The Benefits and Disadvantages of Outsourcing E-commerce Customer Service

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Written by Rene Mallari

Contents

 

 

If customers are the lifeblood of an e-commerce business, then customer service is the heartbeat that keeps that vital liquid flowing. 

Providing excellent customer experience is a complex endeavor. A thriving online retailer is typically swamped with many important tasks, such as product or service enhancement, inventory management, delivery handling, and web store improvement.

Lack of time is often one reason an e-commerce company farms out its non-core functions. But customer service outsourcing has pros and cons like any other venture. Is outsourcing customer service worth the risk? 

Let’s find out. 

 

What Does It Mean To Outsource E-commerce Customer Service? 

Outsource E-commerce Customer Service Concept

Looking after customers’ needs is critical for an e-commerce enterprise to survive and thrive. Complaints, inquiries, requests, and customer issues are facts of life in business and must be met and addressed to ensure customers’ return and develop brand loyalty.

Outsourcing e-commerce customer service involves an online retailer or wholesaler recruiting an external service provider to perform certain customer-related functions. These include assisting and advising customers before and after buying the company’s product or service. 

Specifically, the third-party vendor deals with customer issues, concerns, inquiries, orders, and other matters related to the product or service. It enables direct interaction between customers and company representatives to ensure their satisfaction and drive repeat sales.

A business process outsourcing (BPO) company assists with e-commerce customer service. They provide call center services and keep customer service representatives or agents trained to handle inbound calls. 

Outsourcing customer service helps Businesses operate more efficiently. It helps companies stand out from a sea of players in the highly competitive e-commerce industry. In an environment where countless similar products and services are available online, delivering an excellent customer experience differentiates good enough companies from great ones. 

 

Global E-commerce Growth Fuels Customer Service Outsourcing 

Shopify, a Canadian-based multi-channel commerce platform for small and medium-sized enterprises, reports that the global e-commerce market could reach $11 trillion by 2025.  

The study notes that the global health crisis, worldwide digitization, technological advancements, and online marketplace expansions are the main contributors to the e-commerce boom. 

It adds that consumers continue swarming e-commerce platforms to buy products and services. Up to 24 million online stores are estimated to be operating worldwide, and that number keeps climbing as demand surges. 

The report adds that the continued rise in e-commerce activities indicates that more brands are battling for customers. In this battle, acquisition costs, including digital marketing and advertising, have become more expensive. This requires e-commerce companies to strengthen their long-term relationships with their existing customer base. 

 

What Are the Types of E-commerce Customer Service?

Customer service concept, people contacting support via different channels.

Outsourcing customer service is an effective way to foster an e-commerce company’s image and brand over the long haul. This practice offers several types of activities, including the following:

  • Phone customer service 

BPOs have call center services that can receive or send a high volume of inquiries by standard phones. They are either involved in inbound or outbound call services or both. 

An inbound call center manages incoming calls from customers with questions, issues, feedback, or concerns about the product or service. An outbound operator engages in transmitting information to a target market for telemarketing, market research, and debt collection. 

  • Email customer service 

This communication channel uses electronic mail to address customer issues associated with a product or service. It is a low-cost and accessible web-based form of assistance.

Email customer service does not make customers wait, nor does it put them on hold as sometimes happens during phone conversations. There is no need for the customer service agent and the customer to be online simultaneously or on the same phone line. 

  • Mobile customer service

This type of customer service is for customers accustomed to using their smartphones for various tasks. Call centers can provide customer service assistance over mobile phones. 

Consumers, particularly millennials (born between 1981 and 1996), who are the largest users of mobile services, can receive short message services or text to answer questions or resolve issues before making online transactions.  

  • Live chat customer service. 

Live chats are carried out over a website interface. It enables customers to immediately contact an e-commerce company in a manner similar to a telephone call. The difference is that the communication takes place through a website or a mobile application. 

Every time a customer browses or checks the e-commerce site, a live chat window appears. The app typically asks the visitor to describe what assistance is needed and is activated when the person replies to the inquiry. 

