In-house Vs. Outsourced Analytics Solutions: Which one is better for your e-commerce business?

Posted By: editor
Posted On: 26 Aug, 2021

Data analytics capabilities are a must-have for e-retailers today. Analyzing raw data and aggregating it from various sources like websites, marketplaces (Amazon, Flipkart), marketing channels (AdWords, Facebook ads), or even the CRM database is a daily activity. This will help with understanding and executing data-driven strategies during various stages of growth.

E-retailers have two options for enhancing their data analytics capabilities – developing analytics capabilities in-house or partnering with external analytics services firms.

Choosing either is subjective and will entirely depend on the growth stage, capability, type of product offering of the business. However, one needs to deeply understand the pros and cons of both the options (detailed below) before assessing their suitability.

Designing & Delivering Analytics Solutions with In-house Teams:

Pros:

  • Greater control and low compliance risk
  • A deeper understanding of how the business operates enhances analytics capabilities
  • Projects and internal resources can easily align to prioritize an initiative

Cons:

  • Counter-intuitively, the set-up costs of infrastructure and software involved can be very high and may take time to reach the optimal efficiency. In the initial stages of the business, e-retailers can rather divert this amount to marketing activities for customer acquisition
  • Time and effort consuming to stay on-par with industry practices, new features/upgrades, maintenance, etc. E-retailers can preferably spend the 12-18 months it takes to get an in-house solution up and running (top efficiency) on product enhancements
  • Attracting and retaining high caliber analytics professionals in-house is a costly affair
  • Keeping the analytics capabilities all in-house also means e-retailers do not have access to decades worth of experience and specialization that a partner would otherwise have

Partnering with Analytics Consulting Firm:

Pros:

  • More time to focus on core business operations like customer acquisition and retention, improving the bottom line
  • The other advantage is cost. Outsourcing data analytics allows e-retailers to get highly specialized, senior analytics resources without the full-time employee expenses. Businesses can only pay for a specific deliverable
  • Increased processing accuracy and quality improves the related workflows and generates better insights that aid informed decision-making
  • Analytics consultants bring with them a wealth of experience from similar businesses and projects that add value. Also, their processes will help speed up the development cycle and leverage learnings from previous such deployments
  • Dedicated business analytics firms will keep them up to date on the latest analytical techniques (which are constantly evolving) to outpace the competition

Cons:

  • Risk of exposing sensitive company data and losing confidentiality. Measures to ensure data security and confidentiality (NDA) need to be put in place in advance
  • Communication breakdowns if the business solely relies on the outsourcer to handle it all. Again, one can mitigate this if there is a business commitment to actively engage in the project

In-house Vs. Outsourced Analytics Solutions – Which is the Winner?

The answer is suitability. E-retailers need to consider their business’s growth stage, needs, capabilities, time, and budget.

While for a small and medium business outsourcing analytics solutions will immensely help with following standard practices from early on, enterprises can attain process efficiency and holistic assessment across various teams. This choice offers more flexibility and better results at low costs for both scenarios.

However, companies with niche offerings and very targeted approaches, large or small, may choose to discover and develop the analytical capabilities in-house.

If you are looking for outsourcing your analytics projects, do check Halo. Halo helps you connect, transform and visualize all your e-commerce data in one place. Integrating the leading tools across e-commerce stores, marketing, marketplaces, and analytics has never been easier.

Leave a comment

Your email address will not be published. Required fields are marked *

Sign up for a free trial of Daton today.

Take your analytics game to the next level

×
-