Sometimes, service-oriented industries are easier to run than product-oriented industries. For example, a tennis coach might experience no expenses, while a seller of tennis rackets will at least need to buy space to store and sell the tennis rackets. However, those in service industries run into a variety of problems inherent to services that can be difficult to overcome.
Simultaneous Production and Consumption
Services are different from products in that services are produced and consumed at the same time, while products are produced and then can be consumed at a later date. For example, dance shoes are made by manufacturers and can sit on a shelf and then sit in a closet for any length of time before they are finally put on. These dance shoes are products. However, if a professional dancer produces a dance for an audience, the dancer performs the dance and the audience consumes the dance at the same time. For the service, the producer must be present to provide the service. For the dance shoes, the producer could be somewhere else, but the consumer can still use the product, the dance shoes.
Those selling products can make sure that their products are consistent. For example, a restaurant can use the exact same process and ingredients to create a meal that has a consistent flavor. However, services are inconsistent. Those serving the food can have varying degrees of efficiency and friendliness, depending on the skills and personality of the servers. Therefore, both business owners and business customers cannot predict the quality of delivered services.
Services Can't Be Stocked
Service industries have a much more difficult time managing supply and demand than product industries. If a mattress salesman cannot sell a mattress today, she can always sell it tomorrow. However, a hotel owner who doesn't book a hotel room today will forever lose the profit he would have earned from that hotel room today.
Unpredictable Service Quality
Since customers cannot see the service ahead of time, they cannot always tell if they will like the service. For example, a customer will know that a wrench works after trying it out, but the customer won't know if the plumber will successfully fix the broken toilet until after the plumber arrives and tries to fix it.
Customers have an easier time trusting businesses selling products than businesses selling services. If a business sells a hairbrush, customers can tell that they're getting a hairbrush even if the vendor selling the hairbrush behaves unprofessionally. But a hairstylist must always appear professional or customers may not trust the hairstylist's ability to cut hair well. Therefore, service providers must commit themselves toward behaving professionally on a much more consistent basis.