Monday, November 26, 2007

Selling Online: Physical Products vs. Digital Products

I have attempted to sell physical product online once. I found that it's too much of hassle as compared to selling digital products.

For physical products, on top of the market research / keyword research ground work, you have to also concern about inventory and shipping / delivery stuff, as compared to digital products, where it is normally delivered digitally and instantly in downloadable format. No issue with inventory and shipping / delivery for digital products.

No doubt there is always an alternative to sell physical products without the hassle of handling inventory and shipping -- dropshipping. But again, finding a good and genuine dropshipper is not easy. Most of the dropshippers restrict their dropshipping service to certain countries only, some even worst that they dropship to continents in USA only. This becomes challenging when you want to offer your products to the world wide market.

Besides that, most of the dropshippers would require you to pay a fee in order to access their product line. How ridiculous is this ! You are helping them to promote their products, they shouldn't be charging you to access their product line but instead welcome all sellers to help promote the products by charging only the dropshipping fees per item. What do they have to lose by letting potential partners to view their product lines before making up their mind to work with the dropshippper. I just couldn't figure out why they must charge a fee upfront before you make any money from selling their products.

Sometimes I wonder, are these so-called dropshippers making money out of the account set-up fees instead of from the dropshipping service for their products?

When dropshipping is out of question here, you will now have to crack your head on dealing with the inventory and shipping issues. In order to have good profit margin and being competitive in your niche, you have to minimize the product cost, to get a minimal cost per product item, you have to purchase at least a light bulk to get a reasonable discount. This again go back to the same issue, whereby you need to spend a considerable sum to buy the products in bulk before you make your first sale and before you know that your product is saleable. This of course is not ideal, what if the products don't sell or it goes slow. Huh, another challenging issue to handle.

The second headache that you are going to deal with soon after having the inventory issue solved is the shipping / delivery of the goods. Sending goods via registered air mail or courier service is not cheap and it would be a big challenge if you want to remain competitive in your market.

These are the challenges that I discovered when I am trying to sell physical products online. My experience tells me that selling physical products online is only workable when you are able to source for a good and reputable dropshipper with quality products that can take care of the inventory and shipping / delivery matters for you, PLUS giving you competitive price and good profit margin. Congrats if you can find one.

On the other hand, I would say selling digital products is still the easiest and simplest e-commerce model. You don't have to worry about inventory, shipping / delivery. It all done instantly in downloadable format once the payment is confirmed. And the best part is that you can automate the process. Whenever a purchase is confirmed and the payment is received, the product download link is sent to the buyer instantly and automatically. The buyer can then download the product into his / her computer or have it printed if it is an ebook or e-report. It doesn't involve any inventory cost and you can have almost 100% profit minus out the hosting fee of your website and any third-party credit card payment processing fee. Once it is set up properly, all you need to do is just to drive traffic to your sales page. You can forget about managing your product inventory, payment verification and the delivery of the goods. This gives you ample time to focus on marketing your products which in turn to bring you more sales. Don't you think that this should be the ideal way of doing business. Once set up, forget about the administration but focus on the marketing part and let it run on autopilot. Then set up the second website, do the same things again and let it run on autopilot. This business model allows you to set up unlimited websites and have them run on autopilot, which bring you multiple source of income.

No comments: