How DTC BaaS Solutions Help Brands Scale Without Increasing Overhead
Scaling your eCommerce while keeping costs in check is a tough balancing act. If you don’t spend enough on additional resources, you won’t be able to grow. Spend too much without generating additional revenue and you might not have much runway left.
Support is at hand, however. Business-as-a-Service solutions offer a way to scale your eCommerce brand while keeping overhead low. Combining cloud-based software with real-life business services like fulfillment, marketing or customer service, allows DTC eCommerce brands to outsource entire processes or divisions at scale, without any of the traditional costs such as salaries.
Why BaaS Solutions Are the Next Big Thing
Poor cash flow management is one of the major reasons that businesses fail, writes the team at B2B credit management and receivable automation platform Apruve. “This is why it’s so important for you to reduce costs wherever you can, whether that be by managing inventory better or keeping staff low.” By partnering with third parties and outsourcing parts of your operations, you can acquire the resources that you need to scale while saving money when compared to building those resources in-house.
Leaning on outsourced software and service solutions allows you to significantly scale up your eCommerce offerings without needing to bring on more employees, writes entrepreneur Kevin Gibbon. The good news is that the industry has matured to such an extent that these solutions can be found for almost every aspect of your business.
“Could you use some sales and marketing help, there is software to make it easier. Want to track social and online conversations about your brand, there are services that can automate the process. Need someone to pick-up, package and ship your orders, there is an app for that.”
It’s not just a case of saving on overhead, either, points out the team at Orderhive. The less your time you spend packing orders or handling website updates, the more you can spend on growing the business.
Grow Fulfillment Without Renting More Warehouse Space
In the past, brands that wanted to sell more products had to go out and find a bigger warehouse. That’s not the case anymore. With third-party logistics and fulfillment solutions, brands can outsource the shipping of goods. This allows them to operate from a much smaller space, saving on rent and other related overhead expenses.
Transfering logistics operations to a third party overcomes many of the issues that growing eCommerce brands face, writes Maria Haggerty, CEO of Dotcom Distribution. These issues include:
- Limited space or team members. At some point, DTC brands will either run out of staff to pack orders or space to store products. Better to have a third party take over everything.
- A lack of technology in the supply chain. More sent packages mean more issues. At some point, this is going to cause an issue without a tech-based solution integrated into the supply chain. Using the services of a fulfillment center will typically mean using its logistics software, too.
- Fluctuating sales can make scaling tricky. Sales can spike during the holidays or after a great promotion and then fall flat. This makes choosing when and how much space to rent a bit of a dilemma. Having a third party that can scale and shrink their offering when you need it is the perfect antidote.
Another potential benefit of partnering with a third-party logistics provider is the opportunity to leverage multiple fulfillment centers across the country and, indeed, the world. This can lead to significant cost savings as well as decreased shipping times, writes marketer Taran Soodan. In a similar vein, you’ll also be able to speed up the returns process, saving money and improving the customer experience at the same time.
A.J. Agrawal at Entreprenuer considers fulfillment services compulsory for any eCommerce brand that wants to scale. That’s because this particular BaaS solution comes with a raft of benefits. They save time, allowing your staff to focus on tasks that grow your brand. They help you save on shipping costs and get parcels out to customers more quickly.
Expand Internationally At a Fraction of the Cost
As highlighted in our Introductory Guide to International eCommerce, global expansion presents a huge opportunity for brands. Making the most of the international market isn’t easy, however. There are legal, marketing and logistical issues that brands need to overcome. Traditionally, solving these challenges would mean significant increases in a brand’s overhead expenses.
Take legal issues, for instance, writes Andrew Maff, Director of Marketing and Operations at Seller’s Choice. Not only will you need to identify business, customs and product laws for any country that you wish to enter, you’ll also need to identify just how friendly that country’s government is to foreign business and whether you need to form a new business entity.
Taxation and translations will also require the support of professionals, says Matt D’Angelo at Business News Daily. “With shipping and taxation, it’s crucial to partner with other organizations and companies as the minutiae of different international laws can get very complicated.”
The trouble is that this will be the case for every market that your eCommerce brand enters. Hiring an in-house expert or even a local law firm can quickly add up. Choosing a BaaS solution, on the other hand, gives you the flexibility to lean on their expertise when you need it, without racking up expensive retainer fees.
Customizing your online shopping experience for a new market could also be an expensive and time-consuming endeavor unless you use a BaaS solution.
An integrated eCommerce CMS can make international expansion a lot easier, according to eCommerce Marketing Consultant Victoria Greene. Translating content for a different country can be difficult and tedious with a custom-built system. With a good eCommerce CMS, however, customizing products and pages for international audiences is often painless. What’s more, this can all be done without impacting the customer experience and sales figures in your home country.
Partnerships are key for a successful international expansion, says Mike Ward, Executive Director at Spur Leadership. There is a lot that brands need to understand before jumping into a new international market, such as the culture, shipping policies, laws and tax rates. Exchange rates can be a particular problem, he continues. Expand on your own through local or native banking services and you could incur needless and exorbitant fees. Using a BaaS provider that specializes in international payments can help you achieve significant savings.
Improve Customer Service Without Hiring a Whole Department
The more you sell, the more customer service requests you’ll have to deal with. One option is to hire and train a team. This can lead to huge overheads, however.
The team at InteractOne points out that hiring and retaining permanent employees is a considerable commitment. It’s not just the salary that you need to account for. There are employee benefits, 401K contributions, taxes and employee training that you need to take into account. It might be worth the cost if these employees are going to be busy every working hour. If not — as will often be the case for growing eCommerce brands — outsourcing is the solution.
Luckily, customer support is incredibly well suited to outsourcing or automating, writes FreeeUp.com CMO and Co-Founder Connor Gillivan. “These tasks aren’t too difficult or complicated. In fact, they are mostly clerical and the only major requirement you need to be met is prior customer service experience.” Though they aren’t complicated, they can certainly be overwhelming.
Don’t think that outsourced customer service is going to be sub-par, though, writes HelpScout’s Customer Evangelist Mathew Patterson. It doesn’t have to come in the form of script-based call center agents. “Other options are available that position themselves as remote partners or flexible extensions of your own team.”
These can be particularly beneficial to eCommerce businesses, he continues. Most online stores operate in a seasonal cycle, which means they need to scale customer service teams around the holiday season. This can be tricky, however. It can be time-consuming and expensive to hire customer support staff for a short period of time. Nor is it great for morale when additional staff are let go in January. This isn’t an issue with a customer support-based BaaS solution. Teams can be scaled up in a quick and cost-effective manner.
BaaS-based customer support solutions may even provide better customer service than you could in-house. Maddy Osman at GoDaddy says these service providers already have the technology, tools and knowledge in hand to do a great job. With a multi-channel offering that includes email, social, telephone and live chat, you could get much more than just an extra body to answer emails.
If You’re Using BaaS Solutions, Make Sure You Get Value
There’s no point spending money on BaaS solutions if you aren’t saving money, says Adam Lean, entrepreneur and founder of The CFO Project. Whenever you spend money on these services, you need to make a return on the investment in the form of increased profits. If you are paying for these services but aren’t using them to scale your business successfully, you aren’t really saving money at all.