand and vision. You can create a unique and memorable experience for your customers beyond the transaction — an aesthetic that reflects your positioning and values, a blog or portfolio to demonstrate your expertise, an About page to connect customers with the person(s) behind the brand.
Because customers have a chance to experience your brand, and you are not competing on price alongside other low-cost offerings, you can likely set higher prices for your digital products, especially if what you offer is unique or niche.
The costs of selling your digital products through Shopify is significantly lower than on marketplaces, since you’re not getting the infrastructure and large customer base. Shopify charges 2.4% to 2.9% transaction fee plus 30 cents per item sold.
On the flip side, the lack of access to a large customer base is the biggest disadvantage of Shopify. Marketing is a full-time job, and marketing can be very costly. If you don’t already have your own website traffic or social media following, you’ll need a customer acquisition strategy that you’ll then have to implement in order to generate sales.
Summary of pros and cons of using your own e-commerce site are:
Pros
Cons
Stan Store is the new cool kid on the block, best for individuals or companies who have a decent social media following. They offer the quickest and simplest path to selling products online. You can set up a Stan Store on your Instagram or TikTok profile literally in minutes. It’s super lightweight, and it was built primarily for selling and hosting digital goods. Customers are emailed a link to download your file as soon as a purchase is completed. Since users are kept within the social media ecosystem, there’s presumably less chance of drop-off and therefore a higher conversion to sale, in theory.
The cost of a Stan Store starts at $29/month with no additional transaction fees, making it the cheapest option for selling your digital products.
However, like having your own e-commerce enabled website, Stan Store requires brands to do their own marketing and customer acquisition. If you don’t already have a substantial social media following, your reach is limited.
If you are trying to build your brand and expand to other channels, Stan Store doesn’t exactly do that for you. Sure, you can update the colors and font styles (not yet font size), but you aren’t able to create a holistic user experience as you would with your own e-commerce website.
Summary of pros and cons of using a social media store are:
Pros
Cons
To summarize, if you're looking to leverage an existing base of lots of potential customers, consider listing your products on e-commerce marketplaces like Amazon or Etsy. If you value the user experience and brand storytelling and are willing to invest the time into developing and promoting it, an e-commerce website on Shopify may be the best fit. On the other hand, if you have a established presence on a particular social media platform, Stan Store could be a quick and effective way to start selling.
If you are able to, try testing with a couple of the channels. We’re testing with Etsy and Stan Store now. We’ll share insights when we have them.
Are there other online stores you use? Share your comments.
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