Ecommerce outsourcing: what it is, how it works, and its advantages

Have you heard about ecommerce outsourcing? In simple terms, it involves entrusting the management of your e-commerce to external professionals who transform it into an efficient platform for online sales.

In this article, I will explain when to outsource the management of your online business and the advantages of adopting this approach. However, if you prefer to handle your online business independently, I recommend exploring Digital Coach’s e-commerce courses. These courses equip you with the necessary skills to develop your project from its initial phase to the official launch of your online venture.

It’s worth noting that online sales have seen remarkable growth in recent years, largely driven by the pandemic’s influence, which has significantly accelerated e-commerce. Today, many entrepreneurs choose to digitize their business by creating e-commerce stores—virtual shops that leverage the advantages offered by the web.

Regrettably, in most cases, digital entrepreneurs who attempt to manage everything without specific skills often end up closing their web-based businesses within a year due to mismanagement and errors. This is why I’m introducing you to an exceptionally effective method for managing your online business—one that greatly reduces your efforts while increasing your chances of success: ecommerce outsourcing.

Understanding Ecommerce Outsourcing

Ecommerce outsourcing essentially entails “externalizing” the services of your online store.

Managing an ecommerce is far from simple, particularly as the online business starts to expand. Numerous crucial aspects of digital marketing determine the fate of your online business, including:

  • to the offered service
  • to customer support
  • to warehouse management
  • to logistics
  • to review monitoring
  • to return management, and much more.

There you have it! By utilizing outsourcing management, you can delegate these aspects of marketing to external professionals. This approach gives you more time to focus on other matters while professionals ensure an impeccable service, maintaining your brand’s relationship with customers.

When to outsource management of your ecommerce?

Initially, managing your virtual store on your own might seem easy, but I assure you it’s not. Soon enough, you’ll realize that handling your online business demands more energy and time than you had anticipated for proper care and maintenance.

ecommerce outsourcing disadvantages

An excessive workload inevitably leads to poor results, with a significant decline in engagement from your buyer personas.

This is the point where questions start arising, and now that you’re aware of this option, your first question is likely to be: “Should I take advantage of ecommerce outsourcing?”. Most likely, your answer to that question will be “yes,” but to provide you with a clearer understanding of when to outsource the management of your virtual business, let me explain the main issues that will lead you to make this decision.

Your ecommerce struggles to take off

You’ve established your e-commerce, invested money in the platform, marketing plan, advertising, and various graphics. However, despite all these efforts, your sales are meager or even completely stagnant.

You could exhaust yourself by working hard to identify issues in your project, losing more time and money in futile attempts without achieving the desired results. Alternatively, you can opt for the simpler path with guaranteed outcomes that will make your life much easier: resorting to ecommerce outsourcing management for your business.

The digital marketing experts to whom you entrust the management of your business have ample experience in marketing and are sure to resolve your virtual store’s problems, quickly boosting your business’s sales and profits.

 

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Your business is growing rapidly

Your online business is experiencing rapid growth, and you realize that you lack adequate resources to manage this unexpected expansion.

Your business’s growth demands considerable commitment and, especially, high-level digital marketing skills that increase as your online business develops. That’s why the best solution is ecommerce outsourcing—entrusting the management of your online business to professionals will help you address these challenges, transforming your small virtual store into an established e-commerce reality.

You need more efficient customer support

Customer support, or more appropriately termed “customer care” in digital marketing, is one of the most critical aspects, especially when dealing with new business ventures.

customer service outsourcing

It may seem easy to provide your customers with optimal service, but as the number of buyers increases, the game becomes much more challenging. You must always be available for direct contact if you want to build customer loyalty towards your brand. In this case as well, ecommerce outsourcing can be the right choice for you.

Your customers will receive the attention they deserve and will be guided throughout the decision-making and purchasing journey, strictly following each stage of the marketing funnel. Moreover, the assigned professionals will always be ready to address any customer doubts promptly and professionally, answering their questions. Consumers will love your products and remember the pleasant experience you provided.

Here are some of the main objectives your eCommerce will achieve after offering excellent customer care:

  • Positive reviews
  • Increased brand engagement through word of mouth
  • Retention of customers who have already made purchases
  • Reduction of issues such as returns and refunds.

Expanding without hiring employees

Hiring new employees with high-level digital marketing skills for your business requires an investment your company might not afford. However, you lack qualified staff to commit to your online project and help it take off. With ecommerce outsourcing, you won’t have to worry about new hires, nor about training courses to qualify yourself or your employees.

By outsourcing your services to specialized digital marketing agencies, professionals will handle all the work for you, optimizing sales and marketing at a more cost-effective rate than hiring new staff. You’ll see that thanks to ecommerce outsourcing, your company will achieve significant expansion.

