Business services are the support activities that enable businesses to carry out their work. They can include everything from warehousing to marketing. The term can also refer to the help an organization receives from outside companies, such as third-party logistics firms that handle warehouse management, picking and packaging orders for eCommerce fulfillment or consulting firms that advise on optimizing shipping and logistics.
As opposed to goods, which can be stockpiled for future use, services must be supplied as and when demanded. This is one of the key differences between services and products. Another difference is that services do not have the same kind of physical presence as goods; they cannot be touched, felt or seen. Services are instead experienced by customers who may attribute value to a particular service brand in terms of convenience, friendliness or price.
In economic theory, a service sector represents the third tier of economic production. This is because the creation and sale of tangible goods represent the first two sectors in a three-sector economic model. However, the development of a service sector requires that all the critical elements that characterize successful product businesses be in place to succeed in service. This includes a clear understanding of how to create and differentiate a service from competitors. Moreover, a business must be sure that it can sustain demand for its service. In difficult economic times, consumers usually cut back on services and focus more on the products they need to survive.