How To Grow Your Revenue With Digital Files | #227 Alessandro Macagno

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Claus Lauter: Hello, welcome to another episode of the e commerce coffee break podcast. Today, we want to talk about how to sell digital files. Now, most Shopify merchants are selling physical products and are not aware that Shopify is actually quite good platform if you do it right to sell also digital files. With me on the show today is Alessandro Magnartino.

He is general manager at skypilot. He has a background in computer science and has his fair share of challenges with his first startup in Italy and also has worked as a developer in Berlin. Today he's part of Shop Circle and has taken on the role as general manager for Skypilot, an app that offers comprehensive digital download solutions.

So let's welcome Alessandro to the show and talk about digital downloads. Hi, Alessandro. How are you today? 

Alessandro Macagno: Thank you, Klaus. Thank you so much for having me today. It's incredible. I started my career in e commerce a bit less than two years ago and you were one of the first resources I started listening to, to like get around because e commerce can be intimidating at the beginning and it's a lot to learn.

 Now I'm here today, so I'm super happy. Thank you. 

Claus Lauter: Yeah. Great to have you on the show. A lot to learn. I think that's the right keyword to start with. So, as I said, digital downloads, something that a lot of people are not aware that they can do this with Shopify. Tell me a little bit about what digital downloads can be and where the challenges might be.

Alessandro Macagno: So let me do a little step back. When I talk about digital downloads, I always identify two kinds of shops. One is that is digital first and one that I call digital second. So digital first is, for example, a comedian that sells his videos online or a yoga teacher who sells videos, podcasts and whatever is made digital and you sell the digital thing as a first thing.

 All these people already know that there are solutions to do digital downloads. One thing that I'm really interested in and really working hard on is to expand these because digital downloads can now be a marketing tool for a lot of shops. Imagine, for example, you sell quite a complex product that needs, some FAQ, you can do an with the video, or you need to build something, then you can build it together with your customer and you can answer frequently asked questions with a PDF, with a video, with an audio, whatever you can have.

 It's a relationship right now, digital downloads are a relationship between the customer and the shop, and it's a great marketing tool, and I think we will talk about that, but it's important. It's a way to increase the lifetime value of the merchant because thanks to digital downloads, you can ask your customer and they would be really happy to come back on your website on your mobile app or whatever and consume your content and now everybody is talking about iOS 14 and the problem of attribution that you cannot people.

Well, you have your own audience. You have people that bought this product, and if you want to target them for a cross sell or an upsell campaign, then digital downloads could be a really good way to do that. 

Claus Lauter: I like that you mentioned building up a relationship with your customer. And some good examples out there and they're around for a while, it's like Netflix.

 People just go there pretty much every day and it's a digital product. So how can you build up something like that on the Shopify platform? 

Alessandro Macagno: There are two ways to do that. the first way is with one time purchases. I always do the smoothie machine as an example. A coffee machine is an example.

You have a physical product that you have to ship deliver, and then you can attach that product. Informational piece of content, like how to clean your coffee machine, how to do the best cappuccino ever. And while you do that, you can show all the products. And that's a that's an upsell or a cross sell opportunity.

Of course, or you can sell. If you do the smoothie machine, you can release a weekly new recipe with the Veggies and fruits of this current season so that everybody can. And of course, that depends where you are in the world. And if you have people on the other side, but that's okay. But it's just educational content that people can really.

 Build a relationship with your customers because they come back because all the influencer marketing that hear so much. It's a very targeted influencer marketing that could really help. We have some examples of great stores that do that. And together with that, it can also be a conversion boost.

Like I recently talked with an Italian guy in Berlin who has been selling an EPUB. Together with a bundle of products, and he was doing the bundle with a discount. He saw some increase, but not so much. He added the EPUB and educational content, how to actually use those. It was a makeup thing. Not really my cup of tea, but he explained really how to get the most off.

That purchase, he saw a gigantic increase in the sales because the people was there. It was not like, okay, this is yours. I'm done because this is your stuff. You bought it. And then now I will teach and explain to you how to get the most of that, which is very important. Yeah, I think this 

Claus Lauter: bundling of a physical and additional product gives just a, added value to the purchase overall.

Now you're talking to a lot of merchants. Can you give me some other examples, where people bundle things together to just create a bigger product itself? 

Alessandro Macagno: Makeup is for sure one thing.

