What the ?$@# is service e-commerce and why does it matter in 2020
E-commerce was meant to sell products.
The first one was cannabis and that was in 1971. Since then we have transparently traveled to a highly codified and homogeneous experience.
Shopping carts, stock keeping units, delivery dates.. incrementally, features were added, fueled with substantial business science and conversion R&D (should the check-out be split in 5 pages or fit inside one ? etc..).
There are now tons of options for brick and mortar stores to move online seamlessly. They can choose SaaS options for a few $/month or with a great return on efforts, turn themselves toward open source options for bespoke websites. Drop-shipping has even made it possible for new entrants to hedge their stock risk. From Google reverse-engineering experts to law firms, a multi-billion dollar industry has grown to take advantage of this opportunity.
But there is a but. To leverage best e-commerce, one relies on two axioms :
Prices can be displayed and purchases are absolute (modulo stock availability).
Products and services are structurally different objects.
For example the price of the above t-shirt is fully known as soon as its SKU is set i.e it will (should) remain the same regardless of its size or color etc.. Crucial attributes would only be model and number of units ordered. Before that, an exhaustive supply chain is updating the online shop that this precise t-shirt is indeed available on a warehouse’s shelf in given quantities.
Lets now consider a service, for example a medical consultation. A given medical consultation‘s price will range on many factors. Its geography might be one, depending on the scarcity, it could be more expensive in small towns compared to large cities. The scheduled day might also be a factor, it would make sense for it to be more expensive on a Sunday than on a Wednesday. It might even depend on the scheduled time of the day, more expensive at 4am than at 4pm. One of the most subtle factor is that the human being providing the service is an essential component of the service itself : for the same heart scan whether it is provided by a medical intern or a cardiology professor might make it a completely different service.
Pricing a service is a complex science as services rely on a recursive approach to define themselves while they are being performed. That means that a given person, in the same circumstances, providing a given service, won’t provide the exact same service twice.
The second axiom of e-commerce is swept by a powerful two-worder: Human Error. Although a service provider might be electronically-available at a given time and place for a given service, reality might be something else. Last-minute emergencies, sick-days, agenda syncing oversights, possibilities are endless.
Managing services is managing human beings and managing human beings is technically harder than managing products. This incomplete syllogism has led to a technological hyper focus on products, completely neglecting the opportunities offered by services.
Now is the best time to seize the opportunity to sell services online.
It is getting more and more competitive to make a profit from selling goods online and added-services are proving to be the right store of value to make it possible. The rise of marketplaces as an e-commerce consumption staple for both B2B and B2C markets was also a very powerful macro-adjustment for services. Indeed services weren’t fit to benefit from the scalability provided by the postal system (which is the largest no-brain growth vector offered by e-commerce). The marketplace model provided a lean substitute to massive hires and plane tickets : leveraging on site people. It’s scalability and business model allowed giants to form and operate in record setting time (AirBnB, Booking.com, Uber etc..).
The technological environment has also shifted, there are now open source solutions to launch a service marketplace.
Services are a growing trend as they capture now around 3 out of 4 margin points in western economies after a continuous yet accelerating growth since WWII. Especially the B2B segment has digitized its communication (social medias, website etc..) and organization (ERP, CMS etc..) but still hasn’t digitized (and therefore scaled) its sales process. Opportunities for service e-commerce are plenty and should keep booming in the foreseeable future.
Cocolabs helps companies on the technical side of their service marketplace project. It has build service marketplaces on 5 continents for all types of companies and administrations. If you wish to get started, feel free to reach out by clicking here.
If you kept reading this far, I hope that you got something out of this :)
