E-commerce companies and platforms in South Africa experienced a rise in activity and profits triggered by Covid-19 lockdowns and social distancing restrictions in early 2020, while retailers and other businesses that had not previously developed an online presence found themselves scrambling to do so to survive.
By Tennille Bell, national GM: sales at Programmed Process Outsourcing (PPO)
Now, in 2022, expectations have shifted. South African consumers expect to be able to purchase everything and anything online and to have their order delivered to them quickly and conveniently.
Customer service has now become a key differentiator, but how does an e-commerce company balance their need to heighten efficiencies, curb costs and still continue to deliver an exceptional experience to remain competitive? The answers to the challenges experienced in the e-commerce space can be found in Business Process Outsourcing (BPO).
Playing catch up, quickly
From stock and supply management, to logistics and transport, customer service and customer experience, e-commerce brings with it such an extensive host of demands that requires a far greater headcount to achieve.
Executing the processes required to fulfill such online orders is a costly undertaking if staff are employed on a permanent basis. Achieving efficiency in the e-commerce space isn’t easy, particularly for businesses that have little prior experience. Along with the surge in demand from online shoppers, comes a surge in operational hurdles for companies looking to take their business online.
The biggest challenge? Scaling up quickly to meet an increase in demand which is difficult for businesses that lack the experience or resources to hire e-commerce-suitable employees. Even for those that could hire full-time employees often landed up with an additional labour cost, without achieving their desired productivity outcomes.
The reality of e-commerce: costly and challenging
Further challenges include unpredictable and seasonal demands, which cannot be handled by full-time employees alone. Not being able to fulfill orders, carry out deliveries quickly and timeously, or handle customer queries or returns accurately and efficiently is a massive problem. There are many moving parts between the moment that the customer clicks ‘add to cart’ and the moment the courier rings the doorbell for delivery. This means that there are many opportunities for inefficiency and mistakes, which will ultimately cost the business repeat customers.
Businesses require innovative ways to scale up their operations and scale down back-office expenses while taking their online presence to the next level. BPO services can do exactly this, by taking over time-consuming and/or labour-intensive tasks at a fraction of the cost of full-time resources.
Processes that can be outsourced can include a wide scope of tasks, from warehousing and logistics, to customer support, order processing and deliveries and even inbound call responses. By outsourcing important e-commerce functions, companies get access to highly specialised professionals with extensive e-commerce experience. Bringing in a third-party provider means that companies are relieved of training and new infrastructure costs, which frees up capital that can be channeled into business growth.
How does BPO work?
Instead of focusing on increasing headcount to achieve an increase in productivity, BPO focuses on eliminating as much inefficiency as possible. Through time-and-motion studies, the BPO provider identifies room for process improvement and enhancement, whether through technology or other smarter working processes. In outsourcing, when a company hands over a process to a BPO provider, the labour model moves from a fixed employment cost and risk, to a varied cost based on output, and the relationship is regulated by a Service Level Agreement (SLA).
The SLA will stipulate an acceptable rate of error for the BPO provider, but because the cost is based on output, productivity is guaranteed. Such a labour model allows for seasonal fluctuations, enabling flexible, rapid scaling to meet an increase in demand and then sizing back down once the rush has passed.
Outsourcing is a partnership
Bringing in a third party to service portions of the business doesn’t mean alienation from those business functions. Instead, the companies looking to outsource must partner with specialist BPO providers with a genuine focus on driving efficiencies.
The BPO providers essentially become an extension of the business, enabling all the moving parts of e-commerce more efficiently, making that “click-click, ding-dong” as effortless and seamless as possible for the end consumer. Such a BPO provider will need to have a proven track record and a national footprint, allowing other businesses to benefit from their specialty in the e-commerce space without having to take on the cost of developing that capacity in-house.