Food is something else. And I would like to connect to these because we have some stores selling beer, like subscription of food. Imagine the milk guy that comes to your door every morning, or you have the vegetable goodies that comes to your door every week. And that's a subscription thing. And then connecting recipes.

with what you deliver. If you deliver carrots and apricots and I don't know, whatever else, and you do a custom recipe together with that order, that means that the customer is going to use your product in the way you want. And that's really influencing. Why should I go somewhere and churn from my subscription?

Claus Lauter: How does it look , from the customer side? So obviously they're used to go to Shopify to buy something, check out and that's basically it. Now you get them coming back. Obviously the digital content might be stored in your Shopify store. How does that look from a customer side?

Alessandro Macagno: technically, it's called proxy page, but basically we add to three different pages in your store where we deliver the content. So the customer does not even ever see Skype, but they don't know that we are behind that. The email that we send can be sent from your email address. They can click on access digital download link, and then they will be on your store.

They will see your product with your files and download them. And then what really changed the last few years we saw is that it used to be a lot of downloads, like give me my PDF file and make it small because I have a low bandwidth not so much internet on my phone. And now it's all about streaming.

We have people doing podcasts directly on their store. I saw a couple of people saying. I have podcast episode on Spotify for free for everyone with advertising and a bunch of things and then On my store, if you buy a subscription, then you have it without any kind of advertising. And that's the paid remove ads model that it's so common in the mobile apps.

Claus Lauter: That's really surprising. I've never heard of that. You can host , streams on Shopify. Talking about from technical side of it, what kind of security level is in there, how does the lock in work? 

Alessandro Macagno: Always one of the I do onboarding calls and success calls quite often with my merchants.

And of course, that's one of the things that always come up comes out. So thank you for the question. So, of course, whenever you let someone download things on their computer, then you lose the control of that file. That's why. We are really pushing towards streaming and actually people don't want to download a file and have no way to open it because there's always a problem of I'm downloading it on my phone.

It's an iPhone. How do I open an MP4? For example, it's really about streaming. So if it stays on your website and it gets not does not get downloaded, that's already a solution. We have other solutions like PDF stamping. So where can For each page of the PDF, add some customer information, like name, the first name, last name, email, and the order number, so that if it's shared online, now you have someone to blame.

 I know it's a bit controversial, but one thing I always say to people is. Focus about security until a certain point, you can ask them, for example, to log in on their account on the customer account on Shopify. I don't know if everyone knows, but you can via Shopify settings enable customer accounts so that people have an email in the past when they can log in in their area where they see their orders and their digital downloads.

So that's great for recurring purchases. Or, for example, we have a subscription feature. Sure. Where you have an active subscription and every month it gets renewed and if you're an active customer, you can see, for example, all the movies in Netflix. That's like building your own Netflix, but it's also very useful.

This customer account because people have a password and come back and from a security point of view, they are not willing to share email and password. It's much easier to share PDF on WhatsApp than sharing an email and password. 

Alessandro Macagno: And that's one thing we have a bunch of other features for example.

Hello. We record the IP where the single file is downloaded, and if we see that the single file has been downloaded from more than 1015, you can customize that IP. Then we can automatically block the access to that order so that if we see that there is a malicious user, you will just be blocked. We have a bunch of other features like that.

But those are useful until a certain point, because then what you need to focus on is how easy is it to go on my website and actually purchase it? Because what we are seeing right now is that. If you make the experience as smooth and as easy as possible, then people are more willing to pay for that because there is a culture right now.

It's less about piracy than it was like 15 years ago, where we all used to like download stuff from a mule. Now it's less about piracy. And it's more about giving attribution. You did that. It's so easy. Keep these 10 years. It's fine. So that's what I always say. Like focus. On the security, yes, those are very important features, but at a certain point, then, do not make live for people that actually want to pay you so hard and so complex with like double authentication, passwords and blah, blah, blah.

There is a balance. Of course, it's different for every merchant. It's not if you have a very important thing, then you need to protect it more or less. It's a balance, of course. No, I agree to 

Claus Lauter: that. You want to have a balance between convenience and security. And like the fact that with the security level that you basically can decide on how far you want to go and that there is no sharing, because obviously if you're selling digital products, you don't want to have.

