Shopify Opens the Door to China
A partnership with JD.com gives the platform’s merchants access to the world’s second-largest economy.
Here are today’s highlights:
Big companies expect customers to continue accepting higher prices.
“Hot-desking” can save companies money but alienate employees.
Here’s one reason minority-owned banks are disappearing.
Shopify is partnering with JD.com, the ecommerce giant, to help American merchants sell goods in China: “The deal marks a significant step up in Shopify’s China expansion and is another step in JD’s internationalization efforts. JD said it will open an ‘accelerated channel’ for brands on Shopify to begin selling via its cross-border e-commerce site in China. Merchants can set up shop in three-to-four weeks rather than the typical 12 months that it takes foreign brands to begin selling in China, JD said. JD will handle the price conversion as well as logistics from U.S. to China. JD has its own logistics arm with a vast network of delivery workers and warehouses which the company sees as a competitive advantage over its rival Alibaba.” READ MORE
Amazon will open a brick-and-mortar clothing store: “The first Amazon Style store, located in the Los Angeles suburb of Glendale, California, will open its doors later this year, the company announced Thursday. The store will feature women’s and men’s apparel, shoes, and accessories from a mix of well-known and emerging brands, with prices catering to a wide range of shoppers.”
“When shoppers walk into the store, they’ll see ‘display items,’ featuring just one size and color of a particular product; the remaining inventory for each product will be kept in the back of the store.”
“After logging into the Amazon app on a smartphone, they’ll scan a QR code on the item to view additional sizes, colors, product ratings and other information, such as personalized recommendations for similar items.”
“After scanning the QR code on an item, shoppers can click a button in the Amazon app to add the item to a fitting room or send it to a pickup counter.”
“In the fitting rooms, Amazon has added touch-screen displays, which shoppers can use to rate items or request different styles or sizes to be delivered to their fitting room.” READ MORE
Big companies expect customers to keep accepting higher prices: “Procter & Gamble is betting the world’s consumers will remain undeterred by higher prices on household staples from Pampers diapers to Gillette razors. The Cincinnati-based consumer-products company said sales increased 6 percent in the quarter ended Dec. 31 compared with a year earlier, fueled in part by the company’s largest average price increases since the spring of 2019. Executives on Wednesday said its price increases will continue throughout 2022, and predicted higher profitability and improved margins in coming quarters even as labor, freight and raw-materials costs continue to balloon due to the global supply-chain turmoil.”
“‘The consumer is very resilient and very focused on these categories of clean home and health and hygiene,’ P&G finance chief Andre Schulten said in an interview.”
“Mr. Schulten said that in addition to absorbing higher prices, consumers also are switching to pricier, higher-end products, such as trading liquid laundry detergent for costlier single-dose pods.” READ MORE
THE COVID ECONOMY
Even if it transitions to endemic, Covid will continue to exact a price: “This new normal won’t be the same as the old normal: Endemic Covid-19 will still take a toll on health, work and mobility; the only question is how big. Predictions about the end of the pandemic have a dispiriting record. Hopes that vaccines would bring herd immunity, that more transmissible variants would always be less deadly, or that the Delta wave would be the last, were misplaced. So be wary of forecasts that Covid-19 is about to become endemic. And if it does, ‘endemic does not mean really low,’ notes Caroline Colijn, a mathematician specializing in infectious disease at Simon Fraser University in British Columbia. ‘It just means the system has reached some kind of stable state. Endemic could mean high levels of infections.’”
“Endemic Covid-19 could thus become a lasting ‘supply shock’ that degrades how much economies can produce, similar to the surge in oil prices in the 1970s.”
“In the past year, workers have reported declining satisfaction with their wages and a rising ‘reservation wage,’ that is, how much they would have to be paid to accept a new job, according to the Federal Reserve Bank of New York.”
“Nursing homes have boosted hourly wages 14 percent since the start of the pandemic, yet staffing has plummeted 12 percent, impairing their ability to accept new patients. Such shortages impose a cost that doesn’t show up in gross domestic product.” READ MORE
Starbucks is dropping its vax-or-test mandate: “Starbucks told its employees in a memo on Tuesday that they would no longer be required to be fully vaccinated or submit to weekly coronavirus testing. Just two weeks earlier, the company had detailed the requirement and set a deadline of Feb. 9. The Supreme Court’s decision did not prohibit companies from keeping their vaccine rules in place, and many will continue rolling out stringent Covid-19 safety protocols, especially as Covid case counts remain high.”
