Ecommerce is driven by technology, but there’s still a lot of work that people have to do.
Someone has to write descriptions, take photos, create listings, dispatch orders, support customers, do bookkeeping, marketing and more. There’s no way to completely avoid these time-consuming, repetitive tasks. So what can you do to lessen the pain of that work?
Today outsourcing is the first choice for many businesses, from part-time sellers who still have day-jobs to the very largest enterprises.
I spoke recently with Carlo Silva, co-founder of outsourcing company 2nd Office. Carlo’s company is uniquely focused on ecommerce, particularly selling through online marketplaces like eBay, Amazon, Rakuten and others. That knowledge and experience is not easy to come by.
Not only that, 2nd Office has a great reputation. You can read reviews of 2nd Office in the Web Retailer directory.
I asked Carlo how he got into ecommerce, why he started an outsourcing company (and how sellers can outsource successfully), and what he sees as the next big trend in ecommerce.
Andy: What was your first taste of being an entrepreneur?
Carlo: In high school I was a big video game geek. I was always spending all my money on video games. But then I saw that you were able to create back-up copies then play them on another console if you had this thing called a “mod chip”.
So I found a supplier in China who sold plug-and-play mod chips. It didn’t require you to solder anything onto the board of the PlayStation or anything like that. It’s just a plug and play into the back of the console. Then all you do is put a game CD into a CD-ROM drive on a computer and create a backup copy, and that copy will start working on your PlayStation. So I found these things for I think 25 bucks, landed. Then I would sell them for $100 to my friends in high school. That was around 2001.
How did that work out?
It lasted for maybe a month or two, because all of a sudden it got to the media and then you saw people getting taken to court for it. So I was like, okay, I’m not going to bring this stuff in any more. That was the end of that. I didn’t see it as a long term thing. But it was my first taste of really being an entrepreneur where you can import stuff from China and resell it at a high profit margin.
What kind of business did you go into after that?
My first real business was actually an online store. I’d graduated high school so I was probably around twenty. I registered a sole proprietorship as I didn’t have enough money back then to do a corporation. It was called carbon-fiber-products.com and it specialized in products made out of carbon fiber for cars. It was when the whole Fast and Furious thing got started, and everyone was buying carbon fiber body kits and accessories. This was around 2005, in Orange County, California.
It was an industry I had connections in, as I’d been working for a company that manufactured aftermarket light bulbs. They imported products from Korea, then they would private label it with their own brand name and resell it. They were selling bulbs in yellow, blue, white, and they were brighter. Guys who rented cars would pop these into vehicles to make the car look cool.
The company also had a business selling aftermarket auto parts wholesale. They would basically buy from importers and sell locally. California is known as the aftermarket auto parts import hub for America, all the large importers are in Southern California. Some of the largest eBay sellers are actually located there too.
So I would just buy locally. It was very easy to find people that you can buy from to resell. When I got an order I would go to the supplier, pick it up, and ship it out. I didn’t really have to stock anything. That’s why I chose that product.
Was the business successful?
Yeah. That one was pretty successful. I grew it up to about $100,000 in revenue a month. Then after about two years, I sold it to one of my suppliers because I wanted to go back to college. I was still young back then, and my mom wanted me to go back to college and get my degree.
So I did go to college, but I actually never finished. After I left I went into corporate instead. I’ve basically been working since I was 15, so college wasn’t really for me. I’m just one of those guys that aren’t really made for college I guess.
How did you go from being a seller to running an ecommerce outsourcing company?
So after I had a few businesses of my own, I went into corporate. I wanted to try it out, and started as a graphic designer. On the third month I was promoted to Marketing Director. I didn’t have that many staff but I was responsible for marketing for the whole company. This was a motorcycle accessory company that manufactured wind shields and other accessories.
I wanted to keep my costs low, and I had the option to either hire people locally or outsource. I did hire about two staff locally then most of the other things I wanted to do, like photo editing, I would outsource.
My first experience with outsourcing was to India, and it wasn’t a very good one. I outsourced some products to get photo edited and I was paying I think $400 a month for 160 hours of work. The quality just wasn’t there.
One time I asked them to edit a muffler and a set of springs, that I was selling as a kit. My instructions clearly said “this is going to be sold as a kit, I need you guys to Photoshop these two products so they look like a bundle.” Then I sent them all the photos for it, about 12 images. What they did was put the muffler inside the spring – combined them. I was like “Wow, this is some pretty good Photoshop skills”, but it wasn’t what I wanted.
