E-books, software, music, photos, videos, fonts, etc can be easily sold as downloads through the Internet. Customers can download these items directly to their computers, as soon as they have made the payment.

 

A digital product can be downloaded by a buyer and saved on a computer hard disk or burned on a CD or DVD. The process of buying and selling products via the Internet is called e-commerce.

 

 

Customers can shop conveniently from their homes and pay, through their bank accounts, credit cards, or online payment processing services like PayPal, Google Checkout and 2Checkout. Customers can easily search for the products they want, and pay for them in a secure and transparent environment.

 

Sellers can reach all customers who have broadband connections, globally.

Selling downloads requires a much smaller capital investment, than is needed to sell products through traditional distribution channels. Publishing costs and middlemen are eliminated, resulting in a major reduction in costs.

 

Online transactions allow the customer to get the product and the seller to get the payment instantly, without any shipping costs.

 

 

Look for a product, for which there is a potential demand. You can either create/write it yourself, or obtain it and then sell it. Specify if the downloaded product is only for the personal use of the customer or if copies can be made and transferred to others.

 

You can create a website to sell you digital download, and/or sell it through websites like eBay, ClickBank, Amazon, Lulu.com, etc. The social networking website MySpace is also going to enable artistes and labels to sell original music downloads.

 

It is easy to list your products for sale on eBay and it does not cost much. A range of buyer and seller protection programs have been introduced by eBay and other websites.

 

Selling downloads through your own website will involve a much bigger effort that selling them through websites like eBay and ClickBank. You will have to manage the selling process and protect your website from frauds and hackers.

 

You will also have to create a system to get payments from customers and to promote your website, to build up traffic.

 

 

Research the prices of your competitors for similar products, before you decide on a price for your digital downloads. It is worth the effort because the success of your online business depends on getting the price right.

 

If the price is too high, your product will not sell and if you set a very low price, you will not make any money. It is preferable to set a higher price initially, and to lower it if sales are sluggish.

 

 

Many of your customers may prefer to use their credit cards to pay you, so if you don’t accept credit cards, you may lose a major portion of your sales. You can use an Internet merchant account to accept credit card transactions.

 

It offers flexibility, low fees per transaction and will help to build your credibility, but it takes more time and effort to set up. You will probably have to pay activation fees and monthly / annual fees.

 

It is much easier to use a payment processing system like PayPal, Google Checkout or 2Checkout.

 

A PayPal account is easy to set up and there is no activation or monthly fee. A low per transaction fee has to be paid, but PayPal may freeze the accounts of customers, without any warning, if any suspicious activity is detected.

 

Google Checkout also has no activation or monthly fees, though a low per transaction fee has to be paid. Presently, it is available only to merchants with a US address.

 

For every $1 you spend to advertise on Google’s AdWords pay-per-click targeted advertising service, Checkout will give you $10 worth of free sales processing.

 

You can join 2Checkout for a signup fee of $49 and add its links to your website. There is a per transaction fee, though there is no monthly fee to be paid. Customers can click on the link and deposit money into your 2Checkout account.  

 

 

It pays to take special care to prevent credit card chargebacks and frauds while selling downloads. In the process of selling downloads the buyer’s credit card is not swiped, there is no imprint and there are no shipping details.

 

These proofs of sale are required by credit card processors if there is a chargeback. Since they are not available, you will be asked to reverse the sale and may have to pay a penalty.

 

To prevent chargebacks and frauds, be careful while processing orders from free e-mail accounts like Hotmail and Yahoo. You can ask for a phone number and make a phone call to verify the identity of the customer.

 

The IP address for each transaction can be logged by the credit card processing and shopping cart software. You can find out the country of origin of the customer by entering the IP address on free websites like CheckDomain.com.

 

If the country of origin does not match that of the customer, you will know that it is a fraudulent order. This type of fraud may be committed by overseas hackers who have stolen credit card data.    

 

 

You can use targeted pay-per-click advertising to promote your digital products, through Google AdWords and Yahoo Search Marketing. Your advertisement will be displayed each time the keywords you choose are entered in the search engines, though you pay only when someone clicks on your advertisement.

 

You can provide free versions of your products to enable customers to try them out. Blogging, exchanging links or banners, and listing your products on relevant websites or forums exposes them to a wider audience. If you sell through eBay, getting a high rating will help you to build your credibility.