This was selected as Best Answer

Obviously depends massively on your margins and the returns/call propensity of your goods. For very high margin/premium goods like top-end clothing (assuming you can get your returns rate under control!) and the like, you can probably go with moderate volumes. Since I see you do mobile accessories, which I suspect are also on decent margins, with very low warehouse space requirements, and probably quite low returns/issues rates, then you could certainly at least talk to a few players without looking completely silly.

You also need to consider exactly what parts of your total eCommerce ops you want to outsource. Someone like Venda, for example, could plausibly do the front-end pure eComm presence, but forward on the resulting orders to a fulfilment partner (the best I saw for clothing in the UK was a company called Clipper) who manage warehouse/fulfilment centre for you.

Per transaction deals are certainly feasible for the front-end (i.e. "sales") side of your operation, and probably per-call fees for after-sales/call-centre/email response centre. Back-end per-transaction fees might depend on a capital down payment to cover w/housing costs and/or a fairly hefty minimum charge. If you already have an existing operation, dedicated or shared user, you're almost certainly better off hanging on to it and getting the front-end done by a Venda or similar.

Can medium-sized businesses afford the costs? Totally down to how much margin hit you are prepared to take. However, players like Venda aren't just interested in the Tescos (just seen your company is based in France: Carrefour then!) of this world - they'll certainly work with moderate sized high street retailers. (I have a feeling, although not sure that e.g. River Island in the UK use a service like this, and they are by no means a massive player).

The other key factor is the extent to which you want them to Parrot-ise their offer. If you want their call centre to use processes specific to your company, which aren't just lifted from their standard ones with the word "Parrot" substituted into standard scripts, they'll charge a lot more.

Long answer. Summary: if you are high margin business, possibly. If you are a niche player dependent on given an extra quality of service over and above the competition, keep it in-house.

Big caveat: making sure you can compare costs like-for-like with any existing operation can be something of a challenge. Your existing operation may well have lots of "hidden" extras in it that you'd have to pay extra if you outsource e.g. who does your annual stock audit? Is it your internal finance team? Are you going to persuade them to reduce headcount because this is now being done by outsourcer?

Regards, Chris

posted 9 months ago

Chris's response here is simply excellent, Nicolas. I do not have much to add except to consider that large sized companies and strong brands are all able to ride out any drop in customer service during contract or service transition, where medium size companies may suffer more seriously from the same.

Often handing over this part of your business may result in service levels not necessarily dropping, but just changing from what it was before, and that having an effect on your company's public profile and ultimately your turnover. PPD centers and call centers within these outsourced deals are most often to blame for any poor or late delivery or service, and one needs to have an experienced partnership or relationship manager in place to strong-arm these outsourced processes into proper shape. Manage the transition well, and the benefits to outsource will be real and potentially profitable.

posted 9 months ago