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Stepping into the unchartered world of entrepreneurship can get your anxiety pumping. You want to hit a home run with your first idea, but you don’t want to chase rainbows, either.
I get it. You want ideas on products to sell online and make profit.
While there are hundreds of potential niches and millions of products to sell online, the foundation of your business model comes down to this one decision:
Are you going to sell physical or digital products?
Your answer to the above question will drive decisions on ecommerce platform, business plan and marketing strategy.
If you’ve been wondering about the pros and cons of each approach, I’ve got you covered with cold, hard data and advice from 30 successful online entrepreneurs. Some have sold both physical and digital products online. Some swear by the digital product model and others the physical.
Before we get into the expert advice, I wanted to give you a birds eye view of the B2C markets of physical and digital products online sales.
Here’s what the data says:
Physical product sales dwarf digital. This is a 1 trillion dollar market. A large percentage of these sales are dominated by global brands. The compound annual growth rate from 2016-2020 is expected to be around 11%.
The data below is based on 2012 US retail ecommerce sales. This includes digital sales of books, music and video (about 9% of total sales).
The data below breaks down the projected growth of those product categories from 2012-2018
Now that we have a basic understand of the big picture. Let’s take a deep data dive on digital commerce, a subset of ecommerce.
Digital commerce is a huge segment in itself. Since you’re probably not a movie producer or rap star, we’re going to leave out video and audio and focus on the popular paths for online entrepreneurs:
eBooks are the fastest growing digital product online. 2016 revenue is expected to be roughly $16 billion. Compound annual growth is projected to be around 16% between 2016 and 2020.
Overall growth during that time span is expected around 93% – making eBooks the biggest growth segment overall. Expected sales in 2020 is $29 billion.
While the overall numbers for eLearning (corporate, universities) are massive, this report shows dismal growth in the self-paced eLearning market. In the US, sales of online courses actually decreased in 2015.
These figures include retail packaged content, custom content development services, and authoring tools/platforms.
The global SaaS market is estimated around $78 billion in 2015 and is expected to grow to a $132 billion dollar industry in 2020 (69%).
Hopefully, all that data gave you direction in on where the growth markets are.
But data isn’t the end all be all, is it?
Experience goes a long way, which is why I asked 25 entrepreneurs the following question: what’s the single biggest advantage of selling digital vs physical products? I also want you to answer the flip side of that question.
Responses are below (in no particular order, Tor )