Skip to main content

Selling digital products through your own store vs. a marketplace

Selling digital products through your own store vs. a marketplace

Want to sell your own digital products but not sure whether you should use a marketplace or run your own store? Well, we have some insights to share!

Marketplaces have their benefits, and running your own store does, too! Depending on the types of products you sell (or want to sell), the technical skills you have (or have access to), and some other important factors, the option you choose won’t necessarily be the same as another digital product seller – even ones in your own niche. But, looking at the most important differences can help guide you toward the right choice.

So, talk a bit about digital product stores vs. marketplaces, so you can make a confident decision!

Different degrees of responsibility

One thing to remember when deciding how you want to sell your digital products is the degree of responsibility you want to assume. When you run a digital store, you take on a significant amount of responsibility, from the legal terms and handling customer support and refunds, to website hosting, design, and maintenance. With that said, running your own store can be extremely rewarding, allowing you to build a name for yourself with complete independence!

Based on preferences and lifestyle factors, some people may prefer to opt out of the business side of things, enjoying making products as a side venture or as a supplement to their primary line of work. Others might want to retain maximum control over how their brand is presented and their products are sold. It all depends on what you think is most suitable to your individual needs and preferences – figuring that out is step number one!

Legal considerations

Terms and conditions

The terms and conditions you set forth for the use of your products are hugely important, as they protect you from liability and potential abuse of your products. One benefit of using a marketplace is that the legal side is taken care of – you just have to comply with the marketplace requirements.

Running your own store requires that you draft up terms and conditions (as well as license agreements, if applicable) to protect you and your customers, and dictate how your products can be used. If you don’t feel confident in this area, or you don’t have the resources to hire someone to do it for you, you might be more comfortable selling through a marketplace. If you want to have the final say in how your products are used, and you’re able to put together your terms and conditions yourself, you might prefer running your own store.

It’s worth mentioning that you can always look at legal information from other digital product stores to get the bulk of your material, and then refine everything according to your own specifications. But, no matter if you sell themes, plugins, software, web-based services, audio, video, documents, digital courses, graphics and digital artwork, or services, you’ll need to be willing to do a good amount of research on your industry as it relates to the law in your country (and the countries where you sell your products).

Taxes

It’s no secret that taxes can be complicated when it comes to digital products; many countries (and states) impose different tax laws on digital goods, and may require you as the store owner to withhold sales tax. Depending on where you come from, you may be used to digital product prices that are inclusive or exclusive of sales tax (or without sales tax altogether) – and dealing with taxes can get messy quickly without proper accounting!

Marketplaces take care of sales taxes for you, and that can be a big plus for some people. However, this doesn’t take income tax into consideration; you’ll need to deal with that on your own either way.

The basics

Customer support

Selling digital products can require its fair share of customer support, and this is another area where you may decide to choose either convenience or more autonomy. Marketplaces vary in terms of handling customer support for your products; some may provide support, while others may require that you handle it yourself.

Refunds

In the world of eCommerce, refunds come with the territory; but what does this mean for you as a digital product seller, and how do marketplaces and digital stores differ in this regard? For one thing, in order to create customer confidence for digital products, some kind of money-back guarantee, refund policy, and/or sufficient trial period or trial version should be available.

If you run your own store, you’ll need to make sure you have a clear refund policy, even if you don’t issue refunds. If you do offer refunds, you’ll need to issue them yourself, or have some kind of system in place to handle them.

Marketplaces tend to already have firm refund policies, so you won’t have to create one. However, you might find that you disagree with their policies, or your might find yourself in the middle of a refund dispute with the marketplace and the customer. Although it may technically require more work on your end, running your own store actually simplifies this process – in the sense that there’s no “middle man”.

Managing a website

Got a knack for WordPress or other content management platforms? You might prefer to go the digital store route, dealing with everything yourself. Even if you don’t have extensive technical expertise, you may find that you prefer overseeing your own website, where you can manage your products and content as you wish, and present your brand as you see fit.

Marketplaces remove most of the personal decision-making when it comes to how your products are presented online, sometimes minimizing your input altogether. If you like the idea of having creative freedom and ownership of a custom website, running your own store may be the best option.

Having said that, some people find that they simply prefer not to deal with the responsibilities of a website. A marketplace could be the right choice for a freelancer who only sells a few digital products on the side, for example.

