Digital dropshipping is an exciting ecommerce model that involves selling digital products via a third-party supplier. It has enticingly low startup costs, and once you’re up and running, you’ll find that it doesn’t eat up too much of your time.
However, unlike many would have you believe, digital dropshipping isn’t necessarily a surefire way of making money online. The model has many nuances that, if you fail to take into consideration, could result in your venture being a flop.
In this digital dropshipping guide, we’ll tell you everything you need to know, from how the process works to the best platforms to host your store.
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Digital dropshipping is a form of ecommerce that involves a retailer selling digital products without ever owning or stocking them. Instead, the products will be in the possession of a third-party supplier, who will distribute them once they have been purchased.
The core concept of digital dropshipping is almost identical to that of traditional dropshipping. The only real difference is that the products you sell are digital, not physical. However, this difference has a knock-on effect on how your business will operate. Here’s how:
Inventory and shipping: Digital dropshipping products are stored online, so customers will receive products instantly as downloads rather than waiting for them to arrive at their doorstep
Costs: Not having to send physical products will save you money on shipping costs and packaging
Unlimited stock: With digital dropshipping, there is no risk of running out of stock like you’d have with physical products
Limited environmental impact: With no factories, delivery vans, or materials involved, the environmental impact of digital dropshipping is low
When you break it down, the digital dropshipping process is simple. Retailers compile the digital products they wish to sell, and the supplier stores and distributes them once they’ve been purchased. Both parties will then receive their slice of the profits earned.
Easy, right? Well, let’s break it down even further. Here’s an in-depth look at how the digital dropshipping model works:
Compiling products to sell: First, you must compile a selection of digital products you wish to sell. These products are sourced from suppliers and creators who are willing to use your outreach to widen their audience.
Setting up a store: The next step is to set up an online store in which all the products you’ve compiled can be found and purchased. There are plenty of options you can choose from to host your store, some of which we will discuss later in the article.
Order is placed: Once you secure an order, your supplier will be instantly notified. They’ll receive details of the order as well as the customer’s payment details.
Order is sent: The supplier will then send the customer their order via an email or a download link. This part of the process happens within moments of the purchase.
Receiving a commission: Once the sale has been made and the customer has received their order, you will receive your commission. The entire process is passive once you have set up your store and marketing strategies.
Pros and cons of digital dropshipping
Before you start your venture into digital dropshipping, it’s important to remember that while it has its upsides, it also has its downsides. If you fail to take the negatives into account, you may find yourself ill-prepared for what’s to come, which could result in a loss of money.
After all, while starting a digital dropshipping business will be cheaper than traditional dropshipping, you’ll still have to set up a store and market it. So, as with any form of entrepreneurship, you should always be prepared for the problems that lie around the corner.
Pros
Cons
Instant delivery
Saturated markets
No physical inventory
Limited range of products
No shipping costs
Low profit margins
Unlimited stock
Reliance on suppliers to be reliable
Lower environmental impact
Difficult to build a brand
10 popular dropshipping products
Of course, the most important aspect of your digital dropshipping store is the products that you sell. While the range of products isn’t as limitless as it would be for traditional dropshipping, there are still plenty of options and ideas to consider:
Ebooks: Literature is no longer stuck within the confines of a paperback. You can now sell digital books of all kinds over the internet.
Digital art: There’s always demand for digital art. That could be from brands looking to stylize their website or creatives wanting to add visual appeal to a project.
Online courses: The appeal of learning without leaving the house or enrolling in an official college has never been greater. Online courses are always in demand.
Stock photos: Much like digital art, stock photos are also in demand. They’re found in many different forms of online content.
Software: With software developers all over the world believing that their product will streamline people’s lives, there’s plenty of software waiting to be distributed. Your task is to find a good product and market it well.
Plugins: Plugins are extensions that can be added to existing pieces of software. For example, you could sell plugins for music software that gives you access to different drum beats.
Website themes: New websites are popping up every day. You can help people make theirs stand out with downloadable website themes.
Recipes: Recipes have been in demand for almost as long as humans have been roaming the earth. Things are no different in the digital age.
Fonts: Fonts are integral to a brand or product’s image. They’re in high demand, particularly for new brands or those launching new products.
Stock audio: Royalty-free music is integral to all sorts of media. This includes everything from corporate tutorials to YouTube videos.
Choosing a digital dropshipping supplier
Choosing the right digital dropshipping supplier may be the difference between your business being a success or a failure. For a start, your reputation is key. If you pick an unreliable supplier, it will quickly lead to negative reviews and a lack of people who want to invest in your products.
This also ties into customer service. You’ll want to know that the supplier you choose has adequate means to deal with customer complaints. Unfortunately, with digital dropshipping, the customer interaction will largely be out of your hands, heaping further importance on your choice of supplier.
Ultimately, you’ll want to pick a supplier that sends customers their products efficiently, provides good customer service, and keeps fees to a minimum.
If you’re just starting out in digital dropshipping, Gumroad offers excellent tools for beginners. It allows you to sell all manner of digital products, even physical ones if you want to transition into traditional dropshipping. Do bear in mind that the platform does charge a $10/month fee.
