E-commerce growth is typically measured by comparing the market share of e-commerce revenue to retail sales.
That misses a huge category of digital sales – services. Companies like Airbnb, Uber, Doordash, Booking.com, TicketMaster, and SaaS companies all do sales digitally.
A decade ago, I was working for Hybris (SAP Commerce Cloud now), where we developed a special version of the hybris Ecommerce platform for Telco to sell mobile and Internet plans, Insurance companies to sell policies, Travel businesses to sell hotel rooms and flight tickets, and even for selling government services.
I was closely involved in these developments and defined key characteristics of Ecommerce implementation for services.
Selling services online requires all the usual components of Ecommerce functionality. You need to have a catalog to define them as products with names, images, descriptions, and attributes. There should be a way to price them, add them to a shopping cart, and go through checkout. There are, of course, some differences that I want to highlight here.
Most service companies have a relatively small catalog. Travel sites are an exception.
The majority of services are sold as subscriptions, and the selected Ecommerce platform needs to support subscription products with the ability to define terms, duration, cancelation policies, billing cycle, etc. For example, a subscription product variant can be defined based on billing frequency Monthly vs. Annual.
Configurable products & bundles
Many service companies allow customers to customize what they buy either as a configurable product or a combination of products (bundles).
To personalize offers for customers, businesses are asking them to fill out online forms to collect additional information. Some industries like Insurance, Financial, or Government live and die by them. I found having a generic form builder integrated into an Ecommerce system to be very useful and a great timesaver.
Services sold as subscriptions require support for recurring prices and usage-based pricing both with multiple tiers.
Recurring prices require recurring billing, of course, with additional complexities around plan upgrades/downgrades.
The shopping cart needs to support subscription products, especially when containing a combination of cart items that have recurring and one-time costs. In such cases, the Cart Total takes on a different meaning – Monthly total or the Total that will be charged now. Designing a shopping cart for subscriptions used to be my favorite question when interviewing product managers😉.
Promotions / Discounts
One of the most common types of promotions when selling services is to offer a free or discounted service at the beginning of the contract. First month free, or at a reduced price. Businesses can also offer the full set of features during a trial and switch them off if a customer does not upgrade.
The concept of entitlements is very important for service companies. Let’s start with the definition:
ENTITLEMENT IS A RIGHT TO ACCESS A BENEFIT OR SERVICE. Entitlement can be Metered (20G of storage) or Non-Metered (access to premium content)
Let’s say a customer is buying a subscription to a video-streaming service. The product that is defined in the Ecommerce catalog is the subscription plan. But what customer receives is access to movies. Another example is a customer who buys a mobile phone and a plan from a telco. In this case, the customer receives a phone and an entitlement to 300 minutes per month and unlimited SMS.
What customers receive after completing the purchase are entitlements, and any business selling services should have a mechanism to associate their digital products with entitlements and track/control their usage.
When a business sells services, it does not need the complex OMS implementations required to ship physical goods. But that does not mean there is no order fulfillment process.
A company may be selling SaaS plans, insurance policies, ride-sharing, or travel packages. In all cases, there are steps it needs to implement to process an order and provision the service.
👉 Payment needs to be authorized
👉 accounts created
👉 access granted
👉 notification sent
👉 Service enabled, and so on. During all these steps, customers need to receive order confirmation, order status updates emails, and check their service status in the My Account section.
In the My Orders/ My Account section of the site, it is essential for customers to see billing history, receive a receipt after each billing cycle, and be notified about service renewal or credit card expiration for services billed on a recurring basis.
The implementation is even more tricky when fulfillment involves a combination of a physical product delivery and a service. For example, a customer buys an internet access service and a wireless router. The router needs to be delivered and installed before service can be switched on and the business can start billing the customer.
Selling services online is an often overlooked category of digital sales, and it requires a different approach than selling physical products. Understanding these differences is essential for businesses that sell services online and can lead to increased success in the digital marketplace.