E-commerce Outsourcing: The Definitive Guide

Outsourcing is the process of using a third party to perform services or generate goods that would otherwise be performed internally by the company's employees and staff. The main reason for outsourcing is the lower cost of external labour.

The best examples of e-commerce outsourcing are marketing, cleaning of workshops and warehouses, and website development. When it comes to accounting, maintenance and employment, most shop owners hand over control to in-house professionals. This allows companies to concentrate most of their resources on their primary operation.

Outsourcing some or all of your e-commerce activities can be a good solution for you. But what are the advantages and disadvantages? Read on to find out!

Differences between practices of task delegation

What it means

Outsourcing

Insourcing

Offshoring

The buying organisation

trusts the delivery of a

product or service to a third party

party during the

purchasing process.

His specific activities make it possible

a company to scale up or down

in response to the needs

without long-term

costs.

An organisation puts its

resources and personnel to

perform a task.

Insourcing creates

communicated affiliates

offices within a

organisation and brings

functions together, such as

financial services of

numerous places in one

a single group.

A commercial procedure

which is moved from one

nation to another.

Offshoring requires a

higher level of supervision

by the organisation, because the

processes still under

their control, although from

another country.

 

What are some examples?

Outsourcing

Insourcing

Offshoring

Payrolls, IT services,

training of employees, contact

centres, purchase orders,

and production are some of the

more sources of very

effective business tasks

that are routinely

outsourced.

Instead of assigning the task

to an external agency

writing desk, in-house

designers can develop

technical manuals for their

equipment. All financial

operations and transactions.

The labour force of the user companies

services are outsourced to

other countries. Marketers buy

goods of international

marketplaces and sell them

on domestic markets.

 

How much does it cost?

Outsourcing

Insourcing

Offshoring

Outsourcing prices are on

on the steep side.

The additional costs of outsourcing

costs can vary from

14% to 60% of the purchase price

price. The additional costs in

some circumstances were

more than two or even three

times the purchase price.

The cost of such a

service is usually roughly

25% of the salary of the

person you hire.

Compared to full

rates of $12-$13 in

the United States,

can do unskilled assembly work

can be found for $2-$2.50

per hour with full

extras.

There are five key factors that influence your decision to outsource, insource or offshore, to avoid financial risks and expenses.

Data confidentiality and security Business data means customer information and all financial information, the loss of which will have serious consequences for your company. If, for example, you need to carry out financial operations, it is better to resort to insourcing.

In-house capabilities. This refers to your company's technological capabilities or human resources. If your company has all the resources to perform a task, insourcing is the right choice. However, if there is a lack of in-house resources and you need full control over the processes, you definitely need offshoring. And if there is no need for strict control, outsourcing can help. 

Stability of the country you are going to entrust processes to. Before offshoring to another country or transferring part of the process to a third party, you should investigate the political and economic climate of the country and take into account all risks and the labour market.  

Control over the process. How much control does the company want over the process? This is the most important question to ask before deciding what exactly you need. Offshoring is a good option for maintaining tight control over processes in another country. But if absolute control is not required, then outsourcing is the better choice. 

Ease of setting up a business. If the chosen country has a loyal tax policy, offers a legal framework for successfully running a business and the bureaucracy is not so developed, and that is really important, it is possible to get funds from this country, then it is worth considering options for offshoring and outsourcing. 

Before making a decision in favour of offshoring, insourcing or outsourcing, it is worth considering these factors as a whole. 

How does outsourcing help your e-commerce business grow?

First of all, it must be said that outsourcing is worthwhile for more stable companies (but not for start-ups), which, for whatever reason, cannot perform certain tasks. 