Your product, whatever it might be shared freely around the interwebs and you're not making any money from it, then obviously there's no point when it comes to people back to your store to keep them engaged. Do you have any kind of features where you can inform them of, about new uploads or new episodes, something like this?

Alessandro Macagno: Let's talk your example as a host. So you record a podcast, and then I have a subscription to all your podcasts, for example, you set up your store, you have a subscription app, any subscription app that makes me pay 10 per month. And I have access in as a preview to all your episodes or ads free.

I don't know. The only thing you need is record a podcast and then upload it to Skypilot. And then there's a button, notify customer. And with that button, you send an email that you can personalize and say, Hey, there is a new thing here. And that can be used, of course, for new episodes, but also for updated content.

 So imagine that you are building something, an ebook, but you don't have enough money to finish to build that. You can go crowdfunding. There are so many ways to do that. One way is also to open your Shopify store and start saying, Hey, This is a discounted version, but I need some money.

Of course, you can say it better, but I need some money right now to finish the book. The final price would be 100. You're paying it 49. And as soon as it will be ready, I will send you an email. And that works. That works really well, especially for comedians, you Shopify and start and sell content about shows.

 For example, we have one that says you will be able to see all the rehearsal of the show, which is something that is funny because it is funny and it's something personalized because you don't have access anywhere else and he's making money from just doing what he does and the phone, of course, it's not super high quality, and that's video streaming.

That's audio streaming. That's video download up to you.

Claus Lauter: That obviously opens a complete new market and a complete universe for on how to use Shopify. Tell me a little bit about the file management. How does that work? How do I How can I structure my data SkyPilot? How does it 

Alessandro Macagno: work? I always explain things is that you just have a product or a variant, and then you just think about Something else that is a file that is connected to that, and as soon as you buy a product, then you will also buy the file connected.

user experience is fairly easy. You just have a product list. You just select the product and then you just upload the file and then for each product and each file. There are some settings like, for example, you can set a download limit. For a file, you can download it up to five times, or you can set a rental period.

You can view these content for 10 days, for example, or if it's a PDF, you can decide to stamp it. Eventually you can just decide to revoke the access for some reason, whatever, like you are in control of what your customer see the good point that everybody in the reviews like is that you just need to connect and then OK.

It's there's a lot of smart defaults, so the email gets sent by default. The setup of the pages default, blah, blah, blah. Everything is done, but you also can customize literally anything if you want to cast. So we have an internal theme. You have the Shopify theme and the Skype out of theme and that's liquid.

So if you know HTML and CSS and liquid and you want to customize how that looks. we're super happy when we also help you to do that. Your store, your brand, your colors, and your choice. And it's available in every plan. Like it's not something that is just for super hype.

Like everybody can do that. Just like setting up native streaming or not. Sorry for interrupting you. I like that 

Claus Lauter: everything is basically coming from one platform. Obviously if you using, I don't know, a handful of different apps out there, you can build something like this, but then it's fields and seems clustered.

 it's not a seamless. Experience customer experience. And I think with your solution that is given. So basically you come to one point and you get your physical product, you'll get your digital product, your stream from there, you'll manage your files that you have bought from there. You mentioned before you do a lot of onboarding calls.

How does the onboarding work? 

Alessandro Macagno: I'm a developer. I studied computer science. Learning to talk with merchants was complex. It took a while. And the main thing I learned is to understand actually, what are the issues and what are the problems and just do not try to 

make them swallow your solution, but really like design things and make them worry the least and just say, Hey, it's done. So usually I listen, I understand what's their problem. If they already use a digital download app, what's the problems in that. And if they want something else, if they don't want these and try just to say the least amount of things that make them use the app and get the most out of it, because that's the important part and of course grow their sales and grow their marketing and grow their LTV 

Claus Lauter: before we come to the end of the coffee break today, is there anything that you want to share with the listeners that we haven't covered 

Alessandro Macagno: yet?

Yeah. We have two features that went out very recently, the first one is about subscriptions. So back in the days, it was impossible to build your own subscription tools. That's like your Netflix, right? If you are a yoga teacher and you want to build that.

 Buy per month and access all, it was impossible to have it because you needed a subscription app, and a digital download app, but they were not connected, blah, blah, blah. We built this integration with any app, so you can choose the app that you like the most about subscription and with SkyPalette, and that's very cool.

