Which is Better Digital or Physical Products?
Affiliate Marketing is becoming a hot business trend for micropreneurs. It promises high marginal returns in exchange of promoting a product. This type of performance based marketing is encouraging more people to tap into their entrepreneurial skills.
Physical products are general merchandise items like apparel that you ship out to customers, while digital products are downloadable items/services online such as software applications and online tutorials.The big question is, which is profitable between digital and physical goods?
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The internet presents marketing affiliates with opportunities to sell their products. There are millions of potential customers online.
The customer relies on your expertise. You are expected to deliver and have a straightforward answer to each of their concerns.
Physical products are a lot easier to sell as compared to digital ones. There is no need to explain what kind of service does your app provide. You don’t have to reassure clients that the lecturer at your tutorial site is qualified to conduct lessons. The client’s familiarity with physical products make it easier to sell because most of them have already been featured in traditional media.
Digital items are not heavily promoted. It’s your job to introduce the product to your client. It is truly time consuming to sell a mobile schedule tracker software application than a well advertised spray on nail polish. You will roughly make 1 sale for a $20 schedule tracker after 30 minutes as compared to 3 sales in 5 minutes for a $7 spray on nail polish. You would feel more productive selling more items in a short period of time plus the fact that you didn’t even need to persuade buyer.
Marketing affiliates would most likely work on a commision rate of 1%-10% for each physical product sale. Affiliates promoting digital products would have a 50%-80% commision rate. Let’s compare the products mentioned above. If one is able to sell a $20 schedule tracker in 30 minutes that would amount to having 8 successful sales within 4 hours. If the commision rate for this digital item is 50% then the marketing affiliate would receive $80, not bad to start your day. In comparison, if one is able to sell 48 pieces of spray on nail polish in 4 hours and you would earn a 5% commision rate from each item which is $0.35 that would sum up to $16.80 profit.
Bottom-line: the number of sales does not directly equate to profit.
Exchanges and Refunds:
Physical products require you to be in constant communication with the merchant to avoid mistakes like selling an item that is currently out of stock. You would be the one to process the exchange and refund transactions with the buyer and merchant. Almost 100% of the time asking for a refund is not worth the trouble of repacking and shipping back the item to the merchant and ending up shouldering the shipping fee. That is loss of revenue on your side.
Digital products can never be returned or exchanged. They are also non-refundable, this is actually more convenient for affiliate marketers.
Overall, selling both products would generate income. You just need to choose which product are you interested in promoting and where would your expertise would likely fit.