 Companies can take advantage of differences in labour and production costs between countries by outsourcing globally. Price differences in another country may tempt a company to move some or all of its operations to the cheaper country to boost profits and remain competitive in that industry. Many multinational organisations have outsourced their entire internal customer support call centres to external companies based in cheaper locations. There is less expenditure on hiring qualified staff and you pay less in taxes. It also gives you the opportunity to use technologies and resources that you don't have in your own country. The icing on the cake is that you get access to foreign markets under favourable conditions and laws of another country, allowing you to expand your customer base internationally. 

In terms of the services they provide to their clients, most freelancers or outsourcing providers today fit into one of the categories below. Some will even offer a combination of these categories: 

Customer service

Outbound telemarketing 

Web development and design 

Search engine optimisation and online marketing 

Admin / Back Office support 

Accounting and Human Resources Management 

Support for marketing and sales

Productivity growth

Outsourcing tasks gives the company more freedom. You will be able to focus your expertise on improving and refining the essential procedures that keep your organisation running by transferring supporting processes. 

You can outsource non-essential e-commerce management to more competent providers. For example, when you use a range of specialised freelance websites and online services to outsource work, you often get dynamic and intuitive tools to help you track what is being done, when it is due and how it is being paid. Most of this is handled for you, so you can concentrate on other important matters.

Less capital investment

The cost savings from outsourcing e-commerce are the most obvious benefit. You can do your job at a lower cost and with better quality. Not only will you save time and effort on staff, but your profit margin will also increase as a result of lower expenses.

You can even reduce your staff costs if you outsource wisely, of course, if you can optimise your team. Suppose you sell products that are in high demand during a certain season. Consequently, you need more human resources for a certain period. In such a case, outsourcing is convenient. You don't have to hire full-time staff and pay them for nothing in dead seasons. 

By outsourcing specific functions to other organisations, you can save money on staff. Employees are hired from third world countries but offer the same level of qualification, and the other organisations are also responsible for their remuneration, benefits and training. This allows your company to focus its personnel costs on core employees. 

Outsourcing can also help you save money on equipment and technologies. It may be more cost-effective to contract with a third party instead of buying new equipment, moving or changing operations. 

Less time-consuming

One of the most common motivations for companies to outsource e-commerce work is that it would be done faster. If you have a small team, delegating smaller tasks to freelancers or external organisations that specialise in specific industries can help you get tasks done much faster and with quality.

Improve your service by reducing the time it takes for your product to reach the consumer. So you will be able to turn your ideas into products faster. 

Immediate access to professional staff

Your core team may excel in a few areas, but no one is good at everything. Companies can often significantly improve their performance by leveraging the niche skills of specialists in specific areas through outsourcing. You no longer need to spend money on expensive recruitment for your company. This can hinder your company's ability to achieve the greatest possible results. To ensure customer satisfaction and competitive results, outsourcing e-commerce companies effectively attract the best talent.

By outsourcing qualified specialists to perform key activities alongside internal staff, organisations can improve their operations and enhance the customer experience. It is more expensive to use outsourcing companies for e-commerce than to train and retrain internal staff. The additional costs are just one of the drawbacks of this approach. 

Disadvantages of outsourcing e-commerce activities

If the disadvantages of outsourcing are greater than the advantages, you should reconsider the outsourcing of certain processes. Remember that some operations or departments adapt much more easily to outsourcing than others. Therefore, what is negative in one respect may be an advantage in another. Despite the numerous advantages of outsourcing, you should not proceed with outsourcing until you have weighed these advantages against the possible disadvantages.

Lack of control

When you outsource an e-commerce business, you relinquish part of the control, even though you can give instructions on what should be done. You lose control over how activities are evaluated and executed when you outsource work to external companies or freelancers. This should not be a problem as long as you know and trust the people you have hired - but you should proceed with caution. There are several reasons for this, including the fact that you often hire a contractor rather than an employee. 

It is also difficult to maintain the level of control you desire because the worker is not working on site. If you decide to outsource, you must work closely with your supplier to find the right balance.

Conflict between in-house and outsourced staff

While it may not be a concern for everyone, outsourcing can deprive your staff or a skilled local business of critical work or training opportunities. Development leads to progress, and you may not be supporting your organisation's growth if you outsource work. 

