The world now spends more time glued to their smart phones and laptops than anything else. The Forbes 100 list is dominated by tech titans who have dropped out from Ivy League colleges and started their own ventures. The uncanny similarity among most of them is that they got super rich offering digital products. Clearly, the market for digital products is sky-rocketing and you will do good to jump on the bandwagon.
So what all are classified as digital products?
All your eBooks, online tutorials, websites, music, mobile apps, software, graphic designs, online media can be classified as digital products. And that includes products like Facebook and Whatsapp. The market size for digital products is a good bit. Here are the advantages of building a digital product over a tangible product.
They are Easier to Manage
Since the entire product is online they are a lot easier to manage. Starting from creating them to selling them the entire process is hassle free and can be done from anywhere in the world with a laptop in front. Sounds like such a lucrative proposition doesn’t it? It is. One of the biggest problems of manufacturing tangible products is setting up a factory. This in itself is a humongous task and you need to first get the land, then build the factory and get all the machinery and labour and then only you can start production.
So it’ll take at least 2 years for your idea for your grand idea to see light of the day. That provided if all these processes go on smoothly and there are no regulatory or land acquisition issues. Instead for a digital product you can ideate and get your product up and running in a matter of days sitting in your bedroom! Besides, after starting to manufacture you need to worry about shipping the product to the market and there wil be trans-shipment losses and all. For a digital product you simply do not need to worry about shipping and anything. The selling process is also conducted through the net without you doing anything!
No inventory required
When the demand for a tangible product gets very high we often see the sold-out signs across stores. Your digital product cannot be sold out. What’s more you do not even need to keep an inventory. So once you’ve made the product it’ll sell and mint money without you worrying about ramping up production and all that.
Well, yes there will be the update or the occasional bug that you might have to fix, but compare that to the hundreds of heavy boxes that need to be handled for a tangible product and it all suddenly sounds very easy.
So you do not need to manage the hassles of a warehouse or shipping or worry about running out of stock. For perishable tangible goods you also need to worry about the product getting tarnished or rotting away at the warehouse in case it doesn’t sell. That is a huge risk which can run into losses of millions of dollars! You do not have to worry about any such thing in case of a digital product.
Almost Redundant Customer Service
It happens quite often in the tangible products industry that the customer faces problems with the product and the customer service section faces a barrage of calls to replace the product and give a refund or sometimes even give damage charges. In case of digital products however, all these hassles don’t exist. You might have to fix the occasional bug but that’s about it. You do not need to have those refund policies because the customer doesn’t really need to return the product. They might ask for a refund and you give it and it ends there. It is completely hassle free.
The Lucrative Finances
The biggest advantage of digital products is the huge profit margins as compared to the physical products. You save a lot of money on capital costs and hence you can invest generously on quality human capital. Even with that your profit margins stay quite high. You get all the revenue generated and that increases profitability. Besides, as mentioned earlier there are no chances of millions of dollars worth unsold inventory.
Also since it is a digital product the market is humongous. Once your product is on the internet your market is basically each and every country where there is an internet connection. You do not need to worry about country-specific marketing or manufacturing. Everybody already has access to your product.
Having said the biggest challenge to digital products is piracy. It is very to pirate a software or an eBook that say pirate an electronic product. So you really need to innovate constantly to stay ahead of the curve and that is the only way you can make the most of the digital market.