Services Commerce

What is s-commerce?
Services-commerce, commonly known as s-commerce, is a type of industry where the buying and selling of services between businesses is conducted over electronic systems such as the Internet and other computer networks.
S-commerce enables businesses to procure, or offer, any type of service in the same transactional and straightforward way that a consumer shops online. In short, s-commerce provides similar foundations for the B2B market that e-commerce continues to provide for the B2C market.
Services commerce is not to be confused with social commerce, which is often incorrectly referred to as ‘s-commerce’.
Services commonly procured or provided through the s-commerce model include: graphic design, marketing, market research, lead generation, public relations, advertising, copywriting, SEO, PPC, video production, art & illustration, website development, mobile application development, cloud computing, commercial law, financial planning, accounting and human resources.
Timeline
* 1960 American Computer Scientist, John McCarthy, conceived the idea of ‘computer networking’. His theory is described as a significant contribution to the development of the internet and a precursor of cloud computing.
* 1968 Packet switching networks developed - precursor for the ‘internet’ as we know it
* 1983 First conference held on ‘electronic commerce (e-commerce)’ and a possible model
* 1988 Commercial Internet Service Providers (ISP’s) began to emerge
* 1989 ‘Outsourcing’ formally identified as a business strategy
* 1998 Online freelance marketplace Guru is launched
* 1999 Online staffing platform Elance is launched
* 2001 The term ‘outsourcing’ becomes increasingly used in the US
* 2003 oDesk is founded in California
* 2006 blur Group is born
* 2007 PeoplePerHour.com is founded
* 2009 Matt Barrie founds Freelancer.com in Australia
* 2011 blur Group launch cloud-based s-commerce platform the Global Services Exchange
* 2012 blur Group become the first services-commerce company to go public with an IPO
* 2013 oDesk & Elance announce merger
* 2013 Freelancer.com makes its Australian Securities Exchange (ASX) debut
* 2014 Financial analysts, Liberum, estimate that the addressable s-commerce market is worth in excess of $1.1 trillion
The s-commerce model
Three main factors make s-commerce possible:
* Crowdsourcing
* Cloud Computing
* Consumer Confidence (online)
Crowdsourcing
Crowdsourcing is the process whereby an individual, or organisation, obtains work or funding from a crowd of people. In essence, crowdsourcing involves outsourcing or procuring business services over the internet. The term crowdsourcing is an amalgamation of the words ‘crowd’ and ‘outsourcing’ - the 2 fundamental elements needed to make the ‘crowdsourcing’ model viable.
The theory behind crowdsourcing is simple. By targeting a large collective of people (a crowd) to complete business-related tasks, the variety of expertise and skills will result in yielding a higher quality of content and idea generation will be superior.
Crowdsourcing is often utilised for innovation, problem solving or increasing efficiency within an organisation. Crowdsourcing also allows for a company to gain a deeper insight into their customers; what they like, what they don’t like and what they desire.
Research carried out by Massolution found that 60% of all ‘crowd workers’ reside in North America & Europe. In addition, almost 50% have a bachelor's degree.
Top crowdsourcing influencers include; Jimmy Wales ( ), Phillip Letts (blur Group), Darren Westlake (Crowdcube), Samir Desai (Funding Circle), Simon Hill (Wazoku), Odysseas Tsatalos (oDesk) and Beerude Sheth (Elance).
Cloud Computing
Cloud computing is the term used to describe a model for delivering IT services in which resources are retrieved from the internet - rather than through a direct connection to a local server. In short, cloud computing is a method of storing large amounts of data on a remote server that is accessible via the internet.
Although cloud computing is seen as a relatively modern ‘invention’, American computer scientist - John McCarthy - conceived the idea of computer networking & time-sharing in the 1960s. McCarthy’s theory worked on the premise that, by ‘networking’, users would be able to share data by linking to one central computer. McCarthy’s theory is not only said to have made a significant contribution to the development of the internet, but is also a precursor of cloud computing.
Consumer Confidence (Online)
The rise of online shopping - aided by e-commerce websites such as Amazon - during the late 1990s has resulted in increased consumer confidence when spending online.
A 2013 study conducted by United Parcel Service Inc. (UPS) found that 70% of those surveyed said they preferred to shop online.
The Centre for Retail Research predict that online spending in the United States will reach $306 billion in 2014 - nearly 12% of all retail sales in the US. Similarly, online purchases in the UK are predicted to account for 13.5% of all retail sales in 2014. By 2017, experts predict that 60% of retail sales in the United States will involve the internet.
This increase in confidence in using online platforms to purchase goods has allowed for a services-based commerce model to become viable. Just as consumers can purchase clothing or groceries online, businesses can now purchase business services online - rather than employing a professional to join the workforce and work in-house.
S-commerce Contributors
blur Group
blur Group is an international e-commerce business providing a better way for businesses to buy or sell services online. blur Group introduced the Global Services Exchange in 2011. The Global Services Exchange is an online, cloud-based platform that acts as a marketplace for businesses to buy-and-sell services online.