If you outsource a task, you will not be able to build such talents in your employees. The only time this becomes a problem is if you want to bring the function back in-house at some point in the future. To avoid this risk, either hire external employees or assume that when the function is brought back in-house, internal employees will need additional external training.

If the company outsources one or two critical services or divisions, workers may retaliate. Outsourcing in e-commerce could send a signal to these employees that their jobs are at risk and they will be laid off as a result of the outsourcing company's decision. In conveying the outsourcing signal to the remaining staff, the leadership team must be careful. There is no such thing as too much information when it comes to major changes such as outsourcing departments or business services.

possible violation of privacy

In this day and age of data security, you need to handle customer data with care. You may jeopardise the privacy of individuals or the security of your company by a potential breach of privacy. If your earnings, medical records or other private information are used by the outsourcing company, there is a chance they could be compromised. To be on the safe side, include a protective clause in the contract or enter into a separate confidentiality agreement with the contracting authority. Make sure that the contract is strong enough to prevent deliberate misuse of critical company information. Or simply leave this work to internal staff to ensure that your data is safe. 

Outsource marketing with AdScale

Through streamlined management, automation and continuous optimisation using machine learning and predictive AI, AdScale's multi-platform ad management solution helps marketers save time and increase performance. 

It takes millions of optimisation actions per month to optimise one paid media budget across numerous campaigns, on multiple platforms, and to optimise keyword bids for efficient timings. Constant manual management is neither feasible nor optimal; machine learning is the only technology that can handle large amounts of data.

AdScale's Dynamic Budgeting AI uses complex prediction algorithms based on data and current trends to dynamically allocate your budgets across platforms and campaigns, ensuring that every dollar spent is maximised. Let your budget shift between Google Search, Display, Shopping, Facebook, YouTube, Instagram and other platforms. Optimising your account structure is critical to seeing continued benefit. 

AdScale's smart recommendations recommend improvements and make changes with a simple click. More than 20 types of actionable recommendations help you fine-tune your account structure by adjusting targeting, increasing keywords and negatives, improving quality scores, and more.

The ability to see an overview of all your advertising activities in a single dashboard is a clear advantage of multi-platform ad management. The AdScale dashboard is a powerful and highly customisable tool for analysing cross-platform statistics and uncovering new insights. 

Regardless of what business objectives you are considering outsourcing, the bottom line is that participating in this incredibly profitable activity will allow you to grow your business while also saving money. For companies and agencies looking to improve the performance of their digital advertising while eliminating the need for human management, AdScale is a must-have plugin.

FAQ

why do companies outsource?

Outsourcing an e-commerce business can be done for several reasons. The most popular are:

Operational costs must be reduced and controlled.

Improving the organisation's focus. 

Allow internal resources to be used for new purposes. 

Improve the efficiency of some time-consuming functions for which the organisation may be short of resources.

Is it useful or harmful for a country to have resources?

Outsourcing keeps local businesses profitable by reducing production costs, benefiting customers and stimulating the economy.

What is an outsourced worker

In this scenario, a company outsources certain business areas for a longer period of time to non-permanent employees handled by an outsourcing agency. The aim is for the outsourced employees to take on support tasks so that they can concentrate on their core talents and expand the business.

Is outsourcing beneficial for the employees? 

Companies report that, on average, they outsource 40% of their benefits functions.

What makes outsourcing e-commerce so controversial?  

One of the most common objections to outsourcing is the fear that jobs will be lost in the home country and then transferred to other countries. When labour does not require a high level of skill to create products, companies that outsource tend to hire less skilled workers.

who will benefit from outsourcing? 

According to an analysis by McKinsey, offshore outsourcing brings at least 2.3 benefits to the US economy, compared to 1.3 for low-wage countries that acquire jobs. The costs are lower for both companies and consumers in the United States.

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