How One Couple is Making $600,000 Per Year Selling Digital Products

This is a guest post from from George Palmer at SendOwl.

When Cinnamon and Jason’s daughter turned six, they discovered how much young girls like dolls.

Unlike most moms though, Cinnamon was uniquely qualified to satisfy her daughter's newfound interest.

As an excellent seamstress and designer, she began running up original doll's clothing that soon made her daughter the envy of the neighborhood.

This was the beginning of their doll clothing business.

We caught up with Jason to ask how selling digital products has allowed them to scale their business so successfully.

Describe your business and product in 1-3 sentences.

We run the Internet's largest marketplace for doll clothing patterns at Pixie Faire, featuring more than 50 indie designers, as well as online training courses on design, sewing, pattern-making, and craft business. We also sell our doll clothing and patterns under our brand Liberty Jane Clothing.

How much revenue are you currently generating per month?

Our conservative estimate for total revenue for this year is $600,000 US, which is $50,000 a month, although there is some seasonality.

How did you come up with the idea for your business? What kind of market research did you undertake?

My wife did extensive market research with our daughters! As most moms find out when their daughters reach six or seven, they get very fascinated with dolls, so we were introduced to the market through them.

What gave us the opportunity though, is that my wife is an exceptional seamstress and designer.

Her mom worked for a fashion house in LA as a cutter, and she grew up knowing how to sew at a professional level. So my wife started making dolls' clothes for our daughter, and she would go to dance classes and brownie troupe meetings and all the mums and daughters would say: "where did you get that?" and "how can I get it?"

We started selling with an eBay store in early 2008 and began publishing the patterns about eighteen months later.

How did you create, manufacture or source your product? What were some key issues you learned during this process?

We made the decision that we did not want to outsource manufacturing to China, although we've been approached many times by people who could do that for us. It was just our decision not to do that.

Instead, we tried various schemes such as ladies sewing from home for us and working with local seamstresses.

We didn't find a solution that successfully scaled though, so for the first 18 months my wife was constantly sewing to fulfill customer demand and just got totally burned out.

What made you decide to sell digital products as well as physical ones? What market research did you do?

We were maxed out at $1000 per month and struggling to scale.  We knew that digital goods were amazing products if they worked for your market. We also knew that sewing patterns have been around for a very long time!

Because we already had our own sewing patterns, it was easy for us to try out selling them as downloadable PDFs.

In the first month of trying out digital downloads, we gave away several hundred patterns for free and sold eleven. It was a humble start, but scaled very quickly.

This last month we had over 43,000 downloads, almost all through SendOwl. In total we've now had well over 700,000 patterns downloaded. It was a model that scaled very well.

Did you have any problems scaling the digital delivery business model?

We began selling patterns under our own website, Liberty Jane Patterns, but when we started featuring other designers we realized we had a branding problem.

We relaunched the site a year and a half ago as Pixie Faire, which was a more general brand that many designers could publish under.  It has become the Internet's largest marketplace for doll clothes patterns. A fun corner of the online universe!

It's not a 'pure' marketplace though, because we have a store-level pricing strategy that everyone has to comply with. Similar to Kindle or iTunes, so there's no race to the bottom.

In terms of approaching designers, we reach out to those we like and we also get people who know about us and enquire. We now also have a third channel – training courses.

What other challenges do you face selling digital products?

The largest challenge for us is the delivery process. We started to scale the business with a WordPress website and various shopping cart and digital delivery tools, but something would always break.

When you have 43,000 transactions in a month, bandwidth, the reliability of the hosting, and shopping cart functionality really matter.

We left our WordPress platform and moved to Shopify and SendOwl.  Shopify and SendOwl have solved so many headaches. We can't even tell you how many ways our sites used to break and the frustration we had before we changed to them.

They just work. And it's a beautiful thing.

What channels are currently generating the most traffic and sales for you right now?

The first marketing tool we actively worked on was YouTube. We started making videos about our work. When we started our daughter was our celebrity spokesgirl. She's since become a teenager and wants nothing to do with it! YouTube worked very well.

Email marketing was the other channel we worked hard to grow. Now we have a list of almost 50,000. Then Facebook came on the scene, Pinterest, and Instagram.

We also found that people wanted to use our patterns for their sew from home business. For the first six months, we said that our patterns couldn't be used for commercial purposes. But people kept asking, and we wondered why we were being such jerks!

We flipped it around and created a Liberty Jane Partners Program. Now we have almost 1,600 people that use our patterns for sew from home purposes and we reach them through a newsletter and a blog.

What software, tools and resources are crucial to your business?

We build our content using various tools – Illustrator, Photoshop Elements for image works, and the basic document creation tools. There's no 'magic' tool.

What I would say, however, is that I speak to so many people who have tried to create an ecommerce sales environment using the wrong platform and that's WordPress. In my experience it's simply not scalable and will blow up on you at the wrong time in the wrong way and you will be very frustrated.

What other key advice can you offer to entrepreneurs looking to start a successful ecommerce business?

I think the biggest key is to focus very clearly on your product strategy and to work out whether your product has a high probability of success.

There are back corners of the Internet where people are actively looking for solutions and no one is serving them. Those are the most interesting niches to discover.