INDUSTRIES
Outsourcing e-commerce tasks
Since 2001, sales from brick-and-mortar stores or department stores have decreased by 50 percent, while online sales have increased by 300 percent. According to a Forrester report on the global retail e-commerce sector, retail sales rose from $1.3 trillion in 2014 to $4.4 trillion in 2023. It is expected to hit $6.8 trillion by 2028, with online retail penetration reaching 23.7 percent.
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.
- Logistics
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.
- Fulfillment
Order fulfillment is the process that covers everything from sales inquiries to product delivery. Some 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.
- Order management
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.
- Customer support
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 e-commerce outsourcing
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, human resources, and logistics expertise. These 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 what gives it a competitive edge, such as developing better products or expanding an existing line.
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 outsourcing providers specialize in supply chain optimization and fulfillment — expertise that e-commerce companies can immediately access when they partner with these vendors.
The e-commerce market is a highly competitive, dynamic environment. By working with business process outsourcing providers, e-commerce companies, regardless of size, can reap the benefits of customized outsourcing solutions and get a leg up on the competition in a crowded market, all while staying focused on what makes their brand truly unique.
Please contact us to find out about Sourcefit’s custom e-commerce solutions.
