Outsourcing E-Commerce Tasks

While traditional sales from brick-and-mortar stores have stayed flat, online or e-commerce sales have continued to rise steadily by double-digits over the past several years. According to a Forrester Research e-retail forecast, U.S. e-retail sales are expected to hit $414 billion in 2018, and the web will account for 11 percent of total retail sales.

Many e-commerce companies will take advantage of the opportunities that these forecasts present. However, many e-retailers are not ready to meet the demands of higher sales growth, such as the accompanying increase in cost and complexity of managing online channels properly. Market research data indicates that logistics chaos may even curtail the e-retail boom.

Challenges such as high customer expectations, global distribution, high fulfillment costs, and moving high-volume parcels drive companies to outsource these tasks to specialists. With their expertise and technology, third parties can help e-commerce companies save money and fulfill orders on time.

E-Commerce Tasks to Outsource

Forrester Research reported that medium-sized e-commerce companies (those that handle an average of 1,000 orders per day) should outsource logistics, fulfillment, and order management to gain economies of scale.

  1. Logistics

  2. One of the biggest challenges e-commerce companies face is sending a large volume of parcels to global consumers.  Third-party logistics providers (3PL) handle supply chain management, warehousing, consolidation, and fulfillment.
  3. Fulfillment

  4. Order fulfillment is the entire process that covers everything from sales inquiries to products delivery.  Some third party fulfillment companies store products in warehouses all over the world and ship it to the customer using the best shipping rates.  Third parties can also help with controlling orders, inventory, supply chain operations, and analytics.
  5. Order Management

  6. Many companies outsource order management software and support to third parties that have the technology and resources for frequent upgrades.  OM software provides automated end-to-end order management from order receipt to financial settlement.
  7. Customer Support

  8. Customer support is another commonly outsourced e-commerce function.  Third parties provide services such as inbound sales support, invoice inquiries and adjustments, loyalty programs, IT support, and e-commerce software development.

Benefits of Outsourced E-Commerce

More than half of e-commerce companies lose money on every order, and manufacturers that establish a direct-to-consumer (D2C) online channel using in-house resources often exceed their cost margin by up to 40 percent. One in five orders is also delivered late, according to customers. Whether new to e-commerce or already an established e-commerce company, most businesses in this industry are bound to run into logistics and order fulfillment challenges.

When an e-commerce company considers outsourcing as a way to address one or more of these challenges, it is important for them to determine exactly what and how much can be saved by partnering with an outside expert. Here are some benefits of outsourced e-commerce solutions that can help during the decision-making process:

Save money. Third party service providers have extensive and up-to-date back office systems, warehouse space; as well as human resources and logistics expertise. These in turn allow orders to be fulfilled for less than 10 percent of revenue. The provider often has lower labor, material and overhead costs due to greater economies of scale, allowing them to pass on the savings to their clients.

Focus on product development, manufacturing and brand management. Having a third party handle the e-commerce department frees up the business from dealing with non-core tasks. This in turn allows the business to focus on creating more and better products and emphasize activities that give it a competitive edge.

Access scalable solutions. E-commerce service providers give clients the opportunity to scale in any direction, easily and in a timely manner. This includes IT systems integration and enhanced sales performance.

Access expertise. Starting or expanding a successful B2C or D2C operation is a complex process that takes time. E-commerce-related outsourcing providers specialize in supply chain optimization and fulfillment, allowing companies immediate access to expertise when they partner with them.

E-commerce companies can clearly benefit from working with business process outsourcing providers that can take e-commerce to the next level with a fast, personalized approach that focuses on their clients’ unique business.

Please contact us to find out about Sourcefit’s custom e-commerce solutions.