“A November poll of 543 companies by the consulting firm Willis Towers Watson found that 57 percent either required or planned to require Covid vaccines, including 32 percent that would do so only if OSHA’s rule took effect.”
“Companies weighing vaccine requirements have grappled with a number of factors, according to Ms. Sonneborn, including concerns about labor shortages, the political perception of mandates and the need to keep workers safe.” READ MORE
Opinion: Minority-owned banks are disappearing, and the federal government bears some responsibility: “At the moment the Great Recession hit in 2008, America boasted 215 minority-owned banks. Today, only 146 so-called ‘minority depository institutions’ remain. That decline, a trend that might be termed ‘The Great Winnowing,’ began well before the bottom fell out of the nation’s housing market, and it reflects, in part, a broader trend toward consolidation within the world of finance. But Washington has also played an egregious role. For decades, regulators have embraced a set of policies that, when recessions arise, force the closure of struggling lenders that serve poorer and marginalized communities. In practice, this has the effect of allowing investors to purchase the closed lenders’ assets (loans and properties) while they’re devalued.”
“This vicious cycle has steadily worsened inequality because those assets — now owned by outsiders — skyrocket in value when the market recovers.”
“Federal policy and practice, in other words, ensures that the rich get richer and poor get poorer during each turn of the economic cycle.” READ MORE
“Hot-desking” can save businesses money—but also alienate employees: “Hot-desking is one of the most popular hybrid work-related changes employers have embraced over the past two years, according to numerous interviews with consultants, human resources executives and employees. The concept has gained mainstream popularity during the COVID-19 pandemic, spurred to a large extent by public-health requirements on physical distancing – existing layouts of many offices simply did not have enough room to seat employees at least six feet apart.”
“For employers, however, there’s an added bonus to hot-desking: It’s a savings tool. Why have 100 desks for 100 employees when many of them only come in fewer than three times a week?”
“For employees, however, the idea of not having your own designated desk has garnered mixed reactions. The Globe interviewed more than a dozen people who work in office jobs in various professional services companies in Toronto, and many said their workspaces feel impersonal because of hot-desking.”
“Even some HR professionals have started admitting the pivot to hoteling has left some employees disappointed. And organizational behavior experts say there is evidence that working in an open space without a designated desk or room erodes the culture of an organization.” READ MORE
Facing a shortage of truck drivers, a pilot program turns to teenagers: “During the pilot program, which can last up to three years, as many as 3,000 young truckers at a time will be required to complete 400 hours of cumulative probationary time with an experienced driver in the passenger seat. After that, until they turn 21, they will be able to drive solo but under continuous monitoring by trucking companies. The legal age for truckers who drive across state lines is currently 21, but those 18 and over can drive commercial trucks within state lines everywhere in the country except Hawaii.” READ MORE
Brian Chesky, CEO of Airbnb, joins the work-from-anywhere movement: “Chesky, who announced his plans in a Twitter thread Tuesday, has been vocal about the pandemic changing the nature of travel as employees gain more flexibility to work from anywhere. Long-term stays, or those that are more than one month, were the company’s fastest-growing category during the third quarter and accounted for 20 percent of the nights booked. In November, Airbnb announced new tools to accommodate the work-from-anywhere lifestyle, including the option to search for listings up to a year in advance and verified internet speeds.”
“‘This trend is kind of like a decentralization of living, and it’s changing the identity of travel,’ Chesky said on Twitter. ‘So that’s why I’m living on Airbnb. It’ll be fun, but more importantly it will help us improve the experience for people who can now live anywhere.’” READ MORE
THE 21 HATS PODCAST
I Want to Double Sales This Year: This week, we introduce another new member of the 21 Hats Podcast team, Liz Picarazzi, who talks Shawn Busse and Paul Downs through a series of challenges she’s faced at her business, Citibin. Among those challenges: why she outsourced her manufacturing to China, why she’s trying to bring it back, why she’s struggling to find an American fabricator that wants her business, why she thinks she wasted all of the money she spent last year on digital marketing, how she managed to double sales anyway, and where she found the right person to handle the aspects of running Citibin that she doesn’t think she’s good at.
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If you see a story that business owners should know about, hit reply and send me the link. If you got something out of this email, you can click the heart symbol, you can click the comment icon below, and you can share it with a friend. Thanks for reading, everyone. — Loren