  • Social media customer service 

This communication channel mainly caters to Generation Z (born from 1995 to 2010), which is accustomed to the internet, mobile phones, and social media. It offers customer service and interaction through popular social networks, including Twitter, Instagram, LinkedIn, and Facebook.

Customers can post comments, send questions, and bring their concerns or complaints to an online company through their social media accounts. Consumers can determine a brand’s image using this channel. 

 

Why E-commerce Companies Need Human-led Customer Service 

Human-led Customer Service

Progress in communication and information technologies has made it possible for many organizations to automate nearly all their processes, including customer service. 

Many web-based and brick-and-mortar companies have deployed phone and online platforms that can answer customer questions and offer solutions to consumer problems without human assistance. 

Automation can enhance the customer experience to a certain extent. But all customer service issues can only be resolved by human interaction. Established e-commerce companies see the high value of customer interaction with human agents. Human-led customer service gives them a competitive edge. 

Large e-businesses such as eBay, Alibaba, Mercado Libre, Shopify, Walmart, and Amazon maintain their internal and outsourced contact center services that customers can reach through phone, email, and live chat.  

 

Reasons Outsourcing Human-based Customer Service Is Better

Chatbots, artificial intelligence (AI)-driven communication, and automation software are gaining popularity. Outsourcing development services are also on the rise. Despite their growth, human-based customer service is still king. Below are five reasons why:

  1. Excellent and memorable customer experience can only be achieved by call center representatives interacting with customers. Chatbots and other AI-based communication technologies are best assigned as support. 
  2. Automation decreases human work and provides consistency. However, most customers still prefer to talk to a customer service agent when there are complicated issues about a product or service. 
  3. Nothing beats the human touch in customer service. Agents and specialists know how to offer callers sympathy, flexibility, and respect. Technology is reliable and productive but lacks the qualities that can improve customer experience. 
  4. Chatbots and AIs are incapable of reaching the knowledge level of call center agents. Technology-based intelligence can be programmed, designed, and trained to perform specific tasks. But humans can only acquire holistic knowledge about the customers – their behavior, mood, and attitude – their behavior. 
  5. The infrastructure required to automate customer service processes is expensive. Chatbots and AI are new technologies that require significant investment to develop, test, and implement. Replacing existing systems, hardware, and other equipment to make way for a new platform that has yet to be proven effective long-term is costly and time-consuming, as well as risky.
 

What Makes Good Customer Service? 

What Makes Good Customer Service

Good customer service ensures that the most effective procedures are put in place to deliver an excellent e-commerce customer experience. Here are the six best practices:

  1. Customer issues are always addressed in a timely manner. They are not put on hold for long in a phone conversation or made to wait for a while during a live chat or social media interaction. 
  2. The customer service team adopts a proactive stance. After customers purchase a product or service, team members contact them by phone, email, chat, or other channels to get feedback or ask about issues. 
  3. Customer service is seen as human service. Online customers are treated the way they want to be – as humans, not ticket numbers. Calling them by their first names, knowing their birthdays or hobbies, and making small talk, will all go a long way to cultivating customer loyalty and satisfaction. 
  4. A customer calls to raise an issue, and the receiving call center agent transfers the person to another department for resolution. The original agent reaches out to the customer afterward to find out if the concern is resolved. 
  5. Customer service representatives are active listeners. They pay attention to every detail of what the customers say. Agents listen carefully to their sentiments, feedback, or opinions before speaking to understand them better. 
  6. If possible, the customer is cared for by only one representative throughout the process. The agent takes the customer’s problem, explains it if necessary, and addresses the issue. 
 

How Does Outsourcing Solve Customer Service Issues in E-commerce? 

E-commerce companies encounter many customer service issues. Below are some, along with a description of how outsourcing can solve them.

Issue #1: In-person interaction between online businesses and customers is limited, and so is their trust. Higher customer confidence in the company’s brand is required for repeat business. 

How outsourcing solves this:

A BPO can provide the e-retailer with call center services (phone and live chat operations) to handle customer concerns before and after purchasing online.  

Issue #2: The e-commerce firm’s internal customer service team lacks omnichannel customer experience. Buyers cannot communicate with the business at any time or point in their buying journey. 

