Creating an online store to sell digital products can be a profitable venture. You save on the costs of stocking physical inventory, and there’s no limit to the number of sales you can make. But what if you’re not a creator and don’t have digital products to sell?
Digital dropshipping offers a solution—connecting you to artists, writers, and businesses for a mutually beneficial partnership. Read on to learn more about this business model and how to create a successful digital dropshipping business.
What is digital dropshipping?
Digital dropshipping is a business model that allows you to sell digital products created by others. You don’t own the rights to these products yourself; instead, you sign agreements with creators to list their products on your store.
The term “digital dropshipping” is a bit of a misnomer. Unlike traditional dropshipping, you aren’t actually shipping anything, and you typically aren’t routing orders to third-party suppliers. Most digital dropshippers are selling digital products such as ebooks, online courses, or digital art.
Overcoming common challenges of digital dropshipping
Building a business around dropshipping digital products can come with a few sticking points. Here are some common issues that may arise:
Licensing agreements
With a traditional dropshipping business, you can leverage dropshipping websites and apps to access a large number of suppliers. A digital dropshipping business may have to sign agreements with individual creators and companies, which can be a time-consuming process. Having a set of strong contracts in place can help you expedite this step.
Supplier reliability
One of the main upsides of digital dropshipping is that you don’t have to worry about supplying your own products. This also means you don’t have control over the quality of your offerings. Choosing trusted creators based on reviews can help you avoid this issue.
Building customer loyalty
When customers associate your product with your company, it can foster customer loyalty, creating an ongoing relationship that promps buyers to return again and again. But with digital dropshipping the products are not your own and often come with another company or artist’s branding. This can make it slightly more difficult—though certainly not impossible—to create those same positive associations and gain repeat business.
Promote your branding prominently through digital marketing strategies to ensure customers connect your name to the products they purchased.
Popular digital dropshipping products
It might surprise you to learn how large the market is for digital offerings. In 2020 alone, more than two billion people purchased at least one digital product. Looking to build a digital dropshipping business? Here are a few popular digital dropshipping products you can offer:
Ebooks
The ebook market is booming—expected to generate $14.6 billion in global revenue in 2024. Given the lower overhead costs compared to physical books—such as inventory space, shipping, and handling—ebooks are an ideal fit for digital dropshipping.
Online courses
Online courses offer flexible, self-paced learning outside of formal educational institutions. Subjects range from practical skills like woodworking to formal subjects like programming to motivational courses on leadership. Whether you want to go broad or focus on a specific category, online courses can be a profitable addition to your online store.
Digital artwork
Digital art—made with digital tools or digitized physical art—is extremely versatile. It can be used to spruce up digital spaces, including desktop backgrounds and social media profiles. Customers can also print and frame it to hang in a physical space. If you have an interest in art and a curatorial spirit, selling digital art via digital dropshipping might be an ideal business.
Software licenses
Whether you’re targeting companies or individuals, selling software as digital downloads can be a profitable business due to its high profit margins—often as high as 75%.
Stock photos
Many businesses find hiring a photographer costly and challenging, so they opt to buy stock image licenses from third-party providers instead. With billions of stock photos out there, a carefully curated photo library can appeal to discerning buyers—the challenge is reaching them with your marketing.
Music
The growing popularity of video editing for social media has greatly increased the demand for music, backing tracks, fun sounds, and other audio content users can license for their projects. As with other downloadable products, audio files offer low overhead costs and can yield high profit margins with minimal supply challenges.
How to start a digital dropshipping business
When you dropship digital products, you avoid many of the logistical hassles of setting up a brick-and-mortar shop, but the process of getting your business started is similar. Here are the basic steps to help you start digital dropshipping:
1. Define your market
With so many digital products available, it’s important to be selective about what you sell. Depending on your capacity, interests, and expertise, you may decide to go broad or specialize in a specific dropshipping niche.
For example, if you have an interest in wildlife and are connected to photographers in that field, you may create a digital dropshipping business selling licenses to animal photos. Being the go-to website for specialist content can help set you apart from the competition.
2. Find a supplier
Research your chosen field to find creators and businesses that would be happy to sell their products on your website. Look for suppliers who fit your store’s concept—whether that’s a particular genre of ebook, style of art, or type of software. To ensure you’ve found the right fit, request samples and read reviews.
Shopify Collective lets you sell in partnership with other Shopify brands. You can list items from a partner’s store and they handle fulfillment, whether that be a digital download link or course access.
3. Set up your online store
Create an online store to display and sell your digital products. There are several apps you can connect to your store to upload, sell, and deliver digital products directly to consumers, including Easy Digital Products (EDP), Filemonk, and SendOwl.
4. Market your products
Marketing strategies like search engine optimization, social media, and email marketing can help reach your target market and encourage repeat business. Since the products you sell may not contain your branding, make your store stand out through a unique and easy-to-use site, high-quality customer service, and creative advertising aimed at your target audience.
Digital dropshipping FAQ
Is the digital dropshipping market saturated?
Easy setup, low overhead costs, limited shipping costs, and high margins make digital dropshipping a highly competitive market. Despite this saturation, it can still be highly profitable if you choose the right niche, optimize customer experience, and market effectively.
What digital products can I dropship?
You can sell many different kinds of products on your digital dropshipping store, including ebooks, software, photographs, digital artwork, and music and other digital audio files.
What are digital dropshipping suppliers?
Digital dropshipping suppliers are the creators or businesses that produce digital content such as ebooks, software, or photographs that you can sell on your online store using connected apps and tools like Shopify Collective.
