Read Time: 10 minutes
Table of Contents
Introduction
When it comes to retail outsourcing, people will probably most often think of contact centers. While contact centers are a large portion of the equation, retail outsourcing also includes a wide array of processes that can be offloaded to third parties, from customer experience and supply chain integration, all the way to highly technical tasks like processing data in real time.
Retail is a demanding industry, and it requires a lot of attention to the unique, value-producing goods and services that your company works hard to cultivate. For that reason, retail organizations are particularly well-suited to outsourcing their non-core functions, allowing a strategic advantage that accelerates growth and widens margins.
Today, we’re taking a look at how retail outsourcing can boost efficiency and open the door to a more easily scalable enterprise. Let’s get started.
Key takeaways
- More focus: Retail outsourcing gives companies the advantage of more time, money, and people to put towards their core competencies while their specialist outsourcing partner handles the less central tasks with greater expertise and lower costs.
- Areas to outsource: Three of the most common functions for retail companies to outsource are omnichannel customer service, logistics and fulfillment, and back-office/data management functions.
- Retail BPO selection criteria: The best BPO partner choice should be based on criteria such as technical compatibility, security certifications (like PCI DSS and SOC 2 Type II), and demonstrable transparency of important KPIs like AHT, CSAT, and CPA.
What is retail outsourcing, and how does it drive enterprise growth?
Retail outsourcing is the delegation of a retail company’s non-core functions to another business that specializes in those functions, whether they be customer service, back-office tasks, logistics, or other areas. SMB retail companies in particular can benefit greatly from the flexibility, scalability, and competitive advantages of retail outsourcing.
Driving retail outsourcing operational efficiency through specialization
The key to an enduring retail enterprise isn’t to attempt becoming a one-stop shop that handles every aspect of the business in-house. The real strategy is to understand what makes your company special and double down on it, contracting out your non-core functions to specialists who can leverage economies of scale. That allows you to invest more time and resources into what you do well, while accomplishing the other stuff with more expertise but without the added overhead cost of building and managing the infrastructure for it.
Reducing capital expenditure (CAPEX) in retail operations
Capital expenditure (CAPEX) describes the funds that a company uses to buy, upgrade, or maintain physical assets, including things like real estate, equipment, vehicles, and more. CAPEX can be a major expense for retail companies, especially those with brick-and-mortar locations.
On top of the expenses of physical locations, retailers who do everything in-house are adding to their ongoing CAPEX by also giving themselves the obligation to maintain the premises and equipment necessary to accomplish easily outsourced tasks.
A reliable BPO partner can take on the CAPEX for the specialized tools, infrastructure, and maintenance required for the services they provide. Since your specialties likely lie elsewhere, it doesn’t make as much sense to spend so much of your capital on things that fall outside of it, especially when they are costly.
A BPO provider, on the other hand, does specialize in the services they provide, meaning that not only can they put those expenses to more effective use, but they can also spread out those expenses over the various customers they serve with them, in contrast to in-house teams that bear the full brunt of such expenses.
Retail Use Case
We partnered with a client in the retail industry in 2013 and designed a retention project to strengthen their relationship with our customer experience management team – resulting in a better omnichannel experience for their customers.
See how a retail partner lowered attrition rates by 3% and shrinkage by 6%
Key functions to outsource in the retail industry
The retail industry has a wide range of moving parts, and not every function needs to be handled in-house to be handled well. Some of the most critical retail operations, from customer-facing support to back-end data management, are often better served by specialized outsourcing BPO partners who can deliver greater efficiency, scalability, and cost savings.
Here’s a look at the key areas where retail outsourcing tends to have the biggest impact.
Customer service and omnichannel support
The modern gold standard for customer service is omnichannel customer communication. Not only is it convenient for customers to have more choice in the channel they use to seek support (telephone, email, SMS, social media, self-service options, etc.), but it’s also an incredible time and effort saver for customers to have the freedom to switch channels mid-conversation, all without the need to repeat themselves.
Integrating an omnichannel customer support system can be a time, money, and labor-intensive endeavor, so it’s a great area to consider retail outsourcing.
