The Anti-Amazons
For companies large and small, not being Amazon is a primary selling point.
Good morning!
Today’s highlights: Amazon has an employee-turnover rate of 150 percent. There has never been a better time to borrow from the SBA. And will reopening work this time for California?
ECOMMERCE
More businesses are trying to offer an alternative to Amazon: “ShopIN.nyc pools inventories from local businesses to create a local version of the ‘everything store’ that Amazon is known for, thanks to the vast selection and lightning-speed delivery that founder Jeff Bezos made central pillars of the Seattle company’s strategy. ShopIN.nyc’s marketing is unsubtle: social-media campaigns carry slogans such as ‘Shop Boroughs, Not Bezo$’ and ‘An ‘everything store’ that delivers faster than Amazon.’”
“Mocking [Amazon] has been a successful marketing strategy for Peak Design, which long sold its high-end camera bags on Amazon. Peter Dering, the San Francisco-based company’s CEO, grew angry when he noticed late last year a bag under the Amazon Basics private-label line that looked nearly identical to his company’s most popular product, the ‘Everyday Sling.’”
“Amazon gave its bag the same name, among other similarities, and priced it at $34.99, compared with Peak Design’s $99.”
“Mr. Dering created a cheeky video in which he and an employee impersonate Amazon executives discussing how to copy Peak Design’s product using inferior materials. The video went viral, with more than 4.5 million views on YouTube.”
“Shopify, which helps smaller brands and retailers—including ShopIN.nyc—set up online, is something of a standard-bearer for the retail uprising. Chief Executive Tobias Lütke once quipped that ‘Amazon is trying to build an empire, and Shopify is trying to arm the rebels.’” READ MORE
HUMAN RESOURCES
Amazon has an employee-turnover rate of 150 percent: “Amazon conducted a hiring surge in 2020 that was unparalleled in American corporate history. In just three months, it signed up 350,000 workers — more than the population of St. Louis — offering a wage of at least $15 an hour and good benefits. But even before the pandemic, previously unreported data shows, Amazon was losing about 3 percent of its hourly associates each week — meaning its turnover was roughly 150 percent a year. At that rate, Amazon had to replace the equivalent of its entire workforce roughly every eight months.”
“Kelly Nantel, an Amazon spokeswoman, responded to questions about the company’s turnover by saying, ‘Attrition is only one data point, which when used alone lacks important context.’”
“Some of the practices that most frustrate employees — the short-term-employment model, with little opportunity for advancement, and the use of technology to hire, monitor and manage workers — come from Jeff Bezos, Amazon’s founder and chief executive.”
“He believed that an entrenched workforce created a ‘march to mediocrity,’ said David Niekerk, a former long-serving vice president who built the company’s original human resources operations in the warehouses.” READ MORE
STARTUPS
Larry Ellison is trying to change the way the world grows food: “Picture this: You're driving along the highway on the island of Lanai, Hawaii's smallest inhabited island. All of a sudden, the verdant landscape gives way to futuristic greenhouses powered by an array of solar panels. This is the first outpost of Larry Ellison's three-year-old indoor-farming company, Sensei Ag. Sensei Ag is an agriculture-tech firm bent on changing the way food is grown worldwide. The company's mission is to feed the world by making produce more nutrient-rich and accessible and lowering the barrier to entry for vertical or greenhouse farming.”
“‘In the next three-to-five years, our goal is to feed the top three quintiles of the world with our products and employ the bottom two,’ Sensei Ag CEO Sonia Lo told Insider. ‘And then in the next eight-to-10 years, it is to feed everybody.’” READ MORE
Dark stores are spreading across Europe: “With ‘quick commerce’ customers can place orders – typically food or grocery items – and receive them within 10 or 15 minutes. Delivery services like this rely on small warehouses in city centers, called dark stores, where riders pick up items and take them to their final destinations. A new wave of startups in the space is rapidly growing around Europe: companies like Dija, Gorillas and Getir started their operations a few months ago with sizable investments from VCs.” READ MORE
FINANCE
There has never been a better time to get an SBA loan, and don’t give up just because one bank says no: “There are over 2,200 SBA lenders nationwide who all have different loan appetites. Second, make sure you work with an SBA-preferred lender. The process will be far less painful and take about half the time. And finally, don't automatically discount SBA loans as being too small. You'd be surprised at how much you can actually get. The most popular of these programs is the 7(a), which provides working capital to grow and expand your business. In addition to increasing inventory and hiring more staff, this working capital can also be used to acquire a business, buy out a partner, or even refinance your debt.”
