The Retailer SUMMER 16_v7

technology

The Dawn of Post-modern Retailing

Mark Thornton Marketing Director Maginus Software Solutions

WITH RETAILERS OUTSOURCING AN INCREASING NUMBER OF BUSINESS PROCESSES, MARK THORNTON, MARKETING DIRECTOR AT MAGINUS, LOOKS AT THE BENEFITS OF OUTSOURCING AND HOW RETAILERS CAN RETAIN A DEGREE OF CONTROL IN THE ERA OF POST-MODERN RETAILING. The days of retailers handling all critical business functions and processes from delivery, warehousing, and logistics, to returns and customer contact centres are coming to an end. The traditional notion of retailers handling all these processes is slowly but surely being phased out, as the sector enters a new ‘post-modern’ era in how it conducts its operations. In 2015, outsourcing in the retail sector increased by 45% year-on-year , with 60% of retailers citing delivering an improved customer service as the main driver for handing control of critical processes over to third parties. And the benefits of outsourcing processes don’t stop there; as Natalie Sehnal, Business Development Manager at Spark Response, a provider of customer contact and distribution service to the retail sector, recently explained. The Case for Outsourcing “When talking to customers, it’s clear that outsourcing offers them increased flexibility and scalability at a price point far below the investment required to handle processes themselves,” commented Natalie, “What’s more, they can instantly gain access to expert staff and specialist skills that would take a significant amount of time, resource and investment to accrue internally.” As a result of these benefits, retailers have realised that they are in a far stronger position to respond to changes in the market place, and more able to upscale to cope with peak trading times such as Black Friday and Christmas. Importantly, they can do so cost effectively, while realising a quick return on investment.

ECOMMERCE The obvious pro of outsourcing an eCommerce offering is the easy to use templates that third party marketplaces can offer, ensuring a retailer’s products become almost instantly available to the mass market. However, the flipside tends to be that by outsourcing to companies such as Amazon and eBay, retailers will lose any USP over competitors and have limited choice and control over how products are presented. CUSTOMER CONTACT CENTRE Customer contact centres require not only a large amount of office space, but also significant investments in both staff training and infrastructure. By outsourcing, retailers gain instant access to a well-trained expert team of staff, while also gaining the flexibility to upscale for peak trading periods. However, the drawback is that it removes a direct touch point with the customer, creating the potential for a disconnect opening up between the brand and the customer. WAREHOUSING A warehouse capable of handling a retailer’s entire product range is not cheap, so outsourcing removes the need for upfront investment in facilities, while also providing the scalability to increase or reduce space as and when it is needed. The downside, however, is that the retailer is placing a high level of trust to fulfil orders in a third party provider. DELIVERY The main appeal of outsourcing delivery to an external supplier is that it removes the complex problem of meeting same day and next day delivery promises, leaving it to the experts to fulfil. However, retailers are literally putting their brand and reputation in the hands of the service agent knocking on the door. Connecting the Outsourced Dots Despite the obvious benefits of outsourcing these processes, the retail sector has two core reservations about handing over the critical functions to other providers. First, it becomes a major challenge to pull together all the information they require from the disparate providers, and secondly there is the fear that they will lose all control over the critical data that handling these processes generates. The obvious answer is to utilise cloud solutions to pull together all outsourced functions onto a unified platform and ensure they retain control. This model enables retailers to realise the benefits of business applications, while also enabling suppliers to access only the applications that are relevant to the functions that they deliver.

“Outsourcing offers retailers increased flexibility and scalability

at a price point far below the investment required to handle processes themselves”

Assessing Your Outsourcing Options So, which business processes do retailers stand the most to gain from outsourcing and what are the potential drawbacks of doing so? Let’s take a look at some of the pros and cons of outsourcing key processes.

20 | summer 2016 |

retailer