Is it easier to sell a product or a service online? What are the pros and cons of each? What about selling a product as a service online? Is that a thing?
Questions like these plague the mind of the business owner looking to start making a profit from online sales.
In this article, we aim to answer these questions so that you can get out of analysis paralysis and start building an online sales machine.
What It Means to Sell Products Online
To sell a product online is to sell a physical item through an online marketplace, usually a business website or an e-commerce store.
For example, the company Dog & Co. sells dog-themed items in their store:
Source: Dog & Co.
A buyer simply goes to the online store, browses the store’s offerings, then purchases a product through an online payment form like the one below:
Products typically have a static price attached to them.
The unchanging price, often displayed next to images of the product, makes it easy for customers to browse and quickly find what they’re looking for within their budget.
Also, products can usually be returned for that exact same price within a specified amount of time, provided the company’s policy allows returns.
After the purchase, usually after a few days, customers will receive the product they bought in the mail. If the product is digital, like an e-book, they can access it right away.
Unless the product is high-priced or complex, the sale typically occurs without the help of a salesperson.
And there’s no work to be done once the customer buys the product, aside from packaging and shipping the product. But many companies outsource these tasks.
Also, note that unless you’re using a dropshipping model, you will have to hold and manage inventory.
It’s important to note that even if salespeople aren’t involved in the sales process, the business should still make an effort to engage with their buyers.
This builds a long-lasting relationship with buyers and keeps them coming back to the online store.
To forge this bond, many brands use email nurturing campaigns, blog posts, and social media. These methods also serve the purpose of attracting leads to their website.
For example, check out Dog & Co’s blog:
Source: Dog & Co.
In sum, selling products online is a great method for starting or expanding a product-based business. It’ll help you widen your reach and increase your sales.
What It Means to Sell Services Online
Selling services online entails selling a process that results in some desirable outcome.
Some examples of services that businesses sell online are after-school programs, summer camps, and businesses that sell experiences, like guided tours in Yellowstone:
Source: Yellowstone Forever
Most service-based businesses can sell their services online, even if the service takes place in a physical location.
The standard process for selling services online is that a buyer comes to the website, reads about the service, then fills out a contact us form.
Next, a sales representative from the business schedules a call with the prospect.
During the call, the representative vets the lead to make sure they’re a good fit, assesses their needs, speaks to the value of the service, then attempts to close the deal.
Before or after closing the deal, the business might have to negotiate costs. Prices for services, unlike for products, may be subject to change while the service is being rendered.
For example, if a customer hires a painter for their house, they might uncover a problem that’s going to require more paint and man hours, thus raising the cost.
That’s why, on some service pages, you will only see an estimated price.
However, this isn’t always the case. If the service is straightforward enough, no sales representative is needed, and the price remains the same no matter what.
A company selling one-time painting classes would still probably give leads the option to call someone.
But most leads would be able to learn enough about the service through the company’s website to go through with the purchase.
An example of seamless online service selling is Yellowstone Forever productizing their services. They give each one an unchanging price.
Buyers can simply go to their website, view their prices, and buy the service they want without talking to a sales representative.
They can just fill out an online registration form and then show up.
Source: Yellowstone Forever
If you’re considering selling your service online, following this example is a great way to increase your sales.
Customers can sign themselves up and pay online, and convenience sells.
Getting started with selling your services online is pretty easy too if you’re using an online payment software like Regpack.
This’ll enable you to build registration forms and host them on your website.
It’ll also enable you to accept a wide range of payment methods, as well as automate recurring billing, invoice creation, email communication, and other aspects of running a service-based business.
In sum, selling your services online is a fabulous way to increase your sales while also streamlining many processes to make your business more efficient.
Selling Products vs Selling Services Online: Key Differences
Now that you know what it means to sell products and services online, let’s go into the major differences between the two.
|Selling Products Online||Selling Services Online|
|Sells physical, tangible objects||Sells processes that get some result|
|Product usually works on its own right away||Humans often render the service over several days or weeks|
|Usually one-off purchases||Recurring services are common|
|It’s common for sellers to never speak with the customer||There’s typically much more relationship-building|
|Has inventory management and shipping costs||Typically less overhead because no inventory|
|Pricing is typically set in stone||Pricing is often more flexible|
|Products can be returned||Can be refunded, but it’s uncommon|
Keep in mind that these are just general rules. Companies may or may not break them.