One of the platform’s most beginner-friendly attributes is the fact that you don’t need a website in order to get started. Instead, you can create a site directly on the Gumroad platform, which, albeit basic, is useful for getting your foot in the digital door.
SendOwl is a great platform to choose if you want to take your digital dropshipping business to a high level. It caters to beginners and experts, mixing simplicity with sophistication. It will also help beginner sellers through the process of getting set up, as well as guide them through sales strategy options.
Unlike many platforms, SendOwl isn’t packed with features, so you won’t be overwhelmed when trying to understand the ins and outs of the site. The platform is reasonably priced, although not as cheap as Gumroad, with plans starting from $18/month. However, if you’re unsure about getting started, you can make use of a seven-day free trial and pay $1/month for two months.
Shopify has a free extension app called Digital Downloads, which allows you to upload digital products from your mobile phone. It’s designed for simplicity, so it may not be your number one choice if you want to create a scalable business.
The app has also received criticism from reviewers for being unreliable, often failing to send customers their links once they have paid for a product. However, with Shopify being as huge as it is in ecommerce, you’ll be uploading your products onto a platform with a huge user base.
It’s hard to look further than Shopify when setting up your digital dropshipping business. With over 4,000 free apps on offer to help you sell your products, the platform has everything you’ll need to succeed. All you’ll need to bring to the table is your ideas of which digital products you wish to sell.
A lot of Shopify’s merit is down to its automation. The platform will handle the distribution of digital products to buyers, as well as tracking inventory information. It allows for multiple app integrations, such as Omnisend, which can automate your email and SMS marketing strategies for you.
Omnisend will send automated cart recovery messages and segment your customers depending on their previous interactions with your store. The app is joyfully intuitive to use, allowing you to produce high-end, on-brand email campaigns in a matter of clicks.
Unlike many digital dropshipping platforms, WooCommerce can be with you all the way from being a dropshipping beginner to an experienced seller. It’s highly scalable, with all the tools and integration features you’ll need in order to grow your business.
Unlike Shopify, WooCommerce isn’t its own store host but rather a plugin extension for WordPress. This means that if you’re well-acquainted with WordPress, you should have no issue navigating your way around WooCommerce. If not, it may feel slightly technical.
As for its digital dropshipping capabilities, WooCommerce is reliable and has extra plugin options to help customize your store and manage your inventory. Overall, WooCommerce presents a viable alternative to Shopify.
One company that has experienced real success with WooCommerce is Amundsen Sports, specializing in outdoor sportswear and apparel. The brand has experienced a striking 1010% lift in revenue-per-email from automations since switching from MailChimp to Omnisend.
If simplicity appeals to you, Wix could be the ideal platform for your digital dropshipping business. The platform is packed with pre-made website templates, room for a blog, and SEO tools to help get your business seen. With the ability to seamlessly integrate dropshipping apps and marketplaces like Modalyst into your site, you can get started with dropshipping in no time.
However, Wix websites aren’t exactly known for being responsive, so if you want a stress-free user experience, you might want to look elsewhere. Still, for $17/month, you’ll have access to a decent digital dropshipping service offering a reasonable entry point into the business model.
Digital dropshipping best practices
Once you get started with your own digital dropshipping business, you’ll soon realize that, at its core, it is a simple process. However, there are some best practices that you should bear in mind if you want to hit the ground running:
Choose a niche: While you can be a digital dropshipping generalist, it helps to have a niche. This will help you form a target audience, making it easier to source products your customers will want to buy.
Develop a brand identity: Having a strong brand identity with a logo, color palette, and recognizable aesthetic will help you stand out to customers. It will also make your store look more professional and reliable.
Optimize SEO: If you want to become successful with digital dropshipping, search engines will be your best friend. Optimizing your SEO will help you to be seen on internet searches.
Find a reliable supplier: It cannot be overstated how important it is that you pick a reliable supplier for your dropshipping business. If they don’t complete their side of the deal efficiently, you’ll be in for a rough ride.
Craft marketing strategies: To become a successful dropshipper, your marketing needs to be effective. Platforms like Omnisend can help you personalize your marketing strategies and boost outreach, spreading the word about your store even further.
Of course, if marketing a digital dropshipping business was simple, everyone would be doing it. However, with the help of Omnisend, you can maximize your omnichannel outreach and automate your email campaigns, giving you the best chance of succeeding.
Wrap up
While the premise of digital dropshipping may be relatively simple, there’s a wealth of information to digest before you can get going. Choosing a store host, supplier, the products to sell, and how to market your store will all require preparation if you want to be successful.
Once you have got to grips with the basics of digital dropshipping, the sky could well be the limit. With an abundance of store hosts, tools, and marketing resources available online to help you, it’s never been easier to start selling digital products.
Take a big step toward dropshipping success with Omnisend
Richard is a Content Marketing Manager at Omnisend. An avid writer, he's said to have been born holding a pencil. Fascinated by all things handmade, if he's not reading or writing he can often be found practicing leathercraft.
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