Services vs Products

online, they're just not sold the same way
Why selling services is not like selling products
26/07/2018 The people from Cocolabs

Let’s start with the basics: how does selling services online compare to selling products online? It’s not as straightforward a question as it seems. On the one hand, defining “services” and “products” is quite challenging in itself.

Internet’s changed the way the world does business in just a decade. A classic marketing dichotomy is the “products vs. services” approach. Simply defined, a product is a tangible and discernible item a company makes for consumption. In contrast, a service is the production of an essentially intangible benefit. True, digital file-based output (software or the like), have become intangible. Services can be performed individually or in association with a product. This is why distinguishing one from the other is a difficult task. Lines are blurred.

The product industry successfully operated the digital transition. Online product marketplaces like Amazon and eBay have become popular retail stores. Their attendance rate is more than competitive, compared with traditional, physical stores. This phenomenon illustrates how day-to-day habits have changed. Consumers increasingly use their mobile devices to shop for products. Vendors can conveniently sell a wider range of products through a website, as long as what one end offers meets the need of another end.

Things are much more difficult for a service company. While the service industry represents 74% of GDP in high-income countries, services represent barely 8% of the total e-commerce industry. We’ve compared how selling online services and products differ in the following table:

Differences between selling services and products online

Performance is crucial to perpetuating services. There’s a magnificent quote from Roberto Benigni’s Life is beautiful which metaphorically illustrates how complex the relation between service offeror and asker is: “Think of a sunflower, they bow to the sun. But if you see some that are bowed too far down, it means they’re dead. […] Serving is the supreme art. God is the first of servants. God serves men, but he’s not a servant to men.” The service industry is nothing if not the industrial sector where the human dimension is key. Especially now that the internet technologies have transformed our daily lives.

Can you sell services online like you sell products online? The answer is “no”. Nor can you possibly conceive, develop and expand your service platform the same way you would scale your traditional e-commerce websites. The opposition can be nuanced as much as you like. It still stands. It’s not just what we believe in at Cocolabs, it’s what experience has taught us. It’s fact, not creed.

Sources

Buckley, Patricia and Majumdar, Rumki, “The services powerhouse: Increasingly vital to world economic growth”, Deloitte Insights. Link to article.

US National Archives, “Defining key concepts: Products vs. Services”. Link to article.

Shipperlee Fiod, Phil “Is there a difference between selling products and services?”. Link to article.

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