Can I Bring My Manufacturing Back from China?
Responding to the supply-chain chaos, Liz Reisch Picarazzi, a 21 Hats contributor, has RFPs out to contract manufacturers—including one a bike ride from her home in Brooklyn.
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Here are today’s highlights:
Is it time to start worrying about inflation?
Digital advertising is one of the things getting more expensive.
Why aren’t women going back to the movies?
It’s a good time to own a vintage furniture shop.
Liz Reisch Picarazzi is determined to bring her manufacturing back from China: “My search for a contract manufacturer in the U.S. kicked off in earnest in July, when my business was stuck in dozens of lines: in China, on the ocean, in the United States. Lines for bamboo, aluminum, labor, containers, ships, trucks, warehouses, customs and more. ... How does one shop for sheet metal fabricators? First, I Googled them. Way too many results, not organized by geography, or filterable. Then I consulted the granddaddy of industrial directories, ThomasNet, which has been around for 100 years and was originally published as a gigantic green book. I contacted 20 factories from ThomasNet, in New York, New Jersey, and Wisconsin, and requested quotes from 10 of them.”
“The factory takes up what seemed like a whole city block on the Gowanus Canal, an area that has some remaining industry, amid lots of new restaurants and clubs. I was pleased to see that they have the latest metal-forming, stamping, and pressing machines, ideal for my aluminum trash enclosures and package lockers.”
“I left the tour and thought about how convenient it would be to walk or bike to the factory from my house, just a mile away. When I go to the factory in China, it’s a 7,300-mile flight, 15 hours each way.”
“In a moment of grandiosity, I may have imagined the headline ‘Brooklyn Businesses Team Up to Reshore Manufacturing From China.’” READ MORE
THE COVID ECONOMY
Big businesses are getting worried about inflation: “The stock market is soaring. Company and household bottom lines look strong. Yet corporate executives across the U.S. are obsessing over inflation — and some think the White House isn’t grasping the extent of the problem. Spiking inflation — underscored by two government reports this week showing the biggest price surges in decades — presents a powerful threat to the economy as it struggles to shake off the pandemic, executives say.”
“‘I don’t think the administration is on top of it at all,’ said the CEO of one of the U.S.'s largest companies who spoke on condition of anonymity out of concern over angering the administration.”
“How many people inside this White House really know what inflation is or how it impacts businesses? It’s not really their fault. It’s been so long since we really had it.’” READ MORE
Digital advertising is one of the things getting much more expensive for businesses: “The cost of digital advertising has skyrocketed over the past 18 months, climbing along with e-commerce spending. That’s according to a report by digital marketing firm Merkle. Merkle found the following YOY increases in digital ad costs: Paid search CPC was up 41 percent. Amazon Sponsored Products CPC up 43 percent. Amazon Sponsored Brands CPC up 76 percent. Facebook and Instagram CPMs up 46 and 11 percent, respectively.” READ MORE
Home prices rose across the U.S. in the third quarter: “The ability for some households to work remotely some or all of the time continues to spur home-buying demand, along with low mortgage-interest rates, real-estate agents and economists say. Many buyers are looking for more space, and some are willing to move to a new metro area in search of a different quality of life or lower cost of living. ‘The geographic shifts that are becoming possible in the era of remote working [are] really beginning to settle in,’ said David Doctorow, chief executive of Move Inc., which operates Realtor.com. ‘We really believe that we’re still in the early stages of all those shifts.’”
“Nationwide, the median single-family, existing-home sales price rose 16 percent in the third quarter to $363,700 from a year before, a record in data going back to 1968, NAR said.”
“The Austin, Texas, metro area posted the strongest median-price increase in the third quarter, up 33.5 percent from a year earlier. Austin has been a major destination during the pandemic, drawing new residents from expensive coastal cities.” READ MORE
Movie-goers are returning to the multiplexes, but one demographic is missing: “Women over 35 haven’t come back to theaters. ‘It’s one of the biggest remaining groups that are lacking at the box office,’ says Phil Contrino, director of media and research at National Association of Theatre Owners. As life returns more to normal, young audiences led by men are the ones refilling multiplexes. They’ve turned out for action movies like ‘Venom: Let There Be Carnage,’ which topped all theatrical releases in ticket sales in October and helped make it the biggest month at the U.S. box office since the pandemic began. But older audiences, and especially women, have been slower to return.”
