Would we be better off outsourcing key eCommerce functions or keeping it all in-house? This moment of truth faces most businesses.
While there are certainly benefits to keeping tight control over your order management and product fulfillment, you may be hurting your sales more than helping them by attempting to build and maintain a commerce platform that requires constant updates to meet the needs of your growing business. The reality is that enterprise-level eCommerce is difficult to do.
As order volume and customer service demands grow, many companies begin to realize that their increasingly complex eCommerce operation is a distraction from their core business. Thus begins the journey of exploring alternatives to maintaining a vertically integrated eCommerce business.
Here are the major benefits of outsourcing your eCommerce to a full-service eCommerce solutions provider:
Focus On Your Core
If your focus is primarily marketing an entertainment brand, for example, then creating an entire eCommerce division within your organization might not make the most strategic sense. eCommerce fulfillment requires not only large investments in infrastructure (warehouses, packaging and labeling equipment, etc.), it also requires expertise in managing inventory, supply chain, orders, returns, and customer service. Simply put, for most companies, this is out of their wheelhouse. Outsourcing your eCommerce allows your business to keep its eyes on the prize, while your full-service partner handles the complexities of eCommerce for you.
Invest Less Capital
By outsourcing your eCommerce, including the technology implementation, inventory management, warehousing, fulfillment, returns, customer support and business infrastructure, you’ll save about 90% on upfront costs when using a full-service eCommerce partner. If built and managed in-house, a significant investment is required for platform implementation, systems integration, web development, back office support, logistics and for hiring full-time employees to operate your eCommerce. Whereas when outsourced, an eCommerce provider will require a significantly smaller upfront investment because they will already have the people, processes, technology, and warehouses in place and ready to go.
As a single business, you’re unlikely to achieve the economies of scale that a full-service eCommerce provider can provide because of the volume of business that they conduct with technology partners, shippers, carriers, and packaging suppliers. Doing it alone, you won’t have access to the best rates for web servers, fraud protection, payment processing, web developers, tax solutions, warehousing, packaging, and shipping. You’re also unlikely to see economies of expertise. Ecommerce conversion, global localization, managing subscriptions, product fulfillment and other tricky details of global eCommerce are probably outside your core competencies. That means you’ll be a lot less efficient at managing orders, maintaining a well-oiled supply chain, and rapidly fixing problems when they inevitably arise.
We’re not just talking about dollars and cents (or sense) here. Your brand promise is on the line here. It’s true that investing in the requisite direct-to-consumer brand strategy, estore promotions, exclusive products, warehousing, IT systems, equipment and people is like walking a financial tightrope. But failure is a major concern to most brands. If consumers have a negative experience while shopping direct, they’ll lose sight of your brand values and become less willing to buy in the future (through any channel). Also, by focusing on your eCommerce at the expense of your core business, you’re at risk for opportunity costs. What won’t your company do while it’s distracted by building out an eCommerce division? Maybe putting out your next game-changing product or entertainment title.
Because you’re not bound by the physical demands of fulfilling your eCommerce store, you can be more nimble and change your go-to-market strategy more quickly when necessary. You can experiment with new products, new geographic markets and new areas of promotions and customer acquisition, leaving the back office, technical and logistical headaches to your outsourced eCommerce provider. Outsourcing can also level the playing field with your major competitors. If they already have a thriving eCommerce business, you can regain lost ground by selecting the right full-service eCommerce partner to help you quickly come up to speed.
Keep Ahead of Technology
eCommerce has become a hugely complex and complicated beast in recent years as the market has gone global, consumers have become extremely picky and well-educated. To make matters worse, marketing has become fragmented, and the competition more fierce than ever. You can no longer pump huge amounts of TV advertising around a brand and sit back and wait for the orders to come in. With the rise of the Internet, social media, and global trade, winning at eCommerce now requires massive investments in technology and IT staffing. If your organization is not prepared to play in this arena, then outsourcing would be a wise alternative.