Benefits of Ecommerce Outsourcing

By now, you’ve understood that outsourcing is the most suitable alternative to traditional internal management of your ecommerce for effective web positioning.

In digital marketing, for excellent results, your virtual store must be perfect in all aspects. There’s no room for errors, and even the slightest distraction during design could cost you dearly.
Now, after discussing “when” to resort to ecommerce outsourcing, let’s focus on the main benefits that this management approach will bring to you and your company.

Cost reduction

Using the ecommerce outsourcing approach, you can achieve maximum efficiency while minimizing expenses. Entrust the management of your business to marketing agencies that will handle all the work for you. No budget wasted on poorly structured sponsorships and ads, no extra salaries due to new hires, and no investment without a guaranteed economic return.

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Time optimization

With ecommerce outsourcing, you have fewer aspects to manage directly, allowing you to focus your time on other key areas of your business, such as the physical store (if you have one) or personnel management. Additionally, you’ll have more free time for yourself, your hobbies, and your family. Don’t neglect your personal life too much!

No staff reorganization

Creating, developing, and managing a successful eCommerce in online marketing requires skills and prior experience in the field. If you don’t want to outsource your services, you’ll be forced to hire digital marketing specialists to ensure success for your business, but of course, the cost will be quite high. Among the key professional roles I’m referring to are:

ecommerce outsourcing for companies

  • Web Project Manager, who designs the site from the initial phase considering time, risks, and costs to achieve the set objectives.
  • Ecommerce Manager, responsible for the marketing plan and digital strategy, and establishes the goals to achieve.
  • Operation Manager, handles all aspects of logistics such as shipping, order management, and customer service.
  • Category Manager, analyzes the market, sets product prices, and organizes the catalog.

These are just some of the professional roles you’ll need for your business. You’ll easily understand that using ecommerce outsourcing, you won’t need to hire these digital marketing professionals, so besides the effort required for a complete staff reorganization, you can also save a lot of money due to new hires.

Less bureaucracy

The bureaucratic part of opening a business online requires careful attention and nothing can be left to chance. There are many laws to comply with, and often bureaucratic procedures force you to waste a lot of time. In this case too, you can outsource the service of your online store. Thanks to ecommerce outsourcing, you can leave this challenging task to an e-commerce expert who will handle everything as quickly as possible, ensuring an online business in compliance with local laws and regulations.

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Ecommerce Outsourcing: a successful story

As known, the sector of Ecommerce Outsourcing is growing at a rapid pace, thanks in part to the contractual model of dropshipping. According to this model, the E-commerce company outsources the management of the warehouse and shipment of products it advertises and sells through its website.

In this interview, I asked Antonio Lembo, CEO of terashop.com, to reveal the key to success and help us better understand the phenomenon of Ecommerce Outsourcing.

 

stefania panzeri interviewerAntonio, to start, would you like to tell us something about yourself and Terashop?

antonio lembo intervieweeWe have been involved in Ecommerce since 1999, so we were born in an era when we were the only ones doing Ecommerce, with our brand Mister Price, there was Mediaworld, and at that time, CHL, Casa Rossi. There were very few entities working online. Over the years, we continued to invest heavily. We have investment funds within the company. We grew. We reached a turnover of 50 million euros, which in 2005-2006 was quite significant in the Ecommerce field. The volumes were smaller compared to today’s.

The company grew. We had 100 employees. We acquired a series of brands. We acquired the ePlaza brand, we acquired Bow, and we actively experimented with the in-store delivery model, known as pick up in store. Bow had a network of 200 stores where customers could pick up the product, touch it, and pay directly in the store—a kind of Italian Ecommerce mode that was particularly successful. We had our flash sales site called Ovo, which generated decent turnover volumes in competition with what were then Saldi Privati and Privalia.

Our story continued successfully until ePRICE acquired all our sites. At that point, we continued with Ecommerce outsourcing. So, we help large companies, especially in the distribution sector, approach the Internet world. On their behalf, we manage the entire E-commerce chain, from building and managing the website to handling marketing, order management, customer care, call center, logistics, shipping, returns, and the entire Ecommerce cycle. We provide Ecommerce outsourcing for major and important distribution companies like Expert, Auchan, Brico, and Io (part of the Coop Lombardia group), Grancasa.

stefania panzeri interviewerYou were the first to implement the dropshipping model. Can you tell us how it went?

antonio lembo intervieweeWe started shipping directly from our suppliers in the early 2000s. It almost started as a joke. At that time, we didn’t know it was called dropshipping. I was having lunch with the then CEO of Ingram Micro (one of the main consumer electronics distributors). We found it absurd that Ingram Micro had to send loads of goods to our logistics center every day, only to have it shipped back to the end customer. Ingram Micro had a highly advanced logistics system. Consumer electronics and particularly IT distributors have always been among the most advanced in terms of logistics. So, in this sense, we could leverage their experience, which was certainly superior to ours at the time.

