What is Digital, Physical and Subscription Products?
There are three different types of products that you can sell on Shopify – physical products such as clothes or electronics, digital products such as eBooks, music and software and subscription products where the consumer pays a monthly (usually) fee to be part of a program or have special access to digital products or information.
Each one of these different types of product have their disadvantages and advantages and you don’t necessarily have to choose just one. Many people sell multiple products types on their Shopify website. Which one or ones you choose will be up to you.
To make that decision easier, here are some of the things that you need to know about the different types of products that are out there. Understanding what goes into selling each type of product will help you determine what you are going to fill your Shopify store with. Let’s start with the most common type of product sold on Shopify – the physical product.
Selling Physical Items on Shopify
Physical products are sold in Shopify stores all over the world. They range from computers, televisions and other big ticket items to items for the home, clothing, décor, jewelry and much more. Selling physical items on Shopify can be a rewarding and fulfilling experience, and it can certainly be a lucrative one. More people buy online these days than ever before in history and the number will continue to rise. But there are some disadvantages as well.
For one thing, when you sell physical products you have to worry about getting them to the consumer. At some point in the future, digital and physical objects may be intertwined, with information being sent to a 3D printer after a purchase which then creates the product in minutes or hours. For now, we still have to get items to people the old fashioned way and for your store that means shipping them using one of the services out there like the United States Postal Service, FedEx or UPS.
Something else that you have to consider when deciding whether or not to sell physical products is the problem of defective products, those that get damaged while being shipped to the consumer and other returns. You’re going to need to create a return policy and then prepare for a certain percentage of returns. That percentage will be very low if you sell quality products, but no matter what, you are going to have returns.
With physical products you have the added disadvantage of having to buy them first, and keep a certain number in stock. There are some ways around that, which we’ll discuss in Chapter Nine, but for most stores, you need to invest in inventory, and your profit margin will be much smaller than it is with digital products that you create.
While you can sell a $20 eBook that costs you nothing to send to someone, with an unlimited amount of copies available to be sent, you will actually have to replace the physical inventory so you’ll only be making your markup as profit.
Selling Digital Items on Shopify
The next type of product that we’ll discuss is the digital product. A digital product is one in which it exists only in electronic form. There is no physical product to be shipped because the item is delivered electronically to the buyer. Digital items have become very popular in recent years. Even some items that used to be physical are now almost fully digital – or are at least offered as an option in digital format.
A good example of this is the eBook. It used to be that if you wanted to read a book, you either bought it from the bookstore or you checked it out from the library. Now, you can purchase the digital version of a book and read it instantly.
Even libraries have gone digital, allowing you to check out the digital version of books and read them on your tablet, e-reader or smartphone, and return it when you are finished just as you would with a library book. But the eBook is only one type of digital product that you could sell, and since Amazon is the king of digital reading material, a book probably isn’t the best choice for a product to sell anyway.
There are various other forms of digital product to be sold. One of the most common types today is the application or ‘app’ for smartphones and tablets. Apps for mobile devices are different than regular applications in two ways – one is that they are intended for use with a mobile device operating system like Android, rather than for a PC or Mac operating system, and second, they are made to be as small as possible because there is limited space on most mobile devices. However, computer software is also a viable digital product as are various website templates and more.
The four main types of digital product include the digital image, the mp3 or wav file, the software or application package and the digital video. All of these various media types are sold on the internet and make up nearly all of the digital products sold.
Software includes games and popular programs like Microsoft Office and Skype, movies are streamed across the internet to Smart Televisions and iTunes has become one of the most popular digital music vendors of the 21st century. There is also a booming business in apps, with even small businesses paying to have their own app created.
As far as creating your own digital products, or selling digital products that you have the rights for, the potential for earning is high, since digital goods cost little to nothing to produce, at least after the initial manufacturing, and you can charge nearly as much as a comparable physical product if the demand is there. You’ll have to decide if you have something digital that is worth selling on your Shopify site.
Selling Subscription Products on Shopify
The third type of item is the subscription product. Subscription products are those that are paid regularly and give access to a restricted area of some kind. For example, an application could be built into a website or downloaded that only allowed the person access if they had a current subscription. An example of this is a music service like Pandora, which offers both free and subscription based services.
Netflix is a subscription based service that offers movies and television shows to subscribers. Gamefly is a subscription service that allows for the unlimited rental of video games and almost every stock photo website in existence has some sort of subscription service.
Choosing a subscription based model has a number of advantages for you. First, you don’t just make money on the initial purchase. Instead, you get to make money each and every month that the person subscribes.
Also, many people are able to set up a subscription service that only requires minimal maintenance which means that they are able to make money without doing very much work for it. However, you need to provide value to your customers in order to get them to subscribe and this can be a challenge.