Ecommerce has revolutionized the way that businesses operate, with many companies using online platforms to sell their products and services to customers all over the world. This has created a need for businesses to outsource ecommerce-related tasks, such as website design, customer service, and logistics to third-party providers. In addition, as the ecommerce market continues to grow, more businesses are likely to turn to outsourcing as a way to streamline their operations, reduce costs, and enhance their customer experience. For instance, a company that sells products online may face various challenges such as managing inventory, order fulfillment, shipping, and customer service. Outsourcing certain tasks such as logistics or shipping processes can help alleviate some of these challenges and enable the company to focus on its core competencies.

However, it’s worth noting that the need for outsourcing ecommerce tasks may depend on other factors, such as the size and type of business, the products or services being sold, and the specific outsourcing needs of each company. Additionally, rapidly changing technologies, labor shortages, and the need to squeeze margins may also drive ecommerce businesses to outsource. In this article, we will explore these factors, as well as different types of ecommerce, recommendations for outsourcing, and more.

Table of Contents

What is Ecommerce Outsourcing?
Understanding Different Types of E-commerce and How Outsourcing Can Benefit Each One
Why do Companies Outsource Ecommerce Operations?
Steps for Outsourcing Ecommerce
Outsourcing Ecommerce: Success Story

What is Ecommerce Outsourcing?

Ecommerce outsourcing is the process of delegating various tasks and functions related to running an online store to a third-party service provider. These tasks may include website development and design, order processing, inventory management, customer service, digital marketing, and more. 

Outsourcing ecommerce allows businesses to tap into the expertise and resources of a specialized service provider, which can help them save time, reduce costs, and improve the overall quality of their ecommerce operations. By outsourcing certain functions, ecommerce businesses can focus on their core competencies, such as product development, and leave other aspects of their business to a trusted partner.

Understanding Different Types of Ecommerce and How Outsourcing Can Benefit Each One

Ecommerce is not a one-size-fits-all business, and different types of ecommerce require different approaches to outsourcing. Understanding the various types of ecommerce and how outsourcing can benefit each one is crucial to making informed decisions on which tasks to outsource and which to handle in-house.

Business-to-Consumer (B2C) Ecommerce

B2C ecommerce refers to online transactions between businesses and individual customers. Companies that operate in the B2C space can benefit significantly from outsourcing certain tasks, such as customer service, order fulfillment, and product photography. By outsourcing these tasks, B2C companies can save time and money while improving their overall customer experience.

Business-to-Business (B2B) Ecommerce

B2B ecommerce involves transactions between businesses. In this space, outsourcing can be beneficial for tasks like website design, software development, and marketing. By outsourcing these tasks, B2B companies can access a wider pool of talent, reduce costs, and improve the quality of their operations.

Consumer-to-Consumer (C2C) Ecommerce

C2C ecommerce allows consumers to sell goods and services to other consumers through online platforms. Outsourcing in C2C ecommerce is less common, but some platforms may outsource tasks like customer service, dispute resolution, and platform moderation to third-party providers.

Consumer-to-Business (C2B) Ecommerce

C2B ecommerce involves consumers selling goods or services to businesses. Freelancing platforms and marketplaces are good examples of C2B ecommerce, where businesses may outsource tasks like content creation, graphic design, and software development to individual freelancers or agencies.

In summary, outsourcing can benefit various types of ecommerce businesses by allowing them to focus on their core competencies, access a broader pool of talent, and reduce costs. By understanding the different types of e-commerce and how outsourcing can benefit each one, companies can make informed decisions on which tasks to outsource and which to handle in-house.

Why do Companies Outsource Ecommerce Operations?

Outlined below are several reasons why ecommerce companies choose to outsource certain tasks:

Size and Type of Business

The size and type of ecommerce business can significantly impact the decision to outsource. Smaller businesses with limited resources may benefit from outsourcing to gain access to specialized expertise and technology that would be too expensive to develop in-house. Larger businesses may have the resources to develop in-house capabilities, but outsourcing can still be useful for managing peak periods of demand or accessing new markets.

Products or Services Being Sold

The types of products or services being sold can also affect the decision to outsource. For instance, a business specializing in producing and selling unique artisanal products may want to maintain control over the production process and may choose not to outsource. In contrast, a business that sells commodity products may be more likely to outsource to gain cost efficiencies.

Specific Outsourcing Needs of Each Company

Every ecommerce business will have its own unique outsourcing needs based on its business model, resources, and strategic goals. For instance, a company that operates a subscription-based service may outsource its billing and payment processing to a third-party provider. Another company may outsource its content creation and marketing efforts to an agency with specialized expertise in that area.