For example, a product-based company that sells meal kits might offer their product as a subscription service, so that customers receive the product every month.
Note that, despite their differences, selling products online and selling services online are probably more similar than you may think.
In both cases, you’re selling a solution to a problem.
And you’re using your website for two main purposes — 1) to teach customers about how each product or service will solve that problem, and 2) to streamline the purchasing process for them.
Is It Better to Sell Products or Services Online
Let’s start by figuring out which is more cost-effective. Generally, it’s more affordable to sell services online since you don’t have to hold inventory or deal with shipping.
You don’t have to think about stock replenishment or selling perishable items. You don’t have to deal with product returns.
However, there are ways to avoid these costs that come with selling products online.
Many small business owners have made fortunes off of selling information products, a type of product that exists in a digital format and can be accessed online.
For example, an online course is a common example of an information product:
Now, when it comes to how easy it is to get customers to buy your service or product through your website alone, selling products online usually takes the win here.
Products are standardized and therefore easy for the customer to wrap their head around.
When they see a picture of a backpack on a website and read through all its features, they know immediately if it fits their needs.
Demonstrating to customers that your service meets their needs can be more difficult.
It often requires some phone calls, especially if it’s a high-priced service or a highly specific one.
You can, however, overcome this challenge by productizing your service offerings.
For example, a freelance blogger might standardize their offering and outline all the specifications of what is included in the service:
Source: Marijana Kay
This helps the buyer understand exactly what value they’re getting for their money.
In sum, selling products and services online both present challenges to business owners. Fortunately, there are strategies you can use to you to get around them.
Can You Sell Products as Services Online
You can sell products as services online using the business model known as product-as-a-service (PaaS).
In this model, you focus on the outcomes of the product rather than on the product itself. And you usually include services alongside the product, such as repairs or customer support.
A common subtype of product-as-a-service is the software-as-a-service (SaaS) business.
Technically, a company like Salesforce is selling a product, but users gain much more than a piece of software.
They also get access to customer support and perhaps even a customer success representative dedicated to their account.
Plus, instead of buying the product in one lump sum payment, buyers pay using recurring billing, essentially paying for an ongoing subscription to use the software.
Another example of the PaaS model is subscription-based product companies. With these,
customers can sign up for a product that they receive on a recurring basis.
One such company doing this is Remi, an online business that delivers customers a new mouthguard every six months.
Plus, the company also will create a custom mouthguard for them by sending customers a mold that they make an impression in and then send back to the company.
They do a good job of marketing their subscription plan over their one-off option:
Remi is a great example of a company that couples their product with a service, positioning the package as a service, and selling it online.
By doing so, they’re able to run their product-based business while still capturing the many benefits of selling a service online.
Can You Sell Services as Products Online
You can sell your services as products online through a process called productization.
This is where you standardize your service and outline all its features and specifications on your website.
For example, instead of creating a custom package for every customer, which is often time-consuming, a social media marketing agency could create and offer several standardized service packages, each with its own list of features.
This is exactly what LYFE Marketing does:
Source: LYFE Marketing
This makes your offer clearer to people who are doing online research. They can see the price and what’s included without having to speak to a sales representative.
This makes the buying process much more streamlined for customers.
Sometimes, the company will also give customers the option to customize the packages and pricing to fit their needs.
LYFE Marketing does this while also including a cost estimate calculator:
Source: LYFE Marketing
This way those customers with particular needs who want, for example, feature X but not feature Y, can negotiate a more personalized service with a sales representative.
Another example of productization would be turning a tutoring and test preparation service into an online course.
The course could contain videos of tutors giving lessons and working through practice problems. Quizzes might also be included at the end to test students.
Perhaps, along with access to the course, a higher-priced tier is offered that gives each student two hours of meeting time with tutors per week.
This is far more scalable than selling tutoring and test preparation services online as a service itself.
With productization, so many customers could be receiving your services without even needing a minute of your time.
Selling products and services online is a fantastic way to reach a wider audience, scale your business, and increase your revenue.
Though there are differences between the two methods in terms of what is being sold, how it is priced, and how sales are managed, you’re always selling a solution to your customers’ problems.
The ultimate goal is to effectively use your website to make it easy for customers to learn about and pay for your offerings.