So I decided to try again. I told my dad about it and he said, “Why don’t you try the Philippines?” I’m originally from the Philippines. I was born there, but I grew up in the States. So he said, “I have a cousin there and you should contact her.” So I did and it turns out that her husband was working for US Auto Parts, one of the largest online retailers in the automotive space, the same industry we were in. They have 3,000 employees in the Philippines.
So I offered him a job. I would pay him more and he’d get some work from home, and be able to stay with his kids. So I recruited him and then three other people to work from home with him. They’re all in the family, or related somehow. They were doing that for a year – image editing, listings, data entry – and it went really well.
How did it go from that to your own office out there?
After a year I said, “Hey, this is pretty good.” Being a seller and a store owner, I knew there was a gap in the labor market locally. A person with ecommerce skills is either going to be really expensive, or you’re going to have to invest a lot into training. You’re not going to get a college educated person for cheap in the local market, maybe a high school dropout or something like that. So I thought, why don’t we offer this service to everyone else in the world? We could train people in the Philippines to work for online retailers everywhere else.
I ran it in the States for a year and then I moved out to the Philippines in 2013 to grow the business.
Why did you stick with the Philippines?
I had connections in the Philippines and also I’m Filipino, but the real reason is it’s a more westernized country compared to India. Clients also like the neutral accents. If you’ve ever outsourced to India you’ll know it can be very hard to understand what they’re saying. The Philippines is actually the third largest English-speaking country in the world next to United States and the UK.
Also it has a very low cost of living. I think labor is now cheaper than China, since China has gone up in the market. The Philippines has also surpassed India in terms of being the number one call-center destination in the world now.
What’s the time difference with the US and UK, and how do you handle that?
It’s 12 hours to the US East Coast and 15 hours to the West. With the UK it’s eight hours.
We have different shifts catering to different time zones. We have a UK shift, an Eastern Standard shift and an Australian shift. We actually operate 24 hours a day Monday through Friday.
What type of services do you typically provide?
We specialize in almost everything an ecommerce store needs. So eBay and Amazon listings, data entry, market research, customer support, technical support, marketing, graphic design, web development and we also can provide you with a full-time staff member that can do any support role that you or your team would need. We have almost 100 people now.
All the teams are split into different specializations, so we have a team of graphic designers, a team of web developers, a team of content writers. Content writers are a good basis for product listers. Most of the team leads would be specialized in what they know best. So we have someone that knows Amazon really well for example, and they help train people on Amazon. Then we have someone that knows eBay really well and they help train on eBay for the other staff. We’re basically split into different departments.
Do you support any marketplace software that your customers want you to use, or do you have a list of ones that you know?
We have a list of ones we know. But if a client comes to us with a software we don’t know and they are in for the long term, then we will learn that system for them. If we don’t know it, then the client will help us. Usually they already know how to use the software, so they’ll train whoever is in lead for that project. Then the lead will learn it and they will train the other staff. To be honest all the softwares have the same end result, it’s just a matter of how the systems takes it in.
Some of the software companies know us well, the ones we regularly use, because we’ve contacted them so many times. They help us out whenever we need it.
Do you have a minimum number of hours that clients have to buy?
As we expanded our services, we increased our minimum requirements in terms of hours. Before we used to offer 20 hours, but we found that the people who wanted to buy 20 hours were not ready for outsourcing. So we kept raising it until we found a good number which is now 80 hours.
We would get sellers asking us, “Hey, can you list this product onto Amazon for us, we only have one product.” These guys want us to run their whole online business for them from the beginning. We’re not that kind of outsourcing company. What we do is support you, doing different tasks in your business, but we’re not a consulting company. We offer help and support services to help you grow your business, that’s what we do best.
When we had our hours lower we had a lot of sellers who were too new to online selling. They wanted us to hold their hand. But you don’t go to outsourcing for people to run your business. You go to outsourcing to help them grow your business. We’ve found that usually sellers should outsource when they already have an ongoing operation, or know what direction they want to go with their business.
I find the magic number for outsourcing is when sellers are doing at least $30,000 to $50,000 a month. Through being a seller, I find that that number is where you can no longer grow the business by yourself, because you are working too much in the business. You’re probably doing everything from customer support to order processing, dealing with vendors, accounting.
Is that how people normally come to you, working all hours just to keep up?
Yes. That’s when I would recommend anyone to start looking into outsourcing. But I always say sellers should ask themselves three questions before they really start thinking about it. The first question is, “What do I not like to do?” In the beginning this can be anything except for high-knowledge selling or project management.