From there, we decided to start implementing a series of integration specifications so that we could have orders managed and shipped directly from Ingram Micro to the end customer. This reduced management costs and shipping times. The couriers were not even prepared for this type of management, so we had to sit down with TNT, and we were the first in Italy to define the dropshipping specifications, which then spread to some extent in the market and became a reality for many other companies.

Today, we continue to use the dropshipping model extensively: we ship from 50-60 direct warehouses of our clients using all possible methods. It’s a model that we have sophisticated over time. Shipping can be done directly from our supplier’s warehouse to the end customer, or we can have it pass through a logistics center where the customer has purchased a product that is ordered from multiple suppliers. The product is consolidated in our logistics and then shipped to the end customer in a single shipment. All of this is handled extremely quickly (only one day is lost for merchandise preparation).

It’s also becoming increasingly common, especially since we also support international distribution companies, to engage in international dropshipping. For example, we ship from our warehouses, from our logistics center in New Jersey, to serve America or Canada (this is because in the clothing sector, we ship worldwide and conduct global sales).

stefania panzeri interviewerYour case has been a success story. What were the factors that most contributed to your success?

antonio lembo intervieweeTalking about the current reality, and especially about the reality of Ecommerce outsourcing we particularly focused on omnichannel before others. We tried to “educate” our customers about the concept of omnichannel (which was by no means obvious!). So, already 5 or 6 years ago, we offered a series of solutions to allow customers to buy online and pick up in-store, leveraging our experience with Bow, enabling customers to buy a variety of products through our kiosk solutions that might not have been available in the physical store at that moment.

Furthermore, we developed and refined this concept even further. Today, we have the ability to manage omnichannel loyalty card systems through which we create loyalty cards that automatically register customers on the website. The card can be physical or virtual, and at any time, thanks to the card itself, the customer is recognized whether they are on the website or in the store. This allows them to access their order history, past purchases, and products recommended based on their overall buying habits. This is essentially our model.

We are continuously refining this model. We are now implementing various activities in physical stores so that customers, using NFC tags or other methods, can scan products and instantly view product details in the store. Based on this system, the customer can add products to their wish list from their profile on the website while in the store. This means that while they are shopping, they can simply touch their phone to the products they are interested in, and those items will be added to their wish list. Then, they can conveniently purchase them later from home.

stefania panzeri interviewerWhat prospects do you see for the future in this sector?

antonio lembo intervieweeE-commerce is a sector that is growing like never before. Just over ten minutes ago, I was speaking with Bartolini, who is reporting triple the volumes this Christmas compared to two years ago. This means that the market is expanding incredibly, and more and more people are getting used to buying online. That’s the positive side. On the other hand, there is certainly a significant concentration effect, with a few pure-play entities that are definitely cannibalizing the market. Amazon and ePRICE, for example, are achieving double or triple the volumes of other e-commerce sites. This is where traditional distribution entities come into play—they entered the market later and need to find their space and positioning. Therefore, in my opinion, having the right omnichannel policies is important because large-scale distribution must learn to manage and retain customers who still shop in physical stores. They must ensure that when these customers shop online, they do so within the Auchan website, and the Expert website (two of our clients), rather than buying from Amazon or other e-commerce sites, which is the natural tendency now. So, it’s definitely a market that is becoming more concentrated.

Another major characteristic of the e-commerce market is that it’s a market where everyone is still investing heavily. There are no official Amazon figures, but certainly, Amazon’s financial statement in Italy is not yet positive (looking at ePRICE’s financial report, which is a publicly traded company, there are still losses on the balance sheet). So today, e-commerce is still more of a financial operation than an industrial one. The companies that are particularly valued and are considered successful are more valued for their stock market growth than for the actual profits they generate. We will see in the future whether this will continue or if they will become industrial companies.

Conclusions and personalized free consultation

As you may have understood, managing your virtual store independently is not at all simple. For this reason, if you are facing difficulties or find yourself in one of the situations listed above, I strongly recommend considering outsourcing your ecommerce management.

Furthermore, if you wish to delve deeper into this topic or need advice for managing and/or developing your online business from scratch, you can request your personalized free consultation. An industry specialist will address all your questions, difficulties, doubts, and concerns.

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Stefania Panzeri FIRST DRAFT AND VIDEO INTERVIEW BY STEFANIA PANZERI

I specialize in research in the fields of Transportation, Navigation, and Tourism. Passionate about writing and communication, I am delving into Web Content Writing and Digital Marketing.

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