The Differences between Services and Traditional Products #E-Commerce

Introduction

What are the differences between services and traditional products? They are intangible and impalpable. Generally, products are often mean palpable things, services are mostly about experiences. Therefore, the first challenge is how do we show these intangible products since we have nothing physical to show? Besides, the qualities of services are also significantly important and enact simultaneously. 

Secondly, unlike manufacturing lines that produce homogenous products and have accurate quality control procedures, services are heterogeneous since they vary in output. Moreover, Because services are produced and consumed simultaneously, they cannot be inventoried, it's called perishability. For instance, if there are 5 empty seats on a bus, the transportation, the service, which means it can not be stored for future sale. 

However, cyberservice overcomes many of the traditional problems of services marketing by the innovation of control and take the advantage of the Web to mass customization, but we have to manage the difficulties caused by service characteristics first.

Provide Evidence of Service

Since customers can't see the service, we have to provide evidence of what they get. Customers often rely on tangible or physical evidence, to evaluate the service before its purchase and to assess their satisfaction with the service.

Marriott International Inc., the world’s largest hotel company. From its high-end Ritz-Carlton and J.W. Marriott Hotels to its more budget-oriented Fairfield Inns, the company has been successful at clearly positioning its multiple brands. One of its strategies is to provide physical evidence. Marriott provides effective designs of physical, tangible evidence to enhance service quality expectations. When customers visit a service facility, they expect it to be user friendly and just like what they saw online. Moreover, through its app, customers can now communicate with hotel services staff and the functional aspects of facility design also contribute to the overall service experience.

Making The Intangible, Tangible

Although services are considered intangible, effective Web sites still can make the intangible, tangible. The Netflix Web site, its Instagram, Facebook, and other social media tangibilizes dreams, happiness, and satisfaction for their customers. It well describes what kind of experience they can get after they subscribe, the Web site and all the social media become representing the firm. Netflix frequently updates the popular list and makes them into a part of your life. Netflix also maintains the server speed on a high level because service speed is counted in cyberservices and customers won't wait endlessly. They will simply move on and give it a poor review. Then the review spreads all over the internet to destroy the market share piece by piece.

Cyber Sampling

It is very common to give you a free trial for a month or even a year, like the newly released online game streaming service, Apple Arcade. You can get 3 months for free, then NT$ 170 per month. Just like the best way to convince someone to purchase wine is to have them try a sample glass. If they like it, they may buy at least a bottle. Gamers are the same. You have to convince them that Apple Arcade is really worth to pay for the subscription.

Multiplying Memories

Customer frequently relies on the reviews or testimony of others to a greater extent in a product since services are intangible. Agoda.com collects a huge amount of hotel data to provide a comparable and reliable service for booking hotels online or even on the move by its app. People who have booked a stay through Agoda can leave a review about that stay. How did they feel about it, worth it or not? It brings people together to share their experiences of stays. At the same time, it provides several levels of membership plans, if you are a frequent user.

Move to Manage The Simultaneity

Customization

Recall that services are produced and consumed simultaneously, so the provider should try to customize their services. A very recent IPO company Lemonade Inc, offers renters and home insurance policies online. Lemonade delivers insurance policies and handles claims through desktop and mobile apps using chatbots. It uses AI to customize the policies for different customers. Lemonade Inc. is also registered as a public benefit company. It stated a mission of transforming insurance from a necessary evil into a social good. Lemonade uses chatbots to provide insurance policies and handle claims. In 2016, a customer filed a claim for a stolen coat. After answering a few questions on the app and recording a report, Lemonade's claims bot approving and paying the claim in just three seconds. 

Customers as Part-time Employees

The international transportation company FedEx allows customers to track shipments traveling through the system by entering the package receipt number. By doing this, FedEx saves the more expensive and time-consuming telephone system. 

Innovations as Customer Participation

If the customers are willing to do some works for your company, you can create enjoyable environments for them to do it in, and it is much more efficient and even cost reductions. Services such as Apple's App Store, build a profitable and attractive supermarket for creators and engineers to create apps and sell them(or for free) on it. Clearly, Apple does not need to create millions or billions of apps all on its own. It is costly and lacks efficiency.

Reducing Customer Errors

When customers are part of the production process, their errors can directly affect the service outcome. By breaking them into small steps, companies can manage each of them more easily. Online clothing retailer Lativ, provides recommendations and suggestions while their customers are struggling with the sizes. Not only provide the fitting reports by their models and each model's body shape is different. For instance, a 180cm-high model may have tried all the products and gives his or her suggestions. With this kind of information, customers can now follow a specific model that wear the same sizes as them and purchase the same sizes. These steps hugely reduce the return ratio which causes by unfit sizes.

Service Industrialization

Recall the company, Lemonade, an innovative insurance company. Lemonade delivers insurance policies and handles claims through desktop and mobile apps using chatbots. Lemonade uses chatbots to provide insurance policies and handle claims. Lemonade's claims bot can automatically approve and paying the claim in minutes or even seconds. 

Reference

Lemonade, Inc. (2020, December 08). Retrieved December 16, 2020, from https://en.wikipedia.org/wiki/Lemonade,_Inc.

Watson, R.T., Berthon, P., Pitt, L. F. & Zinkham, G. M. (2008). Electronic Commerce: The Strategic Perspective. Global Text Project. Licensed under a Creative Commons Attribution 3.0 License.