The e-commerce market is highly competitive, with numerous businesses vying for customers' attention. To stay ahead of the competition, business owners are continually seeking ways to improve their operations and do things more efficiently. One approach that many are turning to is outsourcing.
But is outsourcing your e-commerce tasks a good move? In this article, you'll learn about e-commerce outsourcing as well as its pros and cons, so you can make an informed choice for your business.
An Overview Of Ecommerce Outsourcing
Outsourcing refers to the practice of hiring third-party companies or individuals to handle specific tasks in your business. In other words, it involves delegating your tasks to external experts or service providers instead of handling them in-house. These tasks may include accounting, packaging and assembly, information technology, logistics, customer service and support, marketing, human resources, procurement, and more.
Although outsourcing may seem like a recent innovation, it has been around for centuries. It can be traced back to ancient civilizations, where clients hired individuals to complete certain tasks on their behalf. However, it was not until the 20th century that outsourcing gained significant prominence in the business world. Today, outsourcing is an integral part of most e-commerce enterprises across various industries.
Benefits Of Outsourcing E-commerce Tasks
There are several benefits of outsourcing e-commerce tasks. They include the following;
1. Saves Your Business Money
Outsourcing e-commerce tasks can be a cost-effective solution for businesses. By delegating tasks to third-party companies, businesses can save money in the long run. Here are some ways outsourcing can help reduce labor and purchase costs.
Labor Costs:
- Reduce recruitment and onboarding costs: Outsourcing eliminates the need to work with a full in-house team, which can be expensive. Hiring permanent employees comes with increased business expenses, including recruitment, training, and onboarding costs, as well as monthly salaries, allowances, and bonuses. In the long run, these costs can significantly add up, reducing your company's profitability.
- Turn fixed human capital costs into variable expenses: Outsourcing e-commerce tasks means you only compensate outsourced firms when you require their services. This allows you to stay flexible as demand ebbs and flows.
- Benefit from fair, competitive pricing: Outsourcing is often the cost-effective option. Third-party providers operate in very competitive environments, so one strategy many of them adopt to attract more clients is to lower their prices.
Purchase Costs:
- Reduce procurement costs: Outsourcing procurement activities to third-party companies can help businesses reduce costs associated with purchasing goods and services. Third-party companies can leverage their expertise, economies of scale, and relationships with suppliers to negotiate better prices and term
- Reduce equipment costs: Establishing business infrastructure can be costly, especially when purchasing hardware and software components for an IT team. Outsourcing can help reduce equipment purchase costs by allowing third-party companies to use their tools to manage IT tasks for your ecommerce business.
By leveraging the expertise of external vendors, businesses can reduce human capital and procurement expenses. They can stay agile and flexible, keeping overhead costs low and profits up.
2. Allows You To Focus On The Core Activities Of Your Business
Outsourcing e-commerce tasks can free up your time and allow you to focus on managing and growing your business. Some tasks are highly demanding and may require a significant amount of time and effort.
For instance, monitoring your ecommerce site for potential threats and creating secure internal systems can be time-consuming. If you decide to handle these tasks yourself, you might not have enough time to complete other essential responsibilities, which could negatively impact your business's growth and success. This is where outsourcing comes in.
The outsourced firm will take full control of the tasks you've hired them to complete. You can delegate repetitive or non-essential tasks and trust that these will be completed without your involvement or, at the very least, without taking up too much of your time. That way, you can focus on core business activities.
Moreover, outsourcing can help increase your company's overall productivity. By outsourcing specific tasks, the outsourced firm takes responsibility for completing them, freeing up your employees' time. This can lead to more efficient use of resources and increased productivity.
3. Enables You To Run Your Business Round The Clock
Many businesses establish an ecommerce store to reach a wider audience and connect with more customers. However, to achieve this, they'll need to make their products or services available to customers 24/7. As a business owner, you may need to take breaks from work to rest, which can make it difficult to ensure your business runs continuously, especially if you’re a one-man team.
Outsourcing can provide an ideal solution to this challenge. Most service providers operate round the clock, with several staff members working in shifts. By outsourcing, you can close your business for the day, but the service provider will continue working on your behalf, allowing your business to operate uninterrupted. This can help you expand your customer base and increase revenue while ensuring you have time to rest and recharge.
4. Allows For Quick Implementation Of Modern Technologies
Staying ahead of market competition requires businesses to adopt the latest technologies, which can help increase operational efficiencies and keep up with emerging trends. However, adapting to new technologies can be challenging, especially if you lack expertise in that area. Fortunately, outsourcing can simplify this process.
In addition to their specialized services, outsourcing professionals are also technology experts. For example, an IT company can offer advice on the most suitable automation tools for your e-commerce store. By outsourcing, you can leverage the expertise of professionals and access the latest technology without having to develop that expertise in-house.
5. Allows You To Get Access To Global Talent
Collaborating with global workers brings diverse expertise to the table and enables businesses to tap into specialized skills to drive innovation and gain a competitive edge in global marketplaces. However, accessing a global pool of talent can be challenging due to obstacles such as cultural and language barriers as well as limited resources to find and hire international employees.
