In the last decade, many companies have pushed onward with a servitization policy. Yet for many people, this terminology remains an obscure conundrum. What truly is servitization? Is it just to sell services? Has not this been done since the first caveman offered to hunt for the other guy?
Indeed, servitization is a far more complex thing than ‘just selling services as products’, and yet, at its core, it is exactly that.
Today, we want to take a look at what currently servitization stands for, how e-commerce companies can combine servitization with e-commerce cutting edge technologies, and what an e-commerce platform needs to offer to a servitization-oriented company. Let us begin!
A quick guide to understanding servitization
What is servitization?
In its core concept, servitization is to sell your company or brand services as if they were your products. In a broader – and more accurate with real-life – definition servitization normally involves bundling products and services to create shared value for the company and its customers.
And services are a powerful wheel in the global cart of the economy: Since 2019, the services sector accounted for an average of 55 percent of GDP and 45 percent of employment in developing economies, according to the World Bank.
Services are booming. If you don't believe this, let me ask you, have you heard about Netflix, PayPal, Alphabet Inc, Microsoft Corporation, or Meta Platforms, Inc? Surely you have. These are all service-based companies.
What they sell is a service: a streaming service, an online payment platform as a service, or any of the Google, Microsoft, or the former Facebook business oriented and advertising services.
Key aspects of servitization
So, is this servitization? Not really. These are service companies. But not necessarily when we talk about servitization, we should encompass all service provider companies. In fact, when we talk about servitization, we talk about a process: the process to transform your company's primary product from a good to a service.
This is the correct definition of servitization – nowadays – the transformation process of a company that wishes to make its product a service or sell its services as products.
Bear with me, I know it can be a bit confusing. But, let's check out some generally accepted examples of successful servitization processes: Desso-Tarkett, Signify (Philips Lighting), Rolls-Royce, Xerox, Caterpillar, KUKA, and Smart Robotics, are companies that have been able to put servitization in practice.
More close to home, we can share with you the story of Huisman Equipment, a company that is currently undergoing a servitization process, and that has decided to trust Intershop as their online e-commerce platform. Read more about them here:
Back to our matter at hand, servitization is then selling the light not the lightbulb. And some practical everyday examples of this idea could be car leasing, Spotify, Adobe – who ditched the licenses of their products in favor of a subscription system – or the previously mentioned Netflix.
All of them give you access to a product, but not ownership of it. You only have the right to use it, as long as you pay for the service.
Servitization and B2B are a match made in heaven
Now back to B2B e-commerce, servitization is a powerful combination for business and brands who are already working in the complex and challenging B2B economy.
Why? Because B2B e-commerce is, by definition, the perfect scenario for companies to try out bundles of products and services. The B2B market is a great fit for this kind of solution.
It’s a recurrent market among companies that normally work down the river, to provide products or services for the final consumers. This means that B2B buyers are keen to buy solutions, more than products. Because they, themselves, are at the end of the day the real ‘product or service purveyors’ for the general public.
So, bundling a product with a technical solution – adding to the value of the product the niche expertise of the B2B manufacturer – tends to create a final service-product combination that is far more valuable than either of the two separated solutions.
Besides, servitization also enables B2B companies to focus on superior customer service and in the goal of making desired customer outcomes a reality. Thus, selling a solution, not a product.
So, what’s stopping B2B companies from jumping into servitization?
Well, quite a few things. First of all, not all industries can be subject to a servitization process. For some of them, this is just not profitable or plainly nonsensical. Would you buy a ‘lettuce growing service with an expert farmer to help you grow your own vegetables in an eco-friendly farm’, or would you rather just buy the lettuce? You see? Some products are a long shot away from servitization.
Now the other thing that is actually blocking companies that could undergo a servitization process, is technical capability. More precisely: their e-commerce platform capability.
E-commerce capabilities for servitization
An e-commerce platform that could be used for a servitization company, or for a company that wishes to undergo a servitization process, requires a very specific set of functionalities.
Some of the main ones involve things that are specific to service-providing companies and that, by the rule of thumb, are not normally included in basic or standard e-commerce solutions.
Let’s review the main three functionalities you should be looking for:
1. A robust customer care with customization capabilities
Any B2B e-commerce that wishes to dabble in servitization, needs to be absolutely clear that providing services means having excellent control of your interactions with your customers.
For this, a robust customer care e-commerce platform is a must. Your e-commerce platform should be able to provide your brand with personalized offers for your after-sales, self-service options, and a unified omnichannel customer experience, all in one place.
Also, a ticket system and a customer portal to provide account information, invoice and order history, order status, and other digital self-services online 24/7 are a must if you want to succeed.
2. A global fast platform
Another key element required from an e-commerce platform that wants to help a company to achieve a successful servitization process is to be global and fast.
This means, by definition, that the e-commerce solution should not be constrained by any technical liability that could prevent a brand from selling internationally.
In fact, a good e-commerce solution should come with a huge range of integrated features and templates, to make it easy for business users to manage their entire international commerce experience.
And to quickly set up multiple online stores and touchpoints from one central location, then customize the content, catalogs, and services for each region.
3. Offline and online
Finally, the last mandatory ingredient is that it should provide an offline/online capability. This is a tricky one. Because not all e-commerce platforms are capable of offering this functionality, at least not for now.
But for a B2B servitization company, this is vital. The clients of a B2B service provider, could easily be team members of a company that works in remote locations or who work from multiple locations.
So the possibility of losing – albeit momentarily – the internet connection is a very real one. And henceforth, the e-commerce platform should be able to cope with this.
Enter Intershop progressive app solution. Yes, I know, we lead you to this point, but believe me, it is worth the while.
The progressive app functionality is the foundation for a successful mobile commerce strategy. It allows you to create fast, modern mobile websites with a Progressive Web App (PWA) meaning it has – among other capabilities – the functionality of working offline. Which makes it the perfect solution for a global service purveyor!