That's one thing. Another thing that we built recently that might be interesting is magazine subscription. When we were children, we all used to have the Mickey Mouse, that was coming home, right? And it was like the best moment of the week for me. It was Friday afternoon. I was coming home from school and just jumping on the couch and not even eating lunch, just reading Mickey Mouse.

And yeah, that can be digital right now. We have an integration with subscription plus, which is an app about subscription from Hulk apps. And the subscription app lets you choose on which day of which month. A product and other product will be sent and then you can just connect the files that product.

we have so many people that are start selling monthly content. So updates, for example, educational content. What is new in the market last month or? Every month, a new recipe, recently talked to a guy who does SVGs for laser. That is really cool. That's magazine part. the last thing that I would like to talk about is the mobile app integration. It was released like a couple of weeks ago. So now. Going back to what we were saying before, it used to be download on my computer. Now it's let me stream it on my phone.

So things have really changed. And now people, there are so many mobile app builders on the market, and they are all great. And we are integrating with some of them. of course, not all of them. The idea is that in the mobile app, an active customer can click on my digital files and actually access the ebook so he can read while going to work on the bus, or he can watch the video while he's waiting for something else.

Like instead of wasting time on Instagram, they can actually give you money and use the same time to watch, consumer content, it's the ultimate goal of e-commerce, right? 

Claus Lauter: It's a brilliant solution. You're now competing as a small merchant, with the big ones like Audible or Amazon Kindle or whatsoever, and you can do it and provide the app to your customers, which can provide them with all the content that you deliver.

So I think it's a brilliant solution. Tell me a little bit about pricing. What's the 

Alessandro Macagno: structure there? So the pricing, we have three plans and then a custom one. The app is for free. You can install for free and you keep it forever for free. There are two different. Things with measure one is storage.

So how much space you use and bandwidth. So how much your customer actually download the example I will do is you upload one file, which is one megabyte and then 10 people download that it's one megabyte of storage and 10 megabytes of bandwidth. So we have three different tiers, the free one, three paying one starting from 9 per month, so it's super easy.

9, 19 Some of the features that are included are of course, storage bandwidth. We have white label emails, which enables you to send emails from your own email and not from a sky pilot email. We still in Sprout, which are three video providers, which can be used.

So one thing that I want to mention here is the email has really strict policies. You cannot upload everything on the email. Sprout has super open policies. So basically what we are doing right now is opening all the adult content to go from OnlyFans and all those aggregators, which is very similar to Amazon, to go to D2C.

That's also something that we're working on right now. It's bit of a spoiler because I'm really starting now on that. But I see that happening. I see that a lot of these people that do a lot of digital content will move to a D to C direct to consumer space because that's normal. They want to stop it.

I mean, only fence gets. A big cut off your sales, and it's a subscription thing. So why not? Other features that are available is, for example, we integrate with Clavio to send your email from Clavio. I finished a couple of hours ago before jumping in so maybe when this comes out, it's already out.

The MailChimp integration and then we have PDF stamping and we have a bunch of other features that I mean, according to what you need, we're happy to tailor the plan with you. And of course, those are the three plans normal. And then we have a big plan that is for super big merchants that need a lot of space, a lot of bandwidth, a lot of features, priority support, blah, blah, blah.

And then you can really tailor it to your needs. One thing that I've started doing in the last few months is a monthly call. With every merchant with the most important ones and say, okay, this month, this was the price. This is what you use. This is what you did not use. You can go on overages or you can pay too much.

So let's just adjust it. 

Claus Lauter: Okay. Okay. I love the option or the notion that everyone moves to DTC because at the end you own the data. And with another platform, there usually are some limitations when it comes to data. So another benefit there, when can people find more about you guys? 

Alessandro Macagno: We are a public app on the Shopify app store.

It's called Sky Pilot, which by the way is a mountain in north of Canada, they told me. So you can Google Sky Pilot. We are there. Our website is sky pilot app.com we have a live chat. Also, we have a demo story with live chat, so feel free to reach out in the live chat. It's me or one of the team members.

 We jump in. Right away. Excellent. 

Claus Lauter: Alessandro, thanks so much. I think that was a great insight of something that has, I think, a huge potential for merchants out there. And a lot of them might not be aware that they can do it actually with Shopify. Thanks so much for your time today. I will put the links in the show notes as always, and you're just one click away.

Alessandro Macagno: Thanks so much. Thank you so much.