“These loans can go up to $5 million with 10-year repayment periods and interest rates around 6 percent.”
“There are no guarantee fees on new loans through Sept. 30th, 2021. Those fees typically run at 2.5 percent of the guaranteed loan amount.”
“Plus, there are three months of payment forgiveness of up to $9,000 per month. All payments the SBA makes on your behalf are non-taxable.” READ MORE
REOPENING
Will it work this time for California? “In the past, efforts to lift or ease restrictions on businesses and activities have triggered new surges of Covid-19. That deadly domino effect played out last spring, and again in the fall. Those previous attempts pale in comparison to the scope of the state’s full reopening — which will see the end of virtually all coronavirus-related capacity restrictions, as well as masking and physical distancing requirements. With the coronavirus fading dramatically and vaccinations on the rise, however, there’s optimism that history won’t repeat itself.”
“Tuesday’s reopening comes after months of gradually easing business restrictions statewide. Those changes — which allowed higher capacity in retail establishments and more indoor group events — did not bring new rises in the coronavirus. In fact, virus spread kept declining.” READ MORE
REAL ESTATE
The U.S. housing market is short 5.5 million units: “Construction of new housing in the past 20 years fell 5.5 million units short of long-term historical levels, according to a new National Association of Realtors report, which is calling for a ‘once-in-a-generation’ policy response. The industry lobbying group said it hopes the report, set to be released Wednesday, persuades lawmakers to include housing investments in any infrastructure package. U.S. builders added 1.225 million new housing units, on average, each year from 2001 to 2020, according to the report, which was prepared for NAR by Rosen Consulting Group LLC. That figure is down from an annual average of 1.5 million new units from 1968 to 2000.”
“The supply shortage became especially acute in the past year. Builders slowed construction in some regions last spring and delayed land purchases because of the Covid-19 pandemic.”
“In addition, low mortgage-interest rates and an increase in remote work led to a surge in demand for single-family housing. And many homeowners delayed or canceled plans to list their homes for sale.” READ MORE
LOGISTICS
Countries are lavishing subsidies on semiconductor manufacturers: “When a semiconductor company opens a factory in Taiwan, the government covers almost half of the land and construction costs and 25 percent of the equipment costs. In Singapore, government subsidies cut the cost of owning a computer-chip factory by more than a quarter. Europe is cranking up financial incentives, too. And in China, the government is on track to spend as much as $200 billion to subsidize semiconductor companies through 2025. The bonanza of perks, detailed in a White House report last week, shows what the United States is up against as it attempts to entice more manufacturers to build domestic factories to produce computer chips, the precious electronics now in short supply.”
“The incentives game is also heating up over lithium-ion batteries, an essential component of the new green economy. The batteries power electric vehicles and store renewable energy for utility companies.” READ MORE
The Girl Scouts are stuck with 15 million boxes of unsold cookies: “Troops with armfuls of cookies used to be a fixture outside grocery stores and on people’s doorsteps. But this year, those cookies are stuck in warehouses after Girl Scouts of the U.S.A. was confronted with two major obstacles during the pandemic: membership has declined, and the scouts had to abandon their usual in-person selling methods. Those problems left the national organization with millions of extra Thin Mints, Samoas and other signature treats. Around 12 million of the 15 million surplus cookies never left the bakery warehouses in Kentucky and Indiana, the Girl Scouts said in a statement on Tuesday.” READ MORE
THE 21 HATS PODCAST
Episode 64: Adventures in Candyland: This week, Stephanie Stuckey tells Jay Goltz and Dana White about moving closer to the candy factory she recently bought to get a better feel for the people, the operation, and the challenges. Right now, those challenges include recruiting enough employees, absorbing increased supplier prices, and figuring out how much she should raise her own prices: “We can only give up so much of our margin, right?” she tells us. To which Jay responds, “Why give up any?” Plus: we talk about competing for labor with Amazon, whether to require employees to get vaccinated, how to manage legal fees, and whether Dana’s feelings of FUD have eased.
You can subscribe to The 21 Hats Podcast wherever you get podcasts.
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