Digital Products vs Physical Products?
When it comes to you promoting products and services as an affiliate, there are 2 types: digital as well as physical products. Let me explain what is classified as a digital product & what is classified as a physical product?
Digital products are ebooks, audio or video content. Your customers will be able to download these immediately and access the products upon payment.
Physical products are products that have to be shipped to the customer after they have placed the order and made payments for it. These are products such as televisions, books, computers, household goods, CDs, toys & health supplements etc etc.
The question that newbie affiliate marketers ask themselves is between digital & physical products, which one is more profitable? To answer this question I’m going to compare the differences between digital and physical products in terms of marketing them as an affiliate.
From there, you can make an informed decision as to which types of products you want to promote as an affiliate.
1. General Product Knowledge
Let’s say for example, you are promoting a DVD starring Arnold Schwarzenegger, you don’t need to tell people who Arnold is (as people already know who he is & what he is famous for). So, when it comes to promoting Arnold’s DVD products, you do not need much persuasion before they purchase them.
However, when it comes to promoting a digital product like an ebook by Mr. X on “20 Weight Loss Tips To Lose 52 Pounds In 30 Days”, nobody really knows who Mr. X is or whether he is qualified to teach about weight loss. Also, people can be skeptical about the fact as to whether the product really works. Therefore, when promoting products like these it’s important to do some research yourself to find out more about the author. Plus find out why he/she is qualified to teach others on the subject matter.
2. Commission Rates
Commission rates for promoting physical products usually range from 1% to 10% (depending on individual merchants), while commission rates for promoting digital products are significantly higher & range from 50% to as high as 80% per sale.
Therefore, in order for you to generate a $50 commission for a physical product (which you will be receiving 5% commissions), you need to sell a $1,000 product in order for you to receive $50 in commissions.
However, for a digital product if the commission is 75%, you only need to promote a product that costs only $60 (in fact, you’ll receive $45 in commission for every $60 product sale you refer).
You are probably wondering why the commission rates for physical products is so low compared to digital products. This is because for physical products, there are costs involved in storing the products in a warehouse, then there is a cost to ship the products to the customers (after payment).
Compared to a digital product there are no costs involved in storing it, and also there are no costs involved in delivering the product to the customer (your customer can download it instantly upon successful payment). Therefore the cost savings are transferred to you in terms of getting higher affiliate commissions.
3. Refund Rates
From my own personal experience, I tend to get more refunds for digital products compared to physical products. I personally feel that this could be due to the fact that for physical products, in order for someone to get a refund they will need to physically ship the product back to the merchant in order to get a refund (some people will find it too much of a hassle to do this), hence the lower refund rate.
However, for a digital product there isn’t any need for them to “return” a product to get a refund (digital products can’t be “returned” anyway). The refund amount is dealt with by the owner of the product which won’t be you.
So these are the 3 main differences between digital & physical products. If you were to ask me which I prefer to promote I have managed to generate good commissions in promoting both as an affiliate marketer. There is a huge & profitable marketplace for you with both when you learn how to market them effectively.
I recommend that you take some time to do some research on both digital & physical products. Choose one of the two, then focus your marketing efforts on that one to achieve success before moving on to the other. This way you will not get overwhelmed in your learning process.