Lessons on Selling Digital Goods

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      AvatarChris_ZeroOne
      • Messages: 2

      Hello people!
      My name is Chris and I’m with ZeroOne eCommerce.  My co-founders starting selling digital cards and codes online years ago, and realized a few challenges while becoming the largest seller of digital goods on eBay…

      1. Thin margins require automation. While it technically is possible to grow in any condition, the margins for certain digital goods is pretty low. When you are limited by manual labor there’s only so much you can do to make things go faster before you need software to help automate things
      2. Chargebacks suck. In light of point #1, when you get hit with credit card or platform chargeback of $20-$40, it effectively erases profit on the next 10-20 orders. There is much more risk in chargebacks for sellers of digital goods because after the fraudster gets the code, they can simply decline their transaction with their bank. Many take steps to make sure they are who they say they are – but these processes are manual, error prone, and far from 100% effective.
      3. Multi-platform hedges risk. The technical term for having ‘too many eggs in one basket’ is called revenue concentration. Having one customer providing all of your income is riskier than having two. Too often, profits revert to $0 if you are de-platformed and only have one revenue stream for your digital goods.
      4. Everybody wants a cut. Major platforms perform a service, but it is difficult to know when they are worth it or not worth it. Many repeat customers can be transitioned to platforms with better margins. Many choose to open their own webstore for precisely this reason. Some webstore providers charge a percentage of revenue, this helps defray the start-up expense, but often the seller ends up paying just as much margin as a marketplace. Caveat emptor prevails when evaluating providers, be sure to understand the difference between a pay-per-transaction service and a pay-percentage service. The difference will save you thousands.
      5. Supplier sourcing. There are plenty of content creators out there – we believe in their mission and support their entrepreneurial journey. For the rest of us that distribute digital goods, we have to find suppliers of cards/codes/subscriptions/games/content online. This becomes our customers’ full-time effort once the processing is automated because nobody wants to run out of inventory to sell and your reputation for meeting buyer expectations is crucially important for long term success and remaining successful on marketplaces like Hood.de, Mercado Libre, eBay and many others.

       


      Chris @ ZeroOne
      “Sell digital goods, Everywhere”
      ROI calculator (no email required)
      https://zerooneecommerce.com/blog/the-ultimate-roi-guide-for-digital-product-sellers

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