To Streamline Operations

Even if a company operates within a single e-commerce industry, managing their operations effectively can still be a daunting task. For instance, profitability issues are common for e-commerce companies due to losses incurred in every order fulfilled, and late deliveries can lead to negative impacts, with 84% of customers unlikely to return after a poor delivery experience. To address these concerns, companies outsource ecommerce-related tasks to external experts.

Rapidly Changing Technologies

Ecommerce is a rapidly evolving field, and keeping up with the latest technologies can be challenging for businesses. Outsourcing can help businesses stay competitive by accessing specialized expertise and technology that may not be available in-house. For example, an ecommerce business may outsource its website development and maintenance to a provider with the latest tools and technologies.

Labor Shortages

As the demand for ecommerce grows, so does the demand for skilled professionals in areas such as logistics, customer service, and technology. However, some areas may experience labor shortages or a lack of skilled workers. Outsourcing can help businesses access talent pools in other regions or countries with more abundant labor resources.

The Need to Squeeze Margins

Margins can be tight in the e-commerce industry, and businesses may need to find ways to cut costs and increase profits. Outsourcing can help businesses achieve these goals by accessing cost-effective labor and specialized expertise. For instance, a business may outsource its order fulfillment and shipping processes to a provider with lower labor costs, allowing the business to maintain a competitive pricing strategy.

Finally, partnering with business process outsourcing providers can help e-commerce companies take their operations to the next level with a fast, personalized approach that is tailored to their unique business needs.

 

Steps for Outsourcing Ecommerce

Before outsourcing e-commerce services, it’s important to consider various factors and take necessary measures. This will help you determine which tasks should be outsourced and how much time and money you can save. To begin streamlining your e-commerce processes, follow these 3 steps:

Identify the tasks you need to outsource

Re-evaluate your e-commerce processes, including order management, product fulfillment, customer service, and back-office support, and identify which of these tasks can be outsourced to a third-party service provider. 

Check provider backgrounds

Verify the status, reputation, specialization, human resource capacity, and access to technology of potential third-party providers. Also, ensure their capability to manage risks, protect systems, and combat security threats to prepare for unforeseen technical challenges.

Assess prices and plan your budget

 Compare pricing levels of different outsourcing providers to select the right partner with the right service package that fits your needs and budget. Then draft a budget for outsourcing e-commerce services and establish a comfortable price for your outsourcing investment before proceeding. Communicate your budget plan with potential partners and ask for pricing models that fit your needs and funding levels.

Outsourcing Ecommerce: Success Story

One successful example of outsourcing ecommerce can be seen with the brand Adidas. In 2015, the company made a strategic decision to outsource its e-commerce operations to the technology provider, Demandware. The move allowed Adidas to focus on its core competencies of product design and marketing, while Demandware handled the e-commerce platform, order management, and fulfillment.

As a result of outsourcing, Adidas was able to reduce its website load time by 60% and increase website speed by 85%. In addition, the company saw a 27% increase in conversion rates and a 22% increase in mobile orders. These improvements translated into a 59% increase in online sales for Adidas in the first quarter of 2016.

Demandware’s technology allowed Adidas to launch its website in 13 new countries in just six months, without experiencing any major issues or delays. By outsourcing, Adidas was also able to reduce its IT and infrastructure costs, as Demandware was responsible for managing and maintaining the e-commerce platform. This freed up resources that Adidas could allocate towards product design, marketing, and other core competencies.

The success of Adidas’ outsourcing strategy has been well-documented and serves as a model for other companies looking to optimize their e-commerce operations.

To learn more about outsourcing, you can read our 8 Tips for Successful Outsourcing article. We invite you to follow us on social media and to visit our website to learn more about our services.

About Us: Sourcefit is a widely recognized US-managed business process outsourcing company based in Manila, Philippines. We proudly serve over 100 clients with a workforce of more than 1,300 employees. Our global centers can serve multiple markets, and our staff is highly proficient in English, Spanish, French, and Portuguese. Whether you need a few or many employees, we can help you achieve your business goals and build high-quality offshore teams.

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Sourcefit’s commitment to excellence has been recognized through numerous industry awards and certifications.

We recently received the Fortress Cyber Security Award from the Business Intelligence Group. Sourcefit was also honored with the prestigious recognition of Best Outsourcing Solutions Provider in the Philippines during the 2023 Business Excellence Awards.

Other awards include: FT ranking of 500 high-growth Asia-Pacific, The Marketing Excellence Awards, Inquirer Growth Champion,  HR Asia Awards, among others.

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