Number two is, “What tasks am I not good at?” Anyone can be a jack of all trades, but you know that phrase: jack of all trades, master of none? It’s better to outsource tasks that you don’t know how to do, to somebody that specializes in it.
And the third question is, “What tasks do you feel and think you shouldn’t be doing?” I always ask people to take some time to really think about it. What task would you want somebody else to handle so you can focus on growing your business? This could be things that are very repetitive, or things that you already have a process in place for. If you have a process in place, it will be a lot easier to hand that off to an outsourcer.
What are the first things that businesses normally start handing over to you?
Usually the first things they outsource are listings, optimization and research.
Research into areas like pricing, competitor analysis or data gathering. Let’s say you have a supplier, and you want to start selling their products on the marketplaces, but they’re lacking data. If you give us a file with all the supplier SKUs then we can find the missing data online, either through Google or other websites, gather all the data and create a listing from it.
Then there’s photo editing, web development, and if you’re ready for a full-time staff member, customer support is a good one.
If you already have a set process, like for order processing, that’s something you can outsource pretty easily. If you already have a customer support team locally, for example, you might have a training document you use when you hire a new staff member. Instead of hiring locally you could maybe promote one of your team members to a lead, and outsource the new support job offshore for cheaper labor. And at the same time you could run customer support almost 24 hours if you want.
How does customer support work when they get technical questions about the product?
What I’ve found with customer support, is you should outsource it for your first-line. We call it first-line customer service. For an online seller, the majority of the questions they get are like, “What color do you have this in?”, “Where’s my tracking number?”, “What’s the warranty on this?” Very basic questions that are already on the product page. It’s very easy for somebody that’s trained on your company policies to answer.
So getting back to your question about technical questions, if your outsourced assistant doesn’t know the answer we would just say, “We’ll need to get back to you.” If you’re working in the same time zone as your assistant overseas then it’s very easy to hand it off to a person locally, it’s just a matter of a Skype message.
If they’re not in the same shift then they can say, “I’m going to escalate this to my manager and they’ll get back to you in a few hours.” The point is you’ve provided an answer to the customer instead of not even being there. It helps convert sales when there’s somebody there to reply to them.
Do you have any other tips about how to outsource successfully?
First of all I want everyone to get rid of the conception that there’s a super VA [virtual assistant] that can do anything you want; they don’t exist. Whenever you outsource, you want to outsource for the role, not the task.
Usually people want to outsource all these different tasks to one person. But it doesn’t work like that. You need to group it up and then divide it into roles. For example, if you want to do graphic design you need to outsource that to a graphic designer. Don’t find one guy that says he can do a graphic design, he can do writing, he can do web development, most likely he can only do one of those things.
So when you’re on oDesk or Elance [now Upwork] make sure that the person you hire for the job is actually good at it. You can test them, pay for a few hours of work, before you agree to hire them part-time or full-time.
Also if you do find somebody you like, but they’re lacking something, then train them. It’s all about training. When you actually decide you want to hire somebody, my best piece of advice is you need to be able to get along with them. Don’t hire because you need something done really quick, hire because they do good work and you actually get along with them. That goes a long way, especially if it’s a long term relationship you’re looking for, because nobody wants to work with somebody they don’t like.
When should someone go to a site like Upwork, and when should they come to a company specializing in ecommerce like yours?
They should go to Upwork when they have smaller things to outsource, or tasks that don’t require an ongoing relationship. For example, if you need one logo done, go to Upwork. Or if you need really simple copy-and-paste data entry, go to Upwork.
But if you need high level things like eBay listing or custom descriptions, we specialize in that. So you don’t have to worry about looking for that person and testing them. We can give you a free hour trial to test us in terms of work. With Upwork you would probably have to pay for that and you would probably have to go through multiple outsourcers to find someone you like. You have to filter and interview people.
So how does it work at 2nd Office in terms of finding the right person to do the work for a particular seller?
We have two programs, the first is project-based. When you do a project, typically they’re going to be eBay listings, Amazon listings, content creation – one-offs. In this situation we assign a project manager, a single person you deal with, and she will distribute all your tasks to a team under her.
Our other service is a dedicated staff member. This is if you want to hire someone to work exclusively for your company. With project based work, they’re working with different clients, not just you. It’s the same thing with Upwork, they’re working with different clients and you have an arrangement with them. With our dedicated staff you get a staff member that you can hand-pick and hire for your company.
This is what I recommend. If you need someone full-time you would hire for the role and not the task. So if you want an after-hours support person, we can find you somebody who fits your qualifications for that. We would short-list candidates and then you get to interview and choose who you want to hire for your business. Think of it as your staff but they’re just in the Philippines.
