Should I Sell Physical Products or Digital Products?
This is a question you’ve probably asked yourself if you wanted to start an online business. It’s actually a common question. Both can make you money, but they come with completely different startup costs, effort levels, and profit margins. So, in this topic, I’m breaking down the pros and cons of both models, real world examples of what’s selling, startup steps for each, and which one is better for you depending on your goals. Stay till the end because I’ll show you how to combine both models using AI tools to double your income.
What Are Digital Products?
Digital products are intangible items that can be downloaded or accessed online where there’s no shipping, no packaging, and no inventory. Examples include ebooks and guides, Canva templates, online courses, digital planner or notion dashboards, stock photos, AI prompts, and even design assets. Okay, there are so many more digital products, but these are the main ones that you’ll find online.
So, you simply create one and sell it at an unlimited number of times. And that’s what make digital products a passive income source.
Digital Products Income Example
So, let’s say you create a $25 ebook. You write it once, upload it to Gumroad or Pay Hip, and every time someone buys it, you make money automatically. Even if you make just 10 sales a week, that’s $1,000 a month from a product you created once.
What Are Physical Products?
Physical products are tangible goods that require production, packaging, and delivered to the buyer. Examples can include handmade jewelry. There’s apparel or merchandise, um, coffee mugs or home decor, beauty and wellness products, phone cases, or even gadgets. They are handmade, manufactured or even printed on demand.
For instance, if you create a t-shirt design and sell it on Printify or Printull, they typically handle the printing and the shipping and all you do is just design and upload your design on those platforms.
You can then list it on platforms like Etsy, Shopify, PayHip, Equid or any other e-commerce platform. Unlike digital products, your income depends on inventory and logistics. But physical items often feel more real and usually build a stronger brand trust.
Cost Comparison Between Digital and Physical Products
Now if you look at this table, you can see there’s the category digital products and physical products.
Startup Cost
- Digital products: almost zero. Okay, just your time plus Canva orchard GPT.
- Physical products: about $200 to $1,000. This really covers cost of materials, inventory and samples.
Profit Margin
- Digital products: 80 to 100%
- Physical products: 20 to 50%
Delivery
- Digital products: instant download
- Physical products: shipping or fulfillment
Scalability
- Digital: unlimited
- Physical: limited by production
Risk
- Digital: very low
- Physical: much higher because of unsold inventory
Automation
- Digital: easy with AI tools
- Physical: requires human involvement because you’re dealing with physical products
So in short, digital products win in scalability and profit margin, but physical products win in brand credibility and physical appeal.
Pros and Cons of Digital Products
Pros
- Low startup costs
- Instant delivery
- Scalable
- Global reach
- Automation friendly
Cons
- Lots of competition
- Piracy risks
- No physical connection
- Requires marketing
Pros and Cons of Physical Products
Pros
- Tangible products
- Easier to brand
- Loyal customers
- Better for influencers (unboxing, product reviews)
Cons
- Inventory risk
- Shipping challenges
- Lower margins
- Harder to scale
Real World Examples
Digital Product Example
Create a small business planner in Canva.
List it on Etsy or PayHip for about $19.
Sell 100 copies = $1,900 with zero shipping costs.
Repurpose template, sell again.
Physical Product Example
Sell custom candles.
Make them for $5 and sell for $20.
Profit = $15 per candle.
Sell 200 candles = $3,000 profit.
But you must handle materials, shipping, packaging.
Using Affiliate Commissions for Physical Products
One model you can apply while selling physical products is through affiliate commissions.
Platforms like Amazon allow you to earn commission per sale.
How to Find Best Products to Promote
- Go to Popular Deals
- Go to Best Sellers
These are guaranteed to sell because people are looking for them every day.
Once you open a product, click Get Link to generate your affiliate link.
Why You Need a Website for Selling Affiliate Products
You need an SEO optimized website to add affiliate call-to-action links that direct users to Amazon.
Amazon tracks every sale through your affiliate link — you get a commission.
To join, sign up for the Amazon Associates Program.
Using AI to Build Your Website
You can build a website in minutes using AI tools like lovable.dev.
Example: Create a simple website selling electronics.
It can also integrate with Shopify, but if you’re selling Amazon products, Shopify is optional.
Which One Should You Start With?
Ask yourself these three questions:
1. Do you want passive or active income?
Choose digital if you want automation and scalability.
2. Do you enjoy crafting?
Choose physical if you like creating handmade tangible goods.
3. Do you want fast results?
- Digital = launch in hours or days
- Physical = takes weeks (unless promoting affiliate products)
If you’re brand new, digital products are faster and lower-risk.
How to Combine Both Digital and Physical Products
You can actually combine both.
Examples:
- Sell physical journals
- Offer a free digital planner as a bonus (collect emails)
- Sell a digital course or ebook
- Sell art posters digitally + print-on-demand physical versions
Combining both gives multiple income streams and builds a loyal audience faster.
Tools to Get Started
For Digital Products
- Canva
- Chad GPT or Gemini
- Gamro or PayHip
- notion
For Physical Products
- Printify or Printull
- Etsy or Shopify
- Canva
Final Truth
Both can make you money.
- If you want low cost, high profit, and easy automation → digital products
- If you love branding, packaging, real-world creativity → physical products
To help you start your digital product journey, you can download my free income starter kit. It walks you through step by step on how to create your first digital product and quickly sell it online.
