Digital vs Physical Products - Which Is Better For Affiliates?
When it comes to promoting products and services as an affiliate, there are basically 2 types of products and services - Digital as well as physical products. So, what is classified as a digital product, and what is classified as a physical product?
Digital products are ebooks, audio or video content which customers will be able to gain access to them immediately upon payment (instant gratification). Physical products are those that has to be shipped to the customer after he/she has placed the order and made payments for it. Some examples are televisions, books, computers, music CDs, DVDs, pills, etc.
So here's the question - Between digital as well as physical products, which one is more profitable for affiliate marketers? What I'm going to do in this post is to compare with you the differences between the both of them in terms of marketing it as an affiliate.
From there, you can make a better decision as to which types of products you want to promote as an affiliate.
1. General Product Knowledge
Say for example, you are promoting a book by Steven Spielberg, or a DVD starring Ben Stiller, you don't need to tell people who these people are (as people already know who they are, and what they are famous for). So, when it comes to promoting these items, you do not need much persuasion before they purchase them.
However, when it comes to promoting a digital product by Mr. Z on "10 Weight Loss Tips To Lose 72 Pounds In 14 Days", nobody knows who Mr. Z is, as well as why is he qualified to teach about weight loss. Also, people are skeptical about the fact as to whether the product indeed works. Therefore, when promoting products like these, you need to do some research yourself to find out more about the author, and also why he/she is qualified to teach on the subject matter.
2. Commission Rates
Commission rates for promoting physical products ranges from 1% to 10% (depending on individual merchants), while commission rates for promoting digital products ranges from 50% to as high as 80% per sale.
Therefore, in order for you to generate a $40 commission for a physical product (which you will be receiving 4% commissions), you need to sell an item worth $1,000 in order for you to receive $40 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 single $60 sale you refer)
You may be wondering why the commission rates for physical products is so low compared to digital products - The reason is because for physical products, there are costs involved in storing these items in the warehouse, as well as cost to ship them to the customers (upon payment).
Compare that with a digital product, there are no costs involved in storing it, and also there are no costs involved in delivering the item to the customer (he/she can download instantly upon successful payment). Thus, cost savings are transferred to you in terms of getting more affiliate commissions.
3. Refund Rates
From personal experiences, I tend to get more refunds for digital products compared to physical products. It could be due to the fact that for physical products, in order for someone to get a refund of it, they will need to ship it back to the merchant in order to get a refund (and many a times, people will find it too much of a hassle to do it), hence the lower refund rate.
However, for a digital product, there's no need for them to "return" a product to get a refund (digital products can't be "returned" anyway).
The above are the 3 main differences between digital, as well as physical products. If you ask me, I have managed to generate good commissions in promoting both digital, as well as physical products as an affiliate marketer.
I hope with the above article, you now have a good idea on the main differences between the both of them.