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Research: Retail Website Performance, to Outsource or not to Outsource?

Chirag Patel et Christophe Haon
Published on
18 May 2018

To improve sales, retail websites focus on personalizing their web pages and increasing their influence on social networks. To achieve these goals, should they rely on internal resources or call on external service providers? A study of 105 U.S. retail websites provides us with clear answers.

This article of Chirag Patel and Christophe Haon is the subject of the 43rd Executive Summaries by Grenoble Ecole de Management.

From the article

Technology sourcing for website personalization and social media marketing: A study of e-retailing industry. Journal of Business Research 80 (2017) 10 - 23
doi.org/10.1016/j.jbusres.2017.06.005
Poonam Oberoi, Chirag Patel Christophe Haon

The researchers chose 105 retail websites (out of 500 U.S. retail websites) that were willing to communicate their strategies in terms of technology sourcing. Websites included players such as Dell, Adidas America or Sephora USA.

Having analyzed the activities of these retail website between 2013 and 2015, the study clearly confirms that the best way to improve sales is through a mix of internal and external sourcing to personalize web pages and through external sourcing for social networks.

Personalization: combine internal and external resources

Personalizing web pages is all about providing visitors with content that matches their expectations and profile. Retail websites have good reason to keep some measure of control over this strategic aspect of their business. This enables them to develop highly personalized solutions, react quickly to market changes, easily create connections between their website and their database, etc.

At the same time, targeted outsourcing enables companies to take advantage of the latest technological developments. For example, they can accelerate a customer's actions and do so at a reasonable cost thanks to competition between service providers.

This combination of internal and external sourcing has a direct effect on sales. It also has an indirect effect as customers who have a good user experience are more likely to follow the brand on social networks.

Social networks: external service offers better performance

In terms of social networks, outsourcing is more effective. External service providers have greater resources in terms of creativity, client management, social network analysis, etc. It is more difficult and costly for retail websites to develop this know-how in house.

«Social networks are a new sector and relevant knowledge can only be gained through experience. Retail websites have such an important need for efficiency and adaptability that they cannot take the time to discover this new knowledge,» explains Christophe Haon, a co-author of the study.

Outsourcing such services does not have a direct impact on sales. However, it improves performance on social networks, which in turn impacts sales.

Key points

  • In-kind contributions evoke stronger emotional responses than monetary contributions.
  • An uncontrollable issue (natural disaster) evokes stronger emotions than a controllable issue (obesity).
  • Consumers more positively evaluate CSR initiatives in which the emotional response to a company contribution matches the emotional response to an issue.

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