How outsourcing solves this:

A BPO offers omnichannel customer service, allowing customers to contact them whenever and wherever they want. These services are phone, webchat, email, social media, chatbots, live chats, and forums. 

Issue #3: Keeping customer loyalty is difficult because customers can choose from numerous similar products and services. They can quickly switch from one brand to another, especially if customer service is below par. 

How outsourcing solves this:

A BPO can supply an e-commerce establishment with a dedicated team that can build, boost, and maintains customer loyalty. 

Issue #4: Customer problems with checkouts, tracking orders, stocks, and other related processes. 

How outsourcing solves this:

A BPO is equipped with the latest technology, such as order management software, to manage and monitor transactions between e-retailers and customers at every touchpoint. 

 

When Is the Right Time To Outsource E-commerce Customer Service? 

What Right Time To Outsource E-commerce Customer ServiceGood Customer Service

Here are signs, situations, and scenarios that will indicate it is time for an e-commerce enterprise to outsource customer service. 

  • The holidays are approaching  

E-commerce customer traffic typically shoots up during holiday seasons, such as Christmas, Black Friday, and Thanksgiving. High traffic volume means more customers whose questions and issues need addressing. 

  • Overseas expansion is in the offing

Outsourcing customer service is best when an e-commerce company plans to put up its new branch in a foreign country. It will require agents who can interact with customers using their first language. 

  • Multiple communication channels are flooded with customer requests

If an e-commerce firm starts to struggle to meet the customers’ requirements across its omnichannel platforms, outsourcing customer service is an effective solution. BPOs have an ample supply of trained agents to handle such a situation. 

  • Core competency is the main priority

E-commerce operations are complex. Spending a great deal of time and resources is needed to focus on business growth. Outsourcing customer service is a practical approach to delegating non-core functions and time-consuming tasks. 

  • Competitive advantage is among the goals

Competition in the e-commerce industry is intense. Outsourcing customer service will enhance an online firm’s competitive edge since a BPO can help improve customer satisfaction with products and services. 

A third-party vendor can provide customer services that elevate the customer experience. These services include round-the-clock shopping, shipping, refunds, and returns assistance. 

 

Outsourcing Customer Service: Pros  

Outsourcing Customer Service_ Pros

Outsourcing customer service can be a road to new opportunities for e-commerce businesses of all types and sizes. Below are five advantages of delegating such a function to a BPO.

  1. External service providers offer a skilled and low-cost customer service workforce. Many BPOs are located or have operations in nations that have a large English-speaking and educated populace. E-commerce companies can thus save overhead or indirect expenses. 
  2. Growth in customer retention is an outsourcing customer service pro. It’s more expensive to obtain new customers than to maintain existing ones because of rising acquisition costs. These expenses involve spending on advertising and marketing to attract potential consumers into buying a company’s product or service. 
  3. A BPO’s customer service specialists are not only skilled in performing customer processes but also in answering product and service inquiries. Their excellent communication and interpersonal skills give them a better chance of converting an inquiry into sales during customer engagement.  
  4. Increased buyer satisfaction is another outsourcing customer service pro. BPOs specialize in delivering customer success through communication. They know how to transform a “good” customer experience into a “stunning” customer experience. Satisfied consumers can promote the e-commerce company’s product or service to others by word of mouth. 
  5. An external service provider enables an e-commerce organization to access the latest tools and platforms for improving customer service. These expensive technologies include customer relations management software, data warehousing, virtual private networks, connectivity hardware, and enterprise resource planning systems. 
 

Outsourcing Customer Service: Cons 

Outsourcing Customer Service_ Cons

Outsourcing customer service offers many opportunities for improving customer experiences, but challenges also exist. Here are five potential drawbacks associated with this business practice.