“Given the option to see an anticipated movie in theaters, stream it at home for a premium fee, or wait more than a month until they could stream it for free, 66 percent of women over 35 opted for the latter in a September survey by the research and analytics firm Engine Insights.”
“Some people in the industry worry that perceptions about flagging female demand discourage studios from making movies for them. ‘You’ve got to give them a selection. That’s part of the problem. We’re seeing everyone very scared to put out movies that appeal to women,’ one studio executive says.” READ MORE
Vintage furniture shops are having a moment: “Labor shortages, shipping constraints, and supply-chain disruptions are creating huge order delays that are depleting customers' patience. On Thursday, the online retailer Wayfair reported a revenue miss on its third-quarter results and said it delivered 30 percent fewer orders in the quarter compared with the same period in 2020. This is the first year the company has made fewer deliveries than previous quarters since it started reporting the metric in 2014. Meanwhile, vintage and local furniture stores, which keep inventory on-site and can offer fast or nearly instant delivery, are enjoying an influx of new customers.” READ MORE
David Barrett, CEO of Expensify, an expense-management software business that just went public, says the company focuses on smaller businesses: “What makes Expensify special, fundamentally, is that we have a completely different business model. Everyone else in our industry has a top-down acquisition model. They've got a sales team calling into the CFO or whatever. And that model works fine, but it only works in a tiny corner of the marketplace and it's the same market that everyone else was going after. Our competition is email and Excel. It's like a manila envelope stuffed full of receipts that is the actual competition. And no one is defending it.”
“Our approach is starting with the employee, and then they pull us into the company. The bulk of our revenue is subscription revenue that comes from companies between, let's say, 10 and 500 employees.” READ MORE
Rural America is losing its drugstores: “Corner pharmacies, once widespread in large cities and rural hamlets alike, are disappearing from many areas of the country, leaving an estimated 41 million Americans in what are known as drugstore deserts, without easy access to pharmacies. An analysis by GoodRx, an online drug price comparison tool, found that 12 percent of Americans have to drive more than 15 minutes to reach the closest pharmacy or don’t have enough pharmacies nearby to meet demand. That includes majorities of people in more than 40 percent of counties.”
“From 2003 to 2018, 1,231 of the nation’s 7,624 independent rural pharmacies closed, according to the University of Iowa’s Rural Policy Research Institute, leaving 630 communities with no independent or chain retail drugstore.”
“Independent pharmacies are struggling due to the vertical integration among drugstore chains, insurance companies and pharmaceutical benefit managers, which gives those companies market power that community drugstores can’t match.”
“On average, a pharmacy’s cost of dispensing a single prescription, factoring in labor, rent, utilities and other overhead, ranges from $9 to $15. But the reimbursement is often far less.”
“‘Filling a generic prescription, from a financial standpoint, is like pulling the slots at a casino,’ said Ben Jolley, an independent pharmacist in Salt Lake City. ‘Sometimes you lose a quarter, sometimes you lose a buck, and sometimes you make $500.’” READ MORE
An Italian startup, WeRoad, is trying to reinvent travel for Millennials and Gen Z: “With 10,000 travelers a year booking trips, according to the company, it still organizes the tours by hand. ‘We don't use algorithms to match people,’ de Santi said. ‘Rather, we let them match by mood.’ The company organizes small pods of eight to 15 travelers by age range and how they're feeling — whether they're in the mood for adrenaline-charged nightlife or something more cerebral, like exploring cultural sights. Treks can range from riding camels through the Middle East to kayaking under the Northern Lights of Iceland and Norway.”
“De Santi said that she considers WeRoad better than dating apps for meeting people because the types of experiences the trips offer enables participants to bond on a deeper level.”
“WeRoad now plans to spend the next three years focused on growing the European market, Bin told Insider — although their approach to growth is distinctly different than the fast model of Silicon Valley.”
For example, they have no intention of creating a mobile app anytime soon or setting up shop in America.” READ MORE
THE 21 HATS PODCAST
“I Can Do It. I Promise You, I Can Do It:” This week, Dana White takes us along for the ride. After a triumphant trip to Germany, where she expects to open salons on multiple military bases, she’s just returned to Detroit—only to learn that the team she’s counting on is showing serious cracks. Those cracks have shaken Dana and left her questioning her approach as a CEO. Ultimately, she talks about those moments many entrepreneurs experience in the cold of night, when things aren’t going well, and they realize this is all on them. In those moments, Dana confesses, “I’m scared. And I feel alone.”
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