With a dedicated staff member, how does it work with vacations, public holidays or illness?
Since they’re employed by us, they follow our company policies. But with our service if they go on vacation, or they’re sick, we actually credit hours to the seller. So they don’t pay for that. It’s just like any other country, there are labor laws and all employees have rights. We provide five vacation and five sick days a year.
We follow Philippine holidays in our company. Other companies might follow US holidays, but we find it attracts better talent to follow Philippine holidays. People like to spend time with their family. If it’s a Philippine holiday and the client wants them to work, they would just have to pay holiday pay, and the staff member would obviously need to agree to it.
Or if we have available staff to provide cover, and the seller is okay with it, then we can do that. But keep in mind that some of these job roles are very technically oriented, so it’s not like you just can replace that person and they learn everything in one day.
What’s the culture like in the Philippines, are there things you should be aware of to work successfully with Filipinos?
It’s different from western culture. One thing that can annoy westerners at first is that Filipinos always call you sir or ma’am. I had a client one time say, “Don’t call me sir, I’m not a knight”, to one of my staff members! So if you’re dealing with a Filipino and they’re not trained in western culture, like an Upwork freelancer, most likely they’ll be calling you sir and ma’am.
Also with low salaries also comes low cost of living. You can buy a good meal for around a dollar or two. Money goes a long way. If you pay your Filipino employee really well, let’s say $800 a month, or a really good salary would probably be around $1,100 to $1,200 dollars a month, that’s equivalent where they’re living to maybe $5,000 or $6,000 US dollars.
Another thing that’s good to know is that Filipinos are very shy. They tend to not speak up. It’s the complete opposite of the western world, where at school you’re taught to speak your mind, do a lot of problem solving and critical thinking, and talk back to your teachers. That’s not how it is in the Philippines, I’m sad to say. It’s more “Do what you’re told.” In Asia there’s a hierarchy system, the boss is the top and everyone just does what the boss says, as opposed to the western culture, where everyone is taught to be proactive and innovative.
So make sure that you let them know it’s okay to ask questions and not know everything, and it’s okay to make mistakes. Here in the Philippines, the word for it is nahihiya, which means shy but can also translate into ashamed or embarrassed. Westerners should let their Filipino VA known its okay not to feel ashamed if they don’t know something, because nobody knows everything. And that it’s okay to make mistakes as long as you learn from them.
It also means you need to have a process in place, or you need someone to help build that process. You’ll need to train the employee how you want things done in your business. Every business is different, so be patient with them. They’re not going to learn it in a week. Just like with any training, it’s going to take a few months. But the good thing is Filipinos are very fast learners. They pick up things very quick and they retain it. And they’re very loyal. They’re actually very, very friendly and probably one of the most hospitable people in the world.
Moving to a different topic, you wrote a great article on the eBay Cassini search engine. How do you keep your knowledge up to date on that? Do you still get involved in the day-to-day work?
Yeah. At times I will help a client out on their project, and test some theories out with them. That’s how I keep up. I also follow all the new trends happening in the marketplaces, because being in ecommerce and helping ecommerce sellers, we need to know what everyone’s doing.
Since we’re dealing with different countries, and many different types of online sellers, we see almost everything in terms of marketplaces. We see things that work in one country, and we bring it to another country. eBay’s a global marketplace, so tricks of the trade might work in a different country, it’s just in a different language.
If staff are stumped on something, it will reach me and I’ll try to help them answer. But like with any company, if you want to really scale a business you try to have them figure it out themselves first. But I will help out if they can’t solve it.
What do you think is coming next in terms of online marketplace selling?
I think it’s going to go mobile. Everyone is starting to get mobile now, especially in Southeast Asia. I think mobile is used more than desktop when people buy.
And sellers and western brands should get into China. In China, and Southeast Asia as well, there’s a big problem with counterfeit. But in Asia there’s a class standard, and the people with money do not want to buy counterfeit, so they’re willing to spend money to buy real brands.
Southeast Asia is going to be the next big market. China already surpassed the United States in terms of ecommerce, and I see the Southeast Asian countries like Thailand, the Philippines and Singapore becoming more developed in the next ten years.
People are starting to sell into other countries, but not the Asian ones. To be honest, I don’t think the Asian market is there yet just. Foreigners are going to have a hard time getting money back into their currency, because there’s very little credit card penetration. A lot is done in cash, COD. It’s not there yet, but in the future I see it being something very big.
Carlo, I really appreciate you sharing your story, and telling us so much about outsourcing and the great business you’ve built.