Welcome to Part Three of our series on how to monetize your audience! In this edition, we’re looking at monetizing through direct sales - where you sell products directly to your audience.
If you missed parts one and two, check them out:
If you’ve already built up an audience, you’ve got a great asset already and an opportunity to earn some revenue. Here’s how you can do it with direct sales:
Direct sales refers to selling customers products or services from your website. There are a few ways you can do this: holding inventory that you sell, dropshipping products to customers, or selling a service, such as consultations or a digital asset that you create.
From the customer perspective of each of these options, you are the seller, unlike affiliate links which take them away from your website. Instead they go through the checkout process on your website.
Let’s start with an advantage that direct sales have over both advertising and affiliate link revenue: you typically earn higher margins from direct sales. For example, revenue from ads can be dependent on you driving hundreds of clicks to earn even a small commission, whereas you will make something significant from every direct sale you make.
A second advantage of direct sales is that you can track sales yourself and remarket to those customers in the future. You don’t get to do this with any monetization option that takes customers away from your website.
Let’s break down the types of direct sales:
Buying your own inventory means that you get to set your prices and can aim for a specific margin. It gives you the option to develop your own specific products or merchandise that will be unique to your store. You can also control the end-to-end customer experience, delivering to your own standards of service.
The downside is that you’ll have to purchase inventory and hold it to sell. You may have a cost for warehousing your products and you’ll run the risk that products don’t sell and sit on the shelf.
Additionally, when you sell your own inventory, you need to consider the whole product lifecycle. What happens if customers need to return or exchange products? What if they have questions? You’ll need a system to take care of returns and customer support, which takes time and resources.
Dropshipping means that you sell products from your online store, but a supplier holds the inventory and fills your orders. From the customer perspective, they still believe they’re only dealing with you - they won’t know their order went to a supplier.
A huge advantage of dropshipping is that you don’t have the risk of buying and holding inventory. You can even test out products before committing to them by offering them via dropshipping first.
Dropshipping is easy to set up, especially when compared to holding inventory. You may or may not have to directly accept returns - that is something to work out with suppliers.
A disadvantage of dropshipping is that margins are typically lower than selling your own inventory. You can potentially lose touch or oversight of the process and product as well, especially if you’re out of the loop with the supplier. This can sometimes lead to a poor customer experience.
Are you an expert in something? You’ve got an audience for a reason, so perhaps you can sell them a service such as consulting or a content membership, or even a “productized service”, where you package a set of services and sell the package like a product. An example of this is Design Pickle, where they’ve packaged graphic design into a product with a monthly subscription fee.
The pros of this are that you’re not dealing with physical products at all. You’re in your wheelhouse and can basically sell your own expertise. This can also be helpful for building up your profile as a thought leader in your space. Low overheads are another advantage, along with the potential for high margins.
On the other hand, selling services can be very time consuming. You have to do the work to produce the service (such as constantly creating new content, or producing reports for clients) and it often involves more customer support than selling a product.
Digital products refer to products that you can sell and deliver via download or digital access online. Common examples include ebooks, courses, reports, and tools.
If you create a digital product, you can create it one time, then sell it on autopilot repeatedly. There’s no storing inventory - you just may need to make the occasional update to the product. Popular digital products can often help to drive more people to your business, growing your audience.
On the con side, high-quality digital products take considerable time and effort to put together. They can also be harder to sell than “tangible” products. You have to work hard to ensure you’re delivering value to your customers that they can’t just find with a quick Google search.
You can probably make direct sales a good fit with almost any type of business or audience. The key is to offer something that is a great match with why they follow you in the first place. Here are some examples:
Here are some examples of businesses that built an audience and then monetized through direct sales:
Barstool is a media brand with a popular podcast and blog. They initially tried selling stock from inventory, but preferred the convenience and lower-risk of dropshipping. They’re a great example of a media brand that sells merchandise, but has also diversified their product range to include unique, limited-availability products that appeal to their audience.
The logical next step for a golf news and lifestyle brand is to sell golf-related products. Golf.com dropships clubs, balls, apparel and more to golf fans.
Ipsy is a beauty brand that offers monthly subscription boxes or the option to buy products from their online store. It was founded in 2011 by Michelle Phan, who gained popularity for beauty tutorials on YouTube. She leveraged her large audience to create a popular brand which now has estimated annual revenue of $500 million.
Sweat is an example of a digital product. It’s a fitness app which customers subscribe to. Kayla Itsines is a popular fitness and wellness influencer, and developed the app to monetize her large audience.
Craftd is a men’s fashion jewelry brand founded by model and Instagram influencer, Alex Cannon. Cannon first built up a following on Instagram and initially monetized through brand partnerships, but founded Craftd when he couldn’t find the jewelry he needed for fashion shoots.
Direct sales tends to be one of the more complex monetization methods to set up, but it pays off in terms of higher margins. Selling products or services can work for almost any type of audience if you sell something that is a great fit with their purpose for following you.
Consider the pros and cons we’ve outlined above. There are people making a good income off each of those direct sales methods, so it depends upon your type of business and the level of risk you’re prepared to assume.
Ready to try dropshipping? Mothership can help! Our software helps you to manage and streamline your sales and connections with dropshipping suppliers. Check it out here.