|E-Commerce features| Current e-commerce tools are not adapted to services

Miniseries E-commerce features Part 2

As we have seen in the first part of our series dedicated to services’ e-commerce, the next step of the e-commerce revolution should be the e-commerce of services. In this article, we will see that the current e-commerce tools are not adapted to services and why this type of e-commerce is not yet as developed as the products’ one.

In the second episode, Hugues Odasso, Channel Manager at Cocolabs will explain you what are the main reasons why services are still underrepresented in the online business sector. 

There are two main reasons why big and small businesses are not offering their services online already. 

1. Self-limitation & awareness

The first reason is self-limitation & awareness. Some companies may think that their services are not suited for online commerce or may not realize that other actors have already closed the gap. They could also be aware of it but still hesitant to cross the bridge, even with all the types of ecommerce that exists.

And as a result of those beliefs, 86% of French service companies do not sell online yet. This means 14% of services companies are selling online in comparison to 24% for retail sales.

2. Lack of standardized tools

The second reason why companies are not selling their services online already is that the current e-commerce tools are not adapted services. 50% of companies consider that their services aren’t suited to be sold through an ecommerce website. This percentage is 25% in all other sectors. We believe that this pain point is mostly due to the lack of standardized tools as services and products e-commerce are radically different. 

Indeed some actors have been successfully able to digitize their offers. Whether they are operating their business models in business to business (b2b), business to consumer (b2c) or another one, as we can see in the image here under. 

Those companies had to create their ecommerce websites from scratch as products and services require different tools and flows. Booking.com, Malt or Ouisncf had to build and integrate their own digital selling model when they wanted to sell on the web. 

3. The main shopping experience differences

As previously seen in our podcast, in French, there are differences between selling products and services online. Those differences with a product come from the definition of a service itself. Indeed it is defined by 5 I’s: 

1. Intangible
2. Inseparable
3. no inventory 
4. inconsistent
5. Require customer involvement

Those 5 main characteristics are the reason why a product and a service cannot be sold the same way by ecommerce businesses. 

The intrinsic differences have repercussions on the digital sales. Here are the four main aspects that make the online store experience different : 

1. Shopping funnel

For products, the online retailing is built around the Shopping cart. The cart almost always follows the online shopper at the top right corner of the ecommerce store, as it would be the case in a brick and mortar store. For services, there is no shopping cart but a whole funnel built around different steps to allow the purchase. 

In order to have a smooth shopping experience and to find the best service for him, the customer expresses his needs first. He should then be able to see the price, the availability, the time slot of the best suited service. After he selects it, the customer accesses the payment page with a credit card or another tool. Finally the customer can review a summary of the service he just booked. 

All those steps are consecutive and interdependent. Nowadays most customers know those steps as they are present on different electronic commerce platforms. . 

2. Onboarding

While a digital product catalog can simply be uploaded & automatized into a product information management system (PIM). A service catalog must be created through various settings and via a services information management system (SIM). A PIM is a rather simple catalogue whereas a SIM a more complex tree of decisions where the offeror can set a lot of different features in order to get his offer available. Even if this step can sometimes be eased, the set-up of ecommerce platforms needs some adapted multi tools.

The onboarding is important for the offeror as this is the phase where he can set up his offering in the most accurate way possible. The onboarding of askers is also essential. They need to make sure they ask for the right needs so that the offeror answers them accurately. Without askers, who are the customers there is no point for the platform to exist. There is the possibility to blind a two sided marketplaces, where the offeror can also be an asker, according to the type of marketplace.  

3. Geographic and time scope

As a service is inseparable, it is only available at a given time & at a given place. Unless the service can be provided online, a service marketplace must cover a geographical scope large enough. That way he can be sure to be able to serve all its customer base at the requested time-slot. As a result, this requires a very large offer. 

From the offeror point of view, it means using geolocation features to set geo-fencing, location obfuscation or teleservices for exemple. He should also be able to manage his calendar as he wishes and this is possible thanks to the calendar, scheduling and yield management features in a service marketplace

4. Cancellations, refunds and payments 

When buying a product the customer knows that he has 14 to 30 days to return it and be refunded. A customer buys or books a service in advance most of the time on ecommerce sites. As a service is inseperable, the cancellation is not possible after the experience of the service. On marketplaces the service offeror needs to think of its cancellation and refund policies. This type of information needs to be clear for the customer before buying the product. Otherwise the customer service would have to deal with a lot of unhappy customers.

As a conclusion for those 4 main characteristics current e-commerce tools are not adapted to services.

In this episode, we toke the example of Airbnb, visit our blog if you want to read more about the Airbnb, the successful C2C rental platform.

If you plan a services marketplace project, we offer a tool adapted to sell services online, request a demo. In our next episode we will see why plateformization through the marketplace is key.

Sources : E-commerce Nation – Top 100 E-commerce and INSEE – Les TIC et le commerce électronique dans les entreprises en 2019  / enquête de 2013 à 2019