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Pros & cons of selling digital products in marketplaces like Etsy & Udemy

Should you sell digital products on a marketplace or your own website? Learn the pros and cons of each approach and discover which is right for you.

As a frequent online shopper, I love digital marketplaces like Etsy and Amazon. The product options are endless, and in just a few clicks, I can order exactly what I’m looking for.

While this online shopping habit is bad news for my bank account, the availability and accessibility of websites like Amazon — digital marketplaces where nearly anyone can list their products — are great for entrepreneurs.

At least, great for entrepreneurs selling physical products.

Things get a little more complicated for creators who sell digital products.

At first glance, selling your digital goods on a marketplace instead of your own website might seem like a no-brainer. The technical work is done for you — all you have to do is upload your content and start making money, right?

Not exactly. If you’re trying to grow an online business, marketplaces come with their fair share of limitations.

And selling digital downloads from your site doesn’t have to be as technically tricky as you think.

In this article, we’ll cover the pros and cons of selling on a digital marketplace vs. your own website. Then we’ll talk about how the right platform can make selling from your own site a breeze.

But first, let’s start with the basics.

What is a digital marketplace?

A digital marketplace is an ecommerce website where multiple sellers can list their products for sale.

Digital marketplaces make online shopping simple and convenient for consumers. No matter what your niche is, you can probably find a marketplace that caters to your interests.

Products on marketplaces include:

  • Physical goods like apparel, beauty products, and electronics

  • Digital products like online courses, ebooks, and printables

  • Services like coaching, consulting, and accounting

If it can be sold online, you can find it on a digital marketplace.

Online marketplaces play a major role in online spending. Shoppers spent $2.67 trillion on the top 100 online marketplaces in 2020.

Some of the most popular ecommerce marketplaces include:

You can sell physical and digital products on all of the above platforms. But there are also marketplaces dedicated specifically to digital products.

For example, Udemy is an online course marketplace with over 150,000 online classes from a wide variety of instructors.

Marketplaces like Etsy and Udemy are awesome for consumers looking for convenience and endless product options.

But for creators, things aren’t so simple. Getting set up and selling on a marketplace can be a hassle.

While the process varies between marketplaces, it typically works like this:

  1. Create a seller account

  2. Pay a fee to list products (sometimes along with a monthly fee)

  3. List your products

  4. Potentially pay transaction fees (on top of payment gateway fees)

  5. Wait for feedback from customers

  6. Receive payouts on the marketplace’s timeline

  7. Hope for the best

Yikes.

It’s not all bad, though. Although you’ll have to work with someone else’s system and policies — more on that later — there are some real advantages to selling your digital products on a marketplace.

Advantages to selling digital products on a marketplace

Listing your products on a marketplace can help you reach more potential customers. Chances are, your target customers are already shopping on these marketplaces. Why not meet them where they are?

For example, Amazon boasts over 300 million customers and more than $125 billion in sales revenue in the fourth quarter of 2020.

When you list your digital products on a marketplace, you’re getting built-in traffic. Marketplaces allow your customers to come to you, rather than you having to seek them out and drive traffic to your website.

That said, so much traffic can mean more competition, especially if you’re trying to stand out in a crowded niche.

The best-selling products get priority in the search results, and it’s hard to get a brand new product in front of many customers if you don’t put your own marketing efforts behind it.

For example, there are over 3.7 million printables available for purchase on Etsy.

Sure, Etsy might draw in more visitors than your standalone site. But if you’re new to selling printables online, standing out in a crowd of millions is a tricky endeavor.

Another advantage of selling your digital products on a marketplace is the ability to piggyback off of customers’ existing trust in that marketplace.

Two-thirds of adults say trust plays a significant role in their purchase decisions. And shoppers trust major online marketplaces. 89% of buyers agree that they’re more likely to buy products from Amazon than other ecommerce sites.

This trust is especially important when you run a small business or a new brand. 53.4% of shoppers are more willing to try an unfamiliar brand on Amazon than elsewhere online.

When a happy customer leaves a review on your product listing, it can boost your credibility even more.

