The Benefits of Selling Digital Products vs. Physical Products on Etsy

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In recent years, the e-commerce world has seen a significant surge in the popularity of digital products. Etsy, the renowned online marketplace primarily known for handmade, vintage, and unique goods, has not been left behind.

More and more Etsy sellers are choosing to sell digital downloads and printables. But how do these digital products stack up against their physical counterparts?

In this article, we will take a look at the advantages of selling digital products versus physical goods on Etsy, and whether it is better to sell digital products or sell physical products on Etsy.

the benefits of selling digital products vs. physical products on etsy

Benefits of Selling Digital Products vs. Physical Products on Etsy

Whether you’re on the fence about creating digital products on Etsy, or maybe you want to start a digital product business using your own website or e-commerce platform such as Shopify to sell online, you’ve come to the right place.

Digital products are no longer just the future—they’re the now. Let’s compare the two and take a closer look.

No Inventory Worries

One of the biggest benefits of selling digital products, or a digital download is the absence of inventory.

After you’ve created your digital product, whether it is printables or digital downloads, you can sell it an infinite number of times without having to replenish stock.

This brings a great amount of relief for Etsy sellers, as managing and forecasting inventory can be both stressful and costly. It also means that you are able to have a large inventory of digital products that do not take up much physical space.

With physical goods, you will have to invest in the materials needed to create your products, store them safely, and regularly check your stock levels.

If you underestimate your demand, you may run out of stock and miss out on sales. If you overestimate your demand, this can result in wasted resources, time, and storage costs.

No Shipping Hassles

Unlike physical products, one of the many pros of selling digital products on Etsy is their immediate delivery. Once a customer makes a purchase on Etsy, they can download the product instantly and buyers are left feeling instant gratification for this purchase.

This also eliminates shipping costs, potential damages during transit, and lengthy delivery times.

Physical products require a more comprehensive shipping strategy. This involves packaging, postage fees, tracking, potential customs issues for international sales, and customer complaints about delayed or damaged goods, as well as dealing with returns and exchanges.

Higher Profit Margins

After the initial time and effort spent creating a digital product, the subsequent costs are almost negligible.

Since there’s no inventory to buy or shipping fees to worry about, most of your sales translate directly to profit. The more sales your shop begins to get, the more profit will go into your pocket.

Etsy digital product sellers will often report profit margins for their printable products at 80%-90% or higher.

The costs associated with tangible goods—materials, production, storage, and shipping—can quickly add up, often eating into your profit margins.

Environmentally Friendly

In the age of environmental consciousness, digital products stand out as a green alternative. They don’t necessarily require physical materials or transportation, hence reducing carbon footprints.

Physical products require manufacturing, transporting, and packaging goods, which can have a more considerable environmental impact, from resource extraction to emissions during shipping.

Global Reach with Ease

Digital products can be sold online to anyone with an internet connection. There are no international shipping fees, customs complications, or extensive delivery times to deter international customers.

While you can ship tangible goods worldwide, it often comes with added complexities, including increased costs and potential customs barriers.

Flexibility in Product Updates

If you need to update a digital product, it’s as simple as uploading the new version. This is especially beneficial for products that require periodic updates, like planners or guides.

Once a physical product is created and in the hands of customers, making changes or updates is not feasible without producing an entirely new batch.

Less Money Required to Start

Selling digital products on Etsy requires significantly less upfront investment. You need a good idea, some time, and the necessary tools or software to create your product.

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Selling physical products on Etsy often requires a more substantial initial investment. This includes the cost of materials, tools, storage space, and initial shipping supplies.

Reduced Risk of Returns

Digital products, given their nature, have a much lower return rate. In fact, Etsy has a sitewide policy that does not allow for returns when it comes to selling digital downloads, however, each individual Etsy seller can determine if they will provide their customer with a refund based on their own customer service policies.

While it’s essential to provide clear descriptions and ensure high quality, the chances of returns due to damage or dissatisfaction with the physical quality are eliminated.

Physical products have a higher likelihood of being returned because of potential damages, sizing issues, or other tangible defects.

Once a customer initiates returns, you will also have to track the item, ensuring that you receive it and possibly issue a replacement depending on the circumstances and request of your customer.


Your digital products can cater to an audience of ten or ten thousand without much change in your operations. The ability to scale without proportionate increases in costs or effort is a significant advantage in any online business, especially as an Esty seller where the platform drives a lot of traffic to your Etsy shop on your behalf.

Scaling with the tangible form of goods often means increasing production, which can involve increased costs, labor, and logistics.

Creative Freedom

There is a lot of creativity when it comes to selling digital products. From printables and e-books to design templates and even online courses, the possibilities are nearly endless. This allows for immense creative freedom, letting sellers explore various niches and product types, as well as doing keyword research and finding trending searches.

While there’s a plethora of creative opportunities with tangible goods, certain limitations exist due to material constraints, shipping considerations, and production feasibility. Every product line you create has a season, so it is a more daunting task to keep up with trends when selling physical products.

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Final Thoughts

While there are undeniable benefits to selling both digital and physical products on Etsy, it’s clear that digital products offer several advantages, particularly for those new to the platform or looking for a more streamlined selling process.

That’s why here at Gold City Ventures™, we love all things printables and digital products. The allure of higher profit margins and the simplicity of managing a shop without inventory and shipping concerns are great reasons to start your digital product store.

However, the choice between digital and physical largely depends on individual preferences, skills, and business goals.

Some sellers might thrive on crafting tangible items and enjoy the tactile process, while others might find their niche in creating and marketing digital assets. And of course, there are those Etsy sellers that offer a mixture of both physical and digital products in their Etsy shops.

Whatever path you choose, Etsy provides a dynamic platform for sellers to share their passion, connect with customers, and build successful businesses.

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Meet Julie & Cody

Julie Berninger and Cody Berman of Gold City Ventures™ have made thousands selling printables and digital downloads in their Etsy shops and on Shopify. They help others start printable businesses with their programs and templates.

Learn how to start a business selling printables on Etsy!

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