Service based eCommerce - the new frontier

[Damian Hickey]

Dear all,

We get lots of enquiries from web-developers about moving their customers services sales online or helping them move from strictly products based eCommerce to selling services online as well. This is some information that might be helpful for you if you are in that position.

I refer to “Services based eCommerce” because the eCommerce industry sees itself largely focussed on products with only large enterprises having until recently, the opportunity to create a custom services booking module. That era is now ending with the arrival of low cost open source eCommerce software for services.

People ask “Why can't I just modify the way products are displayed to sell services?” Simply put, it's not practical to use the standard product eCommerce systems for services. It seems simple but it isn't. Services don't have things like start and finish times, a resource to reserve or waiting lists. Products and services are like chalk and cheese. So forget that idea right now, you can't just do a quick hack to a products eCommerce system and expect to turn it into a services sales engine.

There is a huge pent up demand for a general services based eCommerce product. After all, many large economies around the world are now based on services and about 95% of it is still offline. People have seen how well on-selling of hotel rooms has gone for some businesses and want to do that in their industry.

So when we talk about Service base eCommerce, what do we mean? The hotel sales systems you see online aren't really true services eCommerce booking systems. They are just selling a rooms much like products. The hotel itself has a booking system sitting behind that and mostly these two systems don't have realtime links.

A Service based eCommerce system should both take and manage booking for a service. A service could be anything from booking a room, ticketing a school concert, booking an appointment at a chiropractor or subscribing online to a magazine. It would have integrated automated eMarketing and SMS marketing and provide the business with clear business intelligence. It should also sell products as well, ideally all in the same transaction.

Before you venture into this new territory be aware, Service based eCommerce is much more complex than product based eCommerce. Businesses generally hold the perception that their services shop should cost about the same as their products shop to set up and maintain. It probably won't both from your side when you build the system and from the customer's side when they reorientate their internal business processes to be focussed online as well as their traditional sales channels.

Most services businesses are used to running their business rules in their heads without ever really defining the business processes. Online sales are a customer only processes. So moving to selling services online forces them to externalise their rules. For most businesses, this is the hardest part and they are unaware of the effort they have to make in conjunction with the web-developer to get it to work. Unless you make them aware of the complexities, you will expect a simple solution at a very low cost and will be probably be disappointed with the result.

Unlike online products sales that can live in isolation from the rest of the business, services bookings are accessible to web, phone or walk-up customers. It is true multi-channel marketing. The next big question you are faced with is “Why run two databases, an online services booking system and an offline one for phone and walk-up customers?” Just one database is much simpler and unfortunately, in most cases it means leaving the legacy standalone system for a new online service. The task then become heavily focussed towards internal business process re-engineering. To do a good job, you have to become intimately aware of your customer's business processes. So you are now as much consultant as developer.

A good services based eCommerce system does it's own marketing. It should have fully integrated and fully automated email and SMS marketing out of the box. The best of breed Service based eCommerce systems will also offer 2way SMS, MMS and a mobile device based interface in the next six months.

Compared to Services based eCommerce, products based eCommerce is just plain easy. That is not to say that Services based eCommerce is not worth pursuing. The benefits in lowering your customer's cost of sales and increasing customer satisfaction by offering a new sales channel are worth it.

To do Services online well, you will have to partially reinvent yourself, probably change the profile of your target market and look for smart, innovative customers. Smart customers are now looking for a web-developer who understands services not just products. With eyes wide open before the gold rush, you stand a much greater chance of success.

Good luck!