92% of consumers read testimonials and online reviews when considering a purchase, and 72% of consumers say that positive testimonials and reviews lift their trust in a business.

Many marketplaces have built-in customer review systems, like this one on Udemy:

Unfortunately, selling on an online marketplace comes with its fair share of downsides, too. Let’s talk through them.

Disadvantages to selling digital products on a marketplace

The biggest downside to selling your digital products on a marketplace is the fees.

Fees might include:

  • Standard transaction fees from your payment processor

  • Marketplace listing fees or monthly fees

  • Transaction fees from the marketplace

For example, Etsy charges sellers:

  • A $0.20 listing fee

  • A 5% transaction fee, plus a payment processing fee

  • 15% offsite ads fee for ads that Etsy posts outside of your control

And Etsy is on the lower (and more straightforward) end of the pricing spectrum.

With Udemy, creators receive 97% of the revenue when a student purchases their course — but only if they use an instructor’s coupon or referral link. If the sales don’t occur through an instructor promotion, creators receive just 37% of revenue from the sale.

How do complex fees hurt digital product creators?

Imagine that you’re selling an ebook for $9.99.

You pay a $0.99 listing fee and receive ten orders. With the payment processor and marketplace transaction fees, your earnings on each sale might end up looking like this:

  • $9.40 after payment gateway fees

  • $7.90 after marketplace transaction fees

Your ten ebook sales brought in $98.91 after the listing fee, but your take-home revenue is $79.00 (or even less if you have to pay a monthly fee).

What’s more, many marketplaces pay merchants on a set schedule, so you may have to wait a while for your earnings. Udemy’s complex payout structure means that creators only get paid once per month — and “premium instructors” don’t get paid until their third month of sales.

One final downside to selling on a marketplace is the lack of brand visibility.

Your entrepreneur branding is a critical part of growing a business. Consistent branding can increase your revenue by 23%, and 90% of consumers expect that consistent branding on every channel.

But in a marketplace, people rarely seek out a specific seller. Instead, they tend to look for the lowest prices and the highest reviews. There aren’t many options for sellers to customize their product pages, build brand awareness, and stand out from one another.

You also don’t get access to your customers’ contact information, making it difficult to build a long-term relationship with would-be loyal customers.

In other words, a marketplace is not the place for your brand to shine. And given that it takes five to seven impressions before someone recognizes your brand, brand recognition on a marketplace can be a losing battle.

Phew.

If all of these disadvantages have you running for the hills, don’t worry. There are some excellent alternatives to selling on a marketplace, and they don’t all involve hours of coding.

Let’s talk about them.

Selling digital products on your own website

If you want to sell digital products outside of a marketplace, you have two main options:

  1. Build and sell on your own website

  2. Use an all-in-one platform like Podia

1. Build your own website

If you go the DIY route, chances are you’ll be selling online courses with WordPress. WordPress’s content management system (CMS) powers a mind-boggling 60 million websites, and it’s a fan favorite when it comes to starting a blog or building a simple website.

Whether or not you use WordPress, building your own website comes with one huge advantage. You have total control over your site’s design and user experience.

The WordPress plugin directory currently contains over 58,000 plugins. Plugins let you add new features and functionality to your website, from shopping carts to SEO tools.

You can also choose from thousands of themes and templates to completely customize your site to match your brand.

Of course, with great website-building power comes great responsibility.

When it comes to building an online store to sell digital products, WordPress has a pretty steep learning curve, making it harder to get the hang of for new creators.

WordPress uses shortcodes, a type of markup that lets you type in a quick command on the back-end to enable different features on the front-end.

Some themes and plugins use their own shortcodes, which is where things get more complicated. When you’ve built entire pages out of shortcodes, it can take hours to install a new theme or plugin and clean up your code.

Beyond that, there’s no drag-and-drop interface when you’re building from scratch, so if you want to fully customize your site, you’ll need some coding knowledge in your back pocket.

And if your coding is inefficient, it can slow down your load time or make your website incompatible with mobile devices.

A slow load time can spell trouble for your revenue. 26.9% of ecommerce website visitors will wait less than four seconds for a page to load, and 45.4% of visitors said they would be less likely to purchase something if the page load speeds were slower than expected.

