PurposeEffective and efficient supply chain management is critical to the success of firms engaging in e‐commerce. The purpose of this paper is to examine the impact of logistics capability and logistics outsourcing on firm performance in an e‐commerce market environment.Design/methodology/approachThis research examines the relationship between firm's logistics capability, logistics outsourcing and its performance. Multiple‐item constructs are used to measure the strength of logistics capability and firm performance. The use of logistics outsourcing is represented by a dichotomous variable. Data obtained via a survey were analyzed to investigate relationships among constructs and various hypotheses were tested.FindingsStudy results revealed logistics capability to be positively related to firm performance in the e‐commerce market. However, counter‐intuitively, logistics outsourcing and firm performance were not found to be positively linked. Further, the association between logistics capability and outsourcing was not supported. Finally, the interactive effect of logistics outsourcing on the relationship between logistics capability and firm performance was not sustained.Research limitations/implicationsResearch findings are constrained, as the study was limited to the computer and consumer electronics retailing industry. However, the importance of logistics capability was confirmed in the e‐commerce supply chain for this segment. And the benefit of using third‐party logistics (3PL) to enhance firm performance was not fully established.Practical implicationsLogistics capability is critical for superior firm performance in e‐commerce. However, study findings lead to the presumption that firms should avoid logistics outsourcing if performance is predicated on competitive advantage due to internally strong logistics capability and competencies.Originality/valueThis research contributes to the study of logistics capability and 3PL in e‐commerce. The development of a logistics capability measurement construct in e‐commerce originated with this research. Also the impact of logistics outsourcing on firm performance is tested for the first time in an e‐commerce market environment.