What is eCommerce Outsourcing?

eCommerce outsourcing is the practice of using third-party companies, products and services to create goods and provide services.

The term “outsourcing” typically refers to tasks usually performed by in-house staff. With an eCommerce business, these tasks can include things like writing product descriptions, handling support tickets, website development, technical support, marketing, and more – sometimes even handing the complete responsibility of eCommerce to a third party.

Many e-commerce businesses outsource to cut current costs or save on new resources they want to add to their workflows when they can’t afford or don’t wish to hire dedicated employees. Outsourced labour can be domestic or international with both practices sparking debates on the ethics of outsourced work.

Outsourcing vs Insourcing

While outsourcing is the practice of hiring third-party labour, “insourcing” is the term to use when referring to the practice of using in-house labour to perform tasks.

Let’s use an eCommerce business that only operates online as an example. The departments this type of company has typically included administration, web development, product management, inventory, shipping, marketing, sales and customer service.

If you break down one of these departments, let’s say administration, you’ll find a variety of different tasks it’s responsible for, from employee management and payroll responsibilities to accounting and human resources. Smaller stores may have the business owner and one other employee handle these tasks, but eventually, all businesses need to hire an individual or an entire department to handle each task.

This is when the owner of the eCommerce business must decide whether they want to outsource or insource the task. They can insource an accountant if this task has become too overwhelming for the business owner to handle themselves. While more expensive, in-house employees are much easier to keep track of, and there will never be a time where their services aren’t available save for illness.

However, it may make more sense to outsource this task in cases where the business doesn’t produce enough accounting data to justify hiring a full-time employee.

Outsourcing vs Offshoring

There are other practices businesses use to cut costs. It’s called “offshoring,” and it refers to the practice of moving a department or your entire business operations to another country. Many consumers and business owners alike often confuse it with outsourcing by automatically thinking companies who outsource only outsource jobs to other countries. In actuality, outsourcing and offshoring are entirely different business practices, though you can certainly combine the two.

Offshoring is often practised by businesses that sell their own products. The costs of manufacturing and everything related to it are quite high in many western countries, prompting many companies to move operations to countries like Mexico, China and Taiwan where labour costs are cheaper.

Businesses can utilize both practices by outsourcing certain tasks, including manufacturing and customer service, to third-party companies outside of their own countries. Both are done to cut costs, but combining the two is often far cheaper.