  1. An e-commerce company that enters into a subcontracting agreement with a third-party vendor will likely experience less control over its customer service functions. Monitoring call quality and enforcing customer satisfaction-related policies are two activities the business may have to give up during the partnership. 
  2. Privacy and security issues may be one of the outsourcing customer service cons. An online firm handing over its customer service often means sharing sensitive data and information with a non-affiliated entity. The information includes usernames, passwords, credit card numbers, bank account numbers, and home addresses. 
  3. An external service provider’s customer service team may simultaneously be taking two or more roles. Its agents split their time and effort to handle multiple brands for different clients. Some BPOs may not provide a dedicated team focusing on an individual e-commerce firm’s needs. 
  4. Undisclosed expenses, hidden fees, and other unpleasant surprises may be included when outsourcing customer service. CIO, a Massachusetts-based publication on business information technology, lists the hidden costs of outsourcing. These are unexpected disruptions, lack of governance, poor innovation, and employee disengagement, to name a few. 
  5. Another outsourcing customer service con is that it may result in lower product or service awareness. The outsourced workforce may not be as knowledgeable about an e-commerce company and its brand as an internal department. Delegating tasks to employees with lower experience levels may compromise the delivery of a high-quality customer experience. 

Discover the right way to outsource customer service 

 

Useful Tips for Outsourcing E-commerce Customer Service 

Below are some pointers for online businesses considering outsourcing e-commerce customer service 

  • Avoid lock periods

A lock period is when a third-party vendor offers customer service at a fixed rate and time period regardless of the call or work volume. Several external service providers use this practice, offering e-commerce clients up to a three-month lock period.

Such an approach is favorable to a BPO because it assures steady revenue inflow. But it is not favorable to online firms. The ideal outsourcing partner should offer flexible terms and charge a client depending on the quantity of output. 

  • Choose a 24/7 and multi-channel customer service. 

E-commerce organizations operate round the clock, and so should the outsourcing entity. Good customer service anytime, even during holidays and weekends, ups the chance of consumer loyalty and conversion rates.   

Moreover, omnichannel service is needed for seamless or continuous interaction with customers wherever they are or whatever platform they use. Voice (phones of all types), text (chats and social media), and web (forums) are must-haves. 

  •  Collaborate with a dedicated team of specialists 

Pick a BPO offering a customer service team that can focus solely on a single client. It may charge a higher service fee for the online company. 

Despite that, this option gives you a focused and targeted team that works only for your customers, not any other e-commerce company’s customers. Having the best team translates to higher productivity, faster turnaround time, and improved customer experience. 

Further reading: Tips for Outsourcing Customer Service   

 

How To Find the Ideal Outsourced Customer Service Team  

How To Find the Ideal Outsourced Customer Service Team

To get started with outsourcing, realize that your e-commerce company can choose from numerous BPOs and external service providers. 

After considering the outsourcing customer service pros and cons, research to find the appropriate outsourcing company. Here are ways to help determine and get the right customer service team. 

Conduct thorough research 

Look into prospects’ backgrounds and other relevant details. The potential partner should have a solid track record that shows the various startups and large-sized businesses it has served.

Check the BPO’s technology

The outsourcing company should have a customer service team that uses the latest customer relationship management platform and other advanced software to keep track of their work and to help them efficiently manage a large volume of customer calls and requests. 

Find out the candidate’s expertise in E-commerce operations 

The likely partner should know the ins and outs of e-commerce activities and be familiar with your company’s government regulations and industry standards. Its knowledge base should be adequate to address any customer question or concern. 

Compare both parties’ work cultures. 

The external service provider’s work culture and ethics should align with that of the e-commerce operator. Working together with the same goals and outlook can make processes structured, efficient, and seamless. The provider should be not only a supporter but also an ally. 

Ensure transparency and security 

Ask at the outset if there are hidden service fees or other costs. Getting the details of rates and fees is important. The BPO should also disclose its security practices related to outsourcing customer service.  

You might be interested in reading about outsourcing customer support 

 

The Bottom Line 

Balancing the outsourcing customer service pros and cons can expedite an e-commerce company’s decision and help improve its understanding of such a strategy. Outsourcing to the right BPO can result in a consistently first-rate customer experience across all channels. 

Outsourcing also helps the e-retailer with every step of the customer buying journey, from product or service inquiries and order status to addressing after-sales concerns. 

After considering all these points, the online business should still create plans for dealing with the potential drawbacks that the outsourcing strategy can bring. Neutralizing these disadvantages at the onset maximizes the benefits of hiring an outsourced customer service firm, enabling your online business to achieve greater success.

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