Where should you “source” your technology to optimize website performance or social network influence? A recent study examined 105 online U.S. retail stores among the top 500 retail industry websites. The analysis presents businesses with several tips to improve their choices in terms of sourcing.
The study was carried out collaboratively by Christophe Haon and Chirag Patel, both professors of marketing at Grenoble Ecole de Management, and Poonam Oberoi, a professor at Sup de Co La Rochelle. The study spanned three years (2013-2015) and was published last September.
Technology sourcing builds on the idea that companies must decide when to develop technology internally and when to outsource. "Our study focused on two e-commerce building blocks: personalizing websites, and marketing tools for social networks," explains Christophe. The researchers explored these two factors in order to see the impact on retail website performance. The goal was to determine which decisions could help businesses optimize their presence, reputation and influence in terms of their retail website and social networks (and therefore sales as well).
Mixed sourcing provides best performance
“In terms of technology to personalize websites, we demonstrated that it was better to mix sourcing. In other words, companies should rely on internal and external solutions. This decision has a direct impact on sales and an indirect impact in terms of improved performance for social networks,” underlines Christophe.
The website is at the heart of any online retail activity: “Internal management enables a company to have greater control over this essential tool. It allows them to be less dependent on outside sources and improve quality. On the other hand, external suppliers can provide specialized expertise in certain fields, which can increase adaptation and efficiency. This optimizes R&D costs,” adds Christophe.
In terms of a direct impact, the companies that chose a mix of internal and external sourcing generated more sales. Such companies also reported better performance on social networks (measured in terms of followers on the primary social networks). As social network performance influences sales, technological sourcing also has an indirect impact via these networks. Overall, personalizing a website enables a better experience. Visitors are thus encouraged to establish recurring relationships with the retail site and its social networks.
By combining internal and external resources, companies can take advantage of the benefits of each, all the while reducing their disadvantages. Christophe adds that: “Currently, too many companies rely solely on external solutions. But the situation appears to be evolving in the right direction.”
External sourcing for social networks
In terms of social network marketing, external sourcing is the preferred solution. “The field of social network marketing requires highly specific expertise in terms of creativity, customer database management and social network analysis,” underlines Christophe. “It’s really a job in and of its own. As a result, internal development can be quite costly, less efficient, and therefore, less profitable.”
In terms of external sourcing for social network marketing, the study showed that sourcing partners were rather stable for retail websites. As a result, companies have all the more reason to look to external partners in order to increase their expertise and agility. “However, as general awareness continues to increase in terms of social networks, it’s possible that the skills required for such activities will become easier to find internally,” concludes Christophe.