Plus, if something breaks on your website, it’s on you to fix it, whether with hours of work or by outsourcing the task to a third-party developer.

Even if you do everything right on your side, selling digital products on your website requires a handful of plugins, and they can (and do) break when your CMS updates.

Last but not least, the cost of building your own website can add up quickly.

Let’s say you’re using WordPress, since it’s the most popular platform.

WordPress is free, but you still need to pay for WordPress hosting, a custom domain name, and an SSL certificate to accept online payments.

You also need an ecommerce solution. One of the most popular ways to sell anything on WordPress is the WooCommerce plugin.

WooCommerce is free, but if you want all of the must-have tools for creating and selling online courses, WooCommerce recommends using WooCommerce Paid Courses, which costs $129 annually.

To use WooCommerce Paid Courses, you also need to install the WordPress LMS plugin Sensei LMS, which comes with its own set of premium add-ons.

Let’s say you also want to sell memberships on top of our online courses. You need a separate membership plugin, WooCommerce Memberships, which adds an extra $199/year.

Like I said, it can add up fast.

That said, if you’re comfortable getting technical and fielding some high startup costs, building your own site gives you a level of control and customization you won’t find elsewhere.

For many small business owners, you don’t have the time or bandwidth to start from scratch. So if you want to hit the ground running without the technical learning curve, keep reading for a way to make things a whole lot simpler.

2. Use an all-in-one platform like Podia

I’m definitely biased, but I think Podia is the best choice for creators looking to sell digital products online.

Podia has all of the tools you need to create a website and sell your products without the technical headaches of WordPress or the complex fees of a marketplace.

When you sell digital downloads with Podia, you get paid via Stripe or PayPal without extra transaction fees (beyond the unavoidable processing fees). You own everything, from your email list and website to your digital downloads and data. It’s all on one centralized platform.

And unlike a marketplace, straightforward pricing means no complicated costs.

What else makes Podia a top-notch solution for creators?

  • You get all of the perks of using your own website to sell your digital downloads, including a custom domain, without any of the technical hassle.

  • You can host, market, and sell digital products, online courses, and membership sites from one dashboard, with unlimited digital file uploads.

  • With the Podia editor, you can create and easily manage a custom website without any code.

  • Email marketing and live chat messaging make it easy to build relationships with your customers.

  • If you need help, our creator-friendly customer support team is just a click away. Amazing customer support is the number one reason our creators cite for choosing Podia.

It takes just a few clicks to start selling a digital product on your Podia site. Try it out with a free 14-day trial, no credit card required.

Once you upload your digital download, you can set up payment plans, add upsells, set a social media image for your product, customize your sales page, promote your download via email, and much more — all from the Podia dashboard.

You don’t have to take my word for it, though. Watch it happen live with our weekly demo.

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Marketplaces vs. websites: Who reigns supreme?

So, what’s the verdict? Should you sell your digital products on a marketplace or your own website?

Like so many parts of building a business, it all depends on your needs. Here’s a recap of how both options stack up:

  • Digital marketplaces are convenient for shoppers, but the process and fees involved in onboarding as a seller can be complicated and pricey.

  • The advantages of selling on a marketplace include broader reach, more consumer trust, and built-in reviews.

  • On the other hand, the cons of selling on a marketplace include high fees, infrequent payouts, and low brand recognition.

  • If you choose to build your own site, you have limitless options for customization and control over the user experience. But that level of control can create a lot of technical work, especially if things go awry.

  • An all-in-one platform like Podia gives you the best of both worlds for selling digital downloads, online courses, membership sites, and webinars.

If selling from your own site seems like the right choice for you — and you don’t relish the idea of digging deep into WordPress code — Podia might be just what you need. Our doors are always open, and we’re here to help you along your entrepreneurial journey.

A portrait of Rachel Burns

About the author

Rachel is a content marketer for Podia, an all-in-one platform where online courses, digital downloads, and membership websites – alongside their creators – thrive. When she’s not writing, you can find her rescuing dogs, baking something, or extolling the virtue of the Oxford comma.