Formed in 2006 by CEO Philip Letts, the platform now has more than 43,000 expert service providers registered and over $270m worth of projects have been submitted. The largest single-value project to be submitted to blur’s Global Services Exchange was submitted in 2014 with a project value in excess of $15m.
blur Group’s platform has 10 service categories - Design, Marketing, Content, Video, Art, Innovation, Technology, Legal, Accounting, Human Resources - and boasts expert service providers from 145 countries around the world.
On 2 October 2012, blur Group was introduced to the London Stock Exchange (LSE) with an IPO.
oDesk & Elance
Elance was launched in 1999 as an online platform for freelancers and was named after a Harvard Business Review article. By the time Elance announced its merger with oDesk, the platform had 2m registered freelance professionals offering their services.
oDesk was founded in 2003 by a trio of Greek entrepreneurs and, like Elance, is referred to as an ‘online staffing platform’.
On December 18, 2013, Elance & oDesk announced that the two companies were merging. The merger was officially finalised in April 2014. Prior to this, both oDesk & Elance had operated as separate entities.
Freelancer.com
Freelancer.com is the world’s largest freelancing and outsourcing marketplace by number of users and projects submitted. The platform now boasts nearly 13-million users comprised of employers and freelancers.
Freelancer.com was founded in 2009 by Australian entrepreneur Matt Barrie and is headquartered in Sydney, Australia. On November 13, 2013, Freelancer.com made its Australian Securities Exchange (ASX) debut after months of speculation. The float valued the company at $771 million.
PeoplePerHour
PeoplePerHour.com was founded in 2007 by Xenios Thrasyvoulou & Simos Kitiris and now has a network of 250,000 active users. The company now has offices in London & New York and has raised nearly $3 million since its inception through seed rounds. In 2012, its engineering department located to Athens, Greece.
Guru
Founded in Pittsburgh in 1998, Guru.com is a freelance marketplace that enables companies to find freelancers for commissioned work. Guru was founded by current CEO, Inder Gugnani, and was originally named eMoonlighter.com.
The s-commerce market
Over the last decade, the process of outsourcing business services has grown substantially. In 2013, 2 million jobs were outsourced. Services in the Information Technology (IT) sector are the most outsourced, with 43% of all IT services now being outsourced.
In the USA, over 2.6 million jobs were outsourced in 2013 and the business services sector in the US accounts for more than 83% of total employment.
A survey by UK staffing group, Manpower, found that over the next 2-years, 20% of organisations not currently outsourcing are planning to do so over the same time period. In this 2-year period, IT, HR, Marketing & Research and Development (R&D) outsourcing are set to expand the most.
Furthermore, at present, over two-thirds of companies in the UK (68%) currently outsource some of their business activities. The survey also found that Print/Design is the most often outsourced business activity.
During the year 2000, a European survey of establishments with more than 50 employees found that 43% digitally-outsourced at least one business service, 41% engaged in B2B digital delivery and 11% engaged freelancers using digital delivery.
Digital delivery of outsourced business services now appears to be widespread; more than 75% of establishments that outsource receive digital delivery. A European study conducted in 2002 found that 21% of establishments with more than 50 employees supplied business services electronically. The most commonly-supplied services in Europe were: design, editorial and creative functions. ([https://www.elance.com/q/blog/2011/12/online-work-to-double-again-in-2012.html 2011)]
A more recent study conducted by research firm, Massolution, found that the number of ‘crowd workers’ - those who offer their services via crowdsourcing and s-commerce platforms - is growing in excess of 100% a year. The study also found that 52% of enterprise purchasers made more than one purchase and became repeat customers.
In 2014, the Financial Times reported that analysts for financial brokerage firm Liberum estimated that the addressable market for s-commerce is worth approximately $1.1 trillion.
Benefits of s-commerce
There are a number of benefits that may impact a business’ decision to procure business services online using an s-commerce platform. They include:
* Controlling tail spend
* Cost Savings
* Provides access to specialized skills and a global knowledge base
* Mitigates risk
* Provides access to new markets
* Efficiency and time saving
* Freeing up internal resources
* Allows an organisation to focus on core business processes
Notable organisations using s-commerce
* Amazon
* eBay
* Danone
* General Electric
* Caterpillar
* Berlitz
* Tesco
* Forbes
* BBC
* P&G
* Walt Disney
* Cisco
* Microsoft
Trade restrictions
In October 2012, the European Union (EU) banned any transactions with Iranian banks and financial institutions due to Iran’s nuclear weapons program. The United States imposed further sanctions aimed at Iran’s oil & pharmaceutical sectors in 2013 - although the US government has imposed successive sanctions on Iran since the 1970 Tehran hostage crisis.
Although no direct sanctions were imposed on Iran’s online business services or s-commerce sectors, the fact that the EU & US in particular banned any transactions with Iranian financial institutions meant that Iranian businesses wanting to offer, or procure, business services online were unable to do so with US or European businesses.
Even though s-commerce involves buying-or-selling business services online, financial sanctions can impact the way in which these services are paid for. If an s-commerce company is based in the Europe or the US, for example, they won’t be able to deal with service providers from Iran due to the financial restrictions imposed on Iranian financial institutions.

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