Logistics and fulfillment outsourcing
Logistics and fulfillment are essential aspects of any brand that sells physical products, but between warehousing, managing orders and carriers, and coordinating the last-mile delivery, these are incredibly complex and costly tasks to take on in-house. There’s a reason that logistics is a multi-trillion-dollar industry worldwide.
By outsourcing logistics and fulfillment to a third-party, retail companies can more easily scale their operations without breaking their budgets.
Back-office and data management
Important retail functions like inventory tracking, processing invoices, and maintaining SKU catalogues take a lot of resources and focus outside of core competencies, which makes them yet another excellent candidate for retail outsourcing. BPO partners with strong data management are able to provide a marked improvement over doing so in-house, usually providing faster processing speed, greater accuracy, and a lower cost-per-transaction
By outsourcing logistics and fulfillment to a third-party, retail companies can more easily scale their operations without breaking their budgets.
Implementation framework for medium to large businesses
Optimized retail outsourcing delivers the most value when it’s:
- Approached strategically
- With the right partner
- Clear standards
- And a solid plan for integration
For medium to large businesses, the stakes are higher with more systems to connect, more customer touchpoints to protect, and more brand equity on the line. What should you look for in a retail outsourcing partner and how do you navigate the most common obstacles that stand between you and a successful CX partnership?
Selecting a retail outsourcing partner
Choosing the right retail outsourcing partner is a big decision, because the choice can impact your brand for better or worse; the best partners becoming a strategic advantage, and the wrong ones opening you up to greater risks and expenses.
A top priority in the selection process is technical compatibility. Determine whether or not a potential outsourcing partner’s systems are able to play nicely with your existing platforms, such as your ERP, CRM, WFH, and others. If they can’t integrate cleanly, that can be a red flag.
Additionally, it’s also important to consider a partner’s security measures. A retail business handles a lot of sensitive data, including electronic payments and customer PII. Because of this, it’s crucial for a retail outsourcing partner to show proof of their PCI DSS and SOC 2 Type II certifications, as well as compliance with any other relevant regulations and quality standards.
Overcoming common barriers in retail BPO
Quality control and brand alignment are two of the most frequently expressed concerns that companies voice about retail outsourcing, and luckily, both problems have simple solutions.
For quality control, it’s essential to nail down the specifics within your service level agreement (SLA). The SLA should make clear the appropriate metrics and standards of quality that the partner will be held to, such as acceptable CSAT scores, AHT, FCR, and so on.
To achieve brand alignment, it’s important to provide clear onboarding to your brand voice, offering documentation of your brand voice and style, and any product training or scenario-based coaching you have access to. Then, along with your collaboration, a good outsourcing partner can train new agents on your brand standards, building a brand-aligned team from the ground up.
Want to scale your business?
Global Response has a long track record of success in outsourcing customer service and call center operations. See what our team can do for you!
Quantifying the impact of outsourcing retail operations
To measure the performance and financial value of a BPO provider, the correct KPI framework is needed, and that begins with the metrics you use. Three of the most important KPIs to pay attention to in retail outsourcing include:
- Average handle time (AHT) shows the efficiency of customer interactions, measuring the average amount of time that it takes for individual customer interactions to be solved.
- Customer satisfaction score (CSAT) gives a strong indicator of the current customer experience, directly showing the percentage of customers who would rate their satisfaction level at or above 4 out of 5.
- Cost per acquisition (CPA) describes the average cost of each conversion, whether that be a purchase, a click, or something else. CPA divides the total expenses used to create conversions by the total number of conversions.
A quality BPO partner should be transparent about these and other KPIs, providing you with real-time dashboards and regular top-level reviews. This allows you to understand the current state of things, as well as giving you more agency and control when course corrections are necessary.
More bang for your buck than in-house retail outsourcing teams
Business process outsourcing, when done right, can be a major strategic advantage for retail companies, allowing for greater flexibility and scalability, more time and funds available for core competencies, and access to the latest advanced tools, all at a lower cost than doing the same tasks in-house.
If you’re searching for retail outsourcing, Global Response has the technology, infrastructure, and people you need to grow your business. Learn more about what retail outsourcing can do for your brand today!
