Sep 4, 2023
EP 3 | Insourcing vs Outsourcing
The learn with Simpl webinar series deals with various aspects of D2C and entrepreneurship in an attempt to bring out the learnings from entrepreneurs who have been through the process of building a business – in order to help future successful entrepreneurs in their journey.
In the third episode of this series, we have Deep Bajaj, CEO, Sirona Hygiene and Vikas Kabra, Entrepreneur in Residence, Neeman’s to talk about one of the most important questions that every entrepreneur has at some point in their journey – the benefits of insourcing vs outsourcing and what to insource and what to oursource?
When you’re a small business, there’s always limited resources to start with, regardless of scale and future resources that are coming your way. This is why it is crucial to plan ahead in time for the resources to insource vs the resources to outsource.
When and where
Date and time
Thursday, November 17th, 2022 11:00 AM Onwards
Location / Link
Tapping into untapped markets
Deep Bajaj talks about Sirona Hygiene and his journey building a D2C business model out of an unaddressed menstrual hygiene market in India, disrupting the category with 10 products that were unheard of in the country at that point. Deep saw an opportunity in the inconvenience that women face without clean toilets, which gave rise to the pee buddy. Over the years, Sirona Hygiene has grown to offer much more in women’s hygiene including pain relief patches, menstrual cups, pads, stain removers, etc. Sirona Hygiene is now a D2C first brand with over 3.5 lakh orders every month.
Neeman’s is a sustainable fashion/footwear brand that started out making shoes out of wool from Australia. They then transitioned into creating footwear out of recycled plastic bottles and organic cotton – a completely untapped market in the Indian D2C space. As Vikas talks about their journey, he reinforces that the founding team at Neeman’s talked very early in their journey about what to insource and what to outsource which helped in their journey till date.
Insourcing vs Outsourcing
There is no specific answer to the question of insourcing vs outsourcing as it can vary from business to business. However, we can split insourcing vs outsourcing into 4 buckets of major business functions:
- Supply Chain
According to Deep, Sirona faced a lot of initial challenges with regard to technology. However, there’s no formula that fits all – there are no mistakes in entrepreneurship, instead, they’re all learnings. During their initial stages, Sirona did not focus on a D2C website as it was not critical at that point and they had marketplaces such as amazon to handle sales.
Product, on the other hand, was critical because their product was a pioneer and a disruptor, they had to ensure that their customers had the best experience with great support and marketplaces such as Amazon were able to give them just that.
As the brand grew, they had to reevaluate their GTM strategy and figure out how to make a customer buy from different touch points. As a femtech brand, Sirona had to be in sync with their customers’ needs which is why they created the Sirona period tracker. Initially, it was an app, built in-house, but keep in mind that this was years before smartphones were a household thing – which meant that this app didn’t solve a problem for people who didn’t have smartphones. And to tackle this problem, they outsourced this solution to WhatsApp and built a WhatsApp period tracker for their customers.
Additionally, it’s about what one can afford and how critical that function is to a business. At every point in the entrepreneurship journey, there will be a question around whether you should build or buy something. The answer is, build it in-house only if you have the expertise, otherwise, outsourcing is the way to go. But keep in mind that it is always better to keep critical functions in-house.
The Neeman’s Way
Vikas believes that one must focus on their expertise and what’s required as well. There’s nothing that cannot be outsourced. The team at Neeman’s believes that product is one thing that must always be in-house. This includes product design, innovation, R&D and also managing the comfort level of their shoes.
Neeman’s has always been a digital first brand, with more website sales than other channels. And that’s why high-ownership tasks must be in-house.
One key aspect that Neeman’s paid heed to is performance marketing – they decided to go the in-house way keeping in mind that if they fail, they learn. That’s where the various tools in the market such as Shopify come in handy. Leverage these tools to your advantage. Performance marketing has been 100% in-house for Neeman’s. Although they did take external support during their initial stages, they were able to identify potential and take things up in-house.
According to Vikas, the two key things to nail early on are the product and customer experience – creating a high net promoter score. It is also crucial to own the narrative and the position of the brand.
On Logistics and Customer Delight
Sirona was initially a marketplace first business that gradually shifted to D2C as well. Although their manufacturing was outsourced, they were able to own their supply chain experience with their own warehousing facility.
Deep believes that the reason to focus on D2C is that they get to control a lot of things in terms of customer experience. Although it is extremely difficult to match the Amazon logistics and reverse logistics experience, brands must focus on D2C to ensure that they own their customer experiences while building a brand as well.
Vikas, on the other hand, also believes that customer delight is the key aspect in building any brand. Every business must focus on delighting their customer at every touch point from the moment they land on their website to the moment they need support after receiving their order.
The session ended with Deep and Vikas answering questions around finding the right co-founder, whether to in-source or outsource functions such as HR and accounting and finally the pros and cons of a marketplace vs a D2C website.
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