Choosing Between Physical Product Sales and Service Based Business
There are generally two ways of making money. The first one is selling tangible physical products and the second one is selling services. There are significant advantages to one and then the other, both have limitations as well.
Personal Experience with Product Failure and the Shift to Services
Starting off a personal journey with entrepreneurship selling tangible physical products can bring some initial success. And at first it seems great put in more money, more resources, more time, and hopefully this brings more revenue. It works for some time.
But then it can crash miserably. Some ventures have to stop, others can continue. From that experience, if you’re thinking of starting off with physical tangible products. You should be aware that there are lots of things that could go wrong. It’s worth being prepared and aware of what could happen and how possibly you could strategize to prevent this.
When it comes to selling services, this is something that comes across later in time. But very quickly it can become one of the most appealing things to do. Because there is a sense of full control and also the ability to maximize the value. That comes from the time invested in doing. And delivering a service to end customers. Learn More
The Initial Visual Appeal and Marketing of Tangible Goods
Products are always very appealing to people because it’s easy to market something that you can see, touch, and feel. It’s easy to be descriptive about the characteristics of a tangible product the color. The shape, the materials you could just list all the functionalities. Tangible products can be easier to sell, especially if you have unique items.
But what most people do nowadays is they don’t actually invest in research. And development to come up with those unique items. They just flip items buy low and sell high. There’s nothing wrong with that.
Competitive Pressures and Market Saturation in Product Flipping
There are lots of white label products, which basically means the supplier allows you to print any brand. And stick it on top of their product and sell it as a product created by your company. But many of those products are very easy to come across, and many people start selling the same product. That product then has very little appeal when it comes to prospective customers. There’s a fight with others for those prospective customers. And in the end it’s kind of like a race to the bottom constantly. Trying to cut down each other’s prices. Constantly trying to increase the money spent on marketing activities, increasing the marketing budget. And it eats all the revenue and net profits that may come out of this.
Lack of Quality Control and Risks of the Drop Shipping Model
When you sell a tangible product, there isn’t much control over the quality of the product. You may have tested the product, you may have ordered a sample to test it, but you cannot really control what the next batch of the product would look like in terms of quality. This is especially dangerous with drop shipping.
Drop shipping is a very contemporary business model in which you don’t even get to see the product you just tell your supplier where to ship the product to, and it’s a hands-off experience. But at the same time, you’re liable for all kinds of issues with the quality of the product or any sort of delay with the shipping. People can get really angry if their product does not arrive quickly.
Customer Relations and Financial Losses from Shipping Delays
Unfortunately, this is beyond your control. There are lots of things that can occur which will prevent products from arriving on a specified date, and immediately many clients would claim chargebacks — they call their bank, say they haven’t received the product, and get their money returned. Then the next day the product arrives. There is very little that can be done. Some customers are honest enough to offer to pay back, others just keep it as a free product.
In addition to this, the costs of products and shipping are always increasing. The cost of marketing tangible products is also always increasing, especially on platforms such as Facebook, Instagram, TikTok, and Google. Typically the way they work is when you want to place an ad, it operates on a bidding principle if somebody is trying to sell a product or even a category of product which is similar, you compete and they try to outbid you for the marketing that the platform can provide.
The Difficulty of Scaling with Low Profit Margins and Ad Costs
Eventually you can end up losing money. If you’re making money you can scale up quickly, but in order to scale up you need to have a really reliable supplier and a reliable path or route for delivery of the product, and in many cases this is difficult. Dealing with people is difficult as well. If you’re making two dollars or five dollars per product sold and spending lots of hours trying to resolve problems that customers may have, then it’s worth asking whether it’s really worth it.
Finding Success and Passion in the Service Industry
After trying all channels of selling tangible products eBay, Amazon, a personal e-commerce website they work, but some days are better than others. Eventually, tipping toes into the service sector as a service provider for different types of services reveals a whole new dynamic. All it takes to be part of the service industry is to be passionate and knowledgeable about something. If you’re passionate, you’d be knowledgeable and you would keep improving your knowledge on a topic because it’s just enjoyable to do so. Interestingly enough, some people are willing to pay money for that.
Capitalizing on Knowledge in Fitness and Professional Motivation
Depending on your expertise, all kinds of opportunities can open up. For example, if you really like working out, going to the gym, and are familiar with different supplements and workouts, there are many people willing to hire such people as assistants or trainers. It’s not only that they pay for the knowledge they actually pay for the motivation they’re going to get. If you are quite excited about something, this could be a channel to motivate people in their career development or in pursuing their fitness goals.
Something quite unique when it comes to the service sector is the personal touch with clients, because you’re building not only a business you’re not only conducting one sale, you’re actually building a relationship with people.
Building Long Term Trust for High Ticket Upselling Opportunities
Once you build a relationship, they trust you more, they know you’re not there to scam them, so they’re ready to buy higher ticket services or spend more money on whatever you’re willing to offer because they trust you and know it is predictable. It’s an entry point to selling high ticket items.
You can even sell tangible items after building the relationship. For example, you may be offering video editing services because video editing is time consuming and requires special skill, passion, and creativity. But after a while, you may tell your client that their video would be much better quality if they invest in proper lights, a proper microphone, and a proper camera. You can offer to set it all up for them, and maybe you have some branded special lights as well. All of these help transition from one opportunity to another.
Transitioning Opportunities through Satisfied Customer Word of Mouth
A very important function here is social proof. Once you get one customer satisfied, they can use word of mouth communication which is one of the oldest but also the most powerful marketing tools that exists and they can refer their friends and family members to take advantage of your services, as long as they’re happy with the work done for them.
You could also have a list of, say, 10 services that you could deliver for people. Some of them you can actually deliver for free, especially when just getting started, to build that initial contact and connection with prospective customers. You can offer something for free and say this is just the beginning of the relationship, and if they’re happy with it, bigger things can follow. Or you can say the work will be done anyway and they can pay however much they think it is worth at the end.
Strategic Growth through Relationships and Client Connectivity
All of these are solid strategies for getting really connected with people and getting them to trust you, because you let the quality of your work speak rather than flashy marketing messages. This is really unique to service provision and that sort of industry, and it can definitely be capitalized on.
Developing Feedback Case Studies to Showcase Customer Satisfaction
Once you have a client who is extremely happy, you can build a case study on the work done for them. You can record a feedback video almost like an interview and use it as a case study to show prospective customers, either within the same industry or different industries, that clients are always satisfied and their needs are always taken care of.
Not to mention, once in a position of growing the business, it’s actually easier to be in full control because fewer things can go wrong. For example, you can always control how many clients you serve at any point in time and regulate this very easily.
Regulating Business Capacity through Pricing and Strategic Outsourcing
If you don’t want to take on any additional clients for a given week, you can bump up the prices, and if somebody is still willing to pay the increased price, you can afford to sign the contract with that person and outsource the service to somebody else. Of course, you’d double check to make sure that the person the work is outsourced to has done a good job that matches your standard and the quality the customer expects. But at that point, you’re already in a position to allocate work to other people and get the profits the difference rather than doing everything yourself.
Final Business Reflections and Maximizing Time Investment Efforts
This is all from personal experience. The service sector offers a level of control, relationship building, and scalability that tangible product sales often can’t match and for anyone wondering which path to take, that distinction alone is worth serious consideration. Read More