The financial aspect

Marketplace fees

How money is handled is another way that marketplaces and digital product stores differ. Many people prefer to run their own store because they don’t want marketplace fees eating into their earnings. You might decide that after working hard on your products, you simply don’t want to give away portions of your sales.

On the other hand, maybe you think these fees are an acceptable price to pay for the increased audience you get access to through a larger marketplace. It depends on the types of digital products you’re selling, market saturation, the prices you want to charge, and so forth.

Pricing

Maybe you prefer to have more control over your prices, or charge higher prices than marketplaces allow. Running your own store lets you to choose virtually any price you want, with the only restriction being what customers are willing to pay.

If you sell your products on a marketplace, there will likely be some kind of price restrictions – or, the competition may be so dense that your prices are forced down anyway! Marketplaces can, however, be a good place to gauge common market prices for certain types of products.

It’s also worth mentioning that if you sell on a marketplace, there may or may not be options for creating product bundles. If you want to have the flexibility to chop, change, mix, and match items however you want, you might consider running your own store!

Payouts

With a marketplace, there will usually be a waiting period between when your product is purchased and when you are paid. 14 days is pretty common (it’s the standard that allows customers time to request refunds after purchase), but some marketplaces may only pay out monthly, or even quarterly. Running your own store gives you the freedom to handle your money as you wish – though you will probably want to account for refunds as well!

Brand and marketing considerations

Growth and exposure

One of the biggest advantages to using a marketplace is the wider access to a pre-qualified audience and potential customers. Marketplaces have their own marketing and advertising budgets, meaning they do a lot of the advertising for you.

They tend to have larger bases of buyers and sellers for all kinds of different products, giving you the increased exposure that could spark the growth of your brand. Marketplaces can also be good places for testing new products to see how they perform. Keep in mind that you could start out on a marketplace to get initial sales traction and move to your own site later, once you’ve established a name and validated an MVP!

Branding

Some people like to have their own store because they want to control the direction (and perception) of their brand. Perhaps you want to create a premium brand; it’s worth considering that many marketplaces can be seen as places to find standard-quality products, as opposed to premium or high-priced products.

Running your own site gives you the freedom to design your brand and present your products as you choose, whereas marketplaces tend to have their own style and marketing rules. Marketplaces may require you to change something as seemingly trivial as your file naming schema, for example – but if that’s a signature element of your brand, you might rather do your own thing!

Competition

It goes without saying that selling your products on a marketplace means that you’ll encounter a significant amount of competition – quite possibly more than you’d encounter on your own. Some marketplaces neglect quality control as well, which means that your products could get lost in a sea of price-driven competition and lower-quality products; after all, marketplaces are known for having lower prices in general.

Depending on your goals and product types, this could be fine for you, but if you’re shooting for products that really stand out, it’s possible that you could make a bigger splash by selling them on your own site. If you sell higher-priced products, this can be especially true because there is often a certain sense of exclusivity when it comes to products that aren’t sold anywhere except an original store.

Even if you run your own store, you might find yourself launching a product in a crowded market. Selling on a marketplace – regardless of whether you compete on price or by differentiating your product from competitor products – going solo gives you more options for competing by innovating or changing your business model altogether.

A personal choice

There are some obvious advantages and disadvantages when you compare running your own digital store to selling your digital products through a marketplace, but the decision is ultimately up to you, your goals, and your preferences. Your gut instinct will probably have a lot to say about it, but think carefully about how you want to operate day-to-day, what you can afford, the skills and tools you have, the degree of responsibility you want to assume, the creative control you desire, and the kind of brand you want to build.

Hopefully we’ve given you some things to think about! If you decide to create your own store, be sure to check out our posts on starting a digital product store, the anatomy of a digital product website, and launching digital products.

What experiences have you had with marketplaces? Do you run your own digital store? Chime in below to join the conversation!

Illustration by Jessica Johnston.

Mandy Jones

About Mandy Jones

Mandy Jones is a content writer at Sandhills Development and founder of Looplicious. Hailing from Minneapolis, Minnesota, she's a world traveler and animal lover with a passion for creativity and maker culture. When she’s not writing blog posts for Easy Digital Downloads, Restrict Content Pro, and AffiliateWP, she can be found hanging out with other people’s dogs, or writing, recording, and performing music.

@mandyjones

Leave a Reply

Your email address will not be published. Required fields are marked *