Outsourcing provides a simple solution to access global talent. By partnering with the right outsourcing company, businesses can connect with the right employees, no matter where they may be.
6. Enhances Your Brand's Visibility
In today's digital age, customers shop for products and services round the clock, and your brand must always be visible to connect with them. Outsourcing can be a powerful tool to increase brand awareness and visibility.
- Keep up with digital marketing strategies and trends: SEO is a complicated process, and it can be difficult for even the most seasoned marketers to keep up with all of the changes in Google's algorithm. If you're not an expert at SEO or other forms of digital marketing, then keeping up with all these moving parts can be very difficult!
- Reach a broader audience: Outsourcing gives you access to resources that allow your brand to reach more people than ever before. This is especially true when it comes to social media platforms like Facebook and Instagram.
- Create a unified brand message: If your ecommerce company has multiple social media accounts for different products or markets, it's easy for these accounts to become disconnected from each other if they aren't managed by one person or team. A brand's image should be consistent across all of its channels, and outsourcing can help you achieve this goal.
Outsourcing can help businesses become more efficient in their efforts to increase brand visibility, ensuring improved productivity and better use of resources.
7. Allows Your Business To Stay Competitive
If you're struggling to connect with customers and overcome market competition, outsourcing e-commerce tasks is a viable option to consider. By outsourcing tasks such as marketing, you can improve brand awareness and connect with more customers, ultimately leading to increased sales and a competitive edge. Running your business 24/7 through outsourcing also ensures you don't miss out on any sales opportunities.
Outsourcing can help streamline processes and complete tasks more efficiently, allowing you to save resources and keep up with the competition. It can also help you scale more quickly and efficiently, especially during periods of rapid growth. By outsourcing non-core tasks, businesses can quickly expand their operations without having to invest in additional resources or infrastructure.
Drawbacks Of Outsourcing E-Commerce Tasks
Despite the many benefits of outsourcing e-commerce tasks, it also has its drawbacks. Here are some of the disadvantages of business outsourcing.
1. Loss Of Control
Outsourcing can be an effective way to improve business efficiency, but you also run the risk of potentially losing control over how tasks are completed. It's still important to maintain oversight to ensure that projects are completed to your satisfaction.
As the outsourced company will take control of your business tasks, it's essential to maintain open communication with the outsourced company. This can help you stay informed about the progress of your projects and ensure that they're completed according to your specifications.
Another way to maintain control is to implement strong contract agreements with the outsourced company. This can help to establish clear expectations and ensure that both parties are on the same page regarding project deliverables, timelines, and quality standards.
2. May Cause Negative Impact On Internal Employees
One of the potential drawbacks of business outsourcing is that it may negatively impact internal employees. When outsourcing begins, internal employees may feel threatened that the third-party provider is coming to take their jobs. This fear may affect workers' morale and reduce their productivity.
To ensure that outsourcing does not negatively impact employees, it's essential to address their concerns and provide reassurance. Assure them they'll still retain their jobs even after outsourcing. Explain why outsourcing some tasks is vital for the company's success and how it can benefit them in the long run. By clearly communicating the benefits of outsourcing, you can maintain a positive work environment and ensure workers feel valued and supported.
3. Confidentiality Risks
Outsourcing e-commerce tasks can also pose a risk to your business and customers' confidentiality. The third-party company hired will use your systems to complete assigned tasks, which means their team members can easily access your confidential information. This increases the risk of losing critical information through cybersecurity attacks.
To mitigate this risk, hire a third-party company that can guarantee and maintain confidentiality. One way to do this is to confirm that the company has a good track record of protecting confidential information. Additionally, review their security protocols and legal requirements to ensure that they meet your standards.
Furthermore, consider signing a non-disclosure agreement to protect your business and customer confidential information. This can help to establish clear expectations and legal requirements regarding the protection of confidential information.
4. Challenge Of Different In Time Zones
One of the potential limitations of outsourcing is communication with your service provider. If you and the outsourced company are in different time zones, it may be challenging to get quick updates.
To mitigate communication challenges, check whether the service provider can work in your time zone. Additionally, they should be committed to providing services 24/7. Make sure everyone's on the same page regarding communication channels, response times, and task updates.
5. The Risk Of Hidden Costs
As noted earlier, outsourcing can be a good way to reduce business expenses. However, this may not be possible if you work with a company that charges hidden costs. Many e-commerce enterprises are unaware of the hidden costs associated with hiring third-party companies, which can result in unexpected expenses and strained relationships between your business and the service provider.
To avoid the risk of hidden costs, work with a third-party company that is transparent in their pricing. Conduct thorough research and due diligence before hiring any third-party company. This can help to identify any potential red flags or hidden costs before entering into a working relationship.
Additionally, it can help to establish clear expectations regarding pricing and billing to avoid any misunderstandings or surprises.
Takeaways
Outsourcing is a common practice for many ecommerce businesses. It involves seeking outside help to complete certain business tasks instead of working with a full in-house team. However, outsourcing carries both benefits and drawbacks.
To make the most of outsourcing, it's important to choose the right company. Evaluate all available service providers or third-party companies for the tasks you want to outsource and hire the most suitable one for your firm. Consider factors such as their years of experience, track record, reputation, availability, and the technology they use.
