‘We’ve Never Raised Prices Anywhere Close to That’

And yet, says Mac Harman, artificial Christmas tree seller Balsam Hill will still make less money this year.

Good morning! 

Here are today’s highlights:

• If you’re trying to hire, don’t forget the Work Opportunity Tax Credit.

• Why retailers big and small love “buy now, pay later.”

• And are we finally done with business cards?

HUMAN RESOURCES

Amazon is offering $3,000 hiring bonuses, but Gene Marks says there’s a way small businesses can compete: “If you’re a small business owner, you can match Amazon’s offer. Maybe even exceed it. And better yet, the federal government will foot the bill. It’s called the Work Opportunity Tax Credit, and thanks to recent stimulus legislation, it’s been extended through 2025. Used the right way, it can be a powerful hiring tool that will enable you to recruit those much needed employees. The tax credit can be worth up to $9,600 per new employee hired. It gets applied against the taxes your company owes and can be carried back to last year’s return — or carried forward 20 years if the credit exceeds your tax liability.”

• “When you’re about to hire a new employee, call up your accountant and get Form 8850 completed in advance. This form is like a pre-qualification and serves to make a written request to your state workforce agency.”

• “The list of eligible workers includes ex-felons, qualified social security insurance recipients, or those that have been receiving long-term welfare assistance from the government. More importantly, the credit can be used for anyone that’s been unemployed for more than six months.”

• “Sound familiar? It’s no secret that lots of people are going to be coming off unemployment this fall as extra federal benefits expire.” READ MORE

LOGISTICS

Sellers of artificial Christmas trees are struggling with supply-chain disruptions: “Some U.S. retailers are raising prices by 20 percent to 25 percent to keep pace with skyrocketing shipping costs and they are warning that certain trees could sell out early because deliveries from overseas producers have been hit by the congestion that has tied up distribution networks from ports in China to freight yards in Chicago. Balsam Hill, a Redwood City, Calif., company that sells medium- to high-end trees online and in stores, is raising prices by 20 percent on average, with list prices for some of its trees pushing close to and beyond the $1,000 level it charges for its premium trees.”

• “‘We’ve never raised prices anywhere close to that in our history and will make way less money,’ said Mac Harman, the firm’s chief executive.”

• “The company’s 7½-foot tall Brewer Spruce with clear LED lights is listed at $999 this year, up from $899 last Christmas. Its 4½-foot tall Grand Canyon Cedar tree with clear fairy lights will list at $499, up from $300 last season, as soon as it is in stock.”

• “Mr. Harman said he expects the company’s U.S. inbound shipping costs will quadruple this year compared with 2020, reaching $45 million to $50 million on projected sales of $200 million to $250 million.” READ MORE

RETAIL

Everyone loves “buy now, pay later”: “One reason: shoppers like Ms. Luedtke who don’t qualify for credit cards. Buy-now-pay-later companies say they rely less on—and in some cases bypass altogether—traditional credit scores and reports. Doing so allows them to approve more consumers. Shoppers gain the ability to buy things even without cash on hand—translating to higher sales for retailers. Afterpay said it expects the company’s U.S. merchants will see an $8.2 billion increase in sales this year because of payment plans. Affirm Holdings last year said purchases made with its payment plans were 85 percent larger, on average.”

• “Shoppers spend more at Macy’s when they use installment plans offered through Klarna Bank AB, Macy’s CEO Jeff Gennette said on a recent earnings call.”

• “The value that most retailers see in buy now, pay later is customer acquisition,’ said David Sykes, Klarna’s North America head.”

• “Merchants take no credit risk with these plans, but the fees they incur can be higher than on credit-card purchases—often between 3 percent and 5 percent of the purchase price, according to people familiar with the matter.” READ MORE

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ECOMMERCE

Target is fulfilling 95 percent of its online orders from its local stores: “The company is now the fourth-largest e-commerce grocer in the nation. With 75 percent of the U.S. population within 10 miles of one of its 1,900 stores, Target was already well positioned to grab market share, but its approach — from acquiring technology and routing firms, to owning its own delivery network — helps set it apart and has been a key that allowed digital sales to grow 150 percent in 2020. ‘We had to first build out that fulfillment network in stores,’ Valdez said, noting that Target needed to think about how it would sort ecommerce packages.”

• “Its solution was to shift away from the traditional store replenishment model — floor-loaded truckloads that store employees would break down and distribute around the store — and instead pre-sort items at the warehouse level and send them to stores in containers with ‘directional put away in the store’ instructions to speed the process.”

• “The company has opened a sortation center in Minneapolis and plans four more in the Philadelphia, Houston, Dallas and Austin, Texas, regions. These sortation centers serve as a central pickup point for e-commerce orders, including same-day delivery.” READ MORE

FROM OUR SPONSOR: WOMPLY

At Womply, we believe everyone should be able to start, run, and grow their own business. When the pandemic hit, we stepped up to support business owners: 

• 933K businesses received funding through Womply

• 1.3M loans funded

• $19B deposited

• $14.4K average loan 

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MARKETING

Has Covid finally killed off the business card? “Before the pandemic a vast amount of business cards were being printed around the world. One estimate put it at 27 million per day, or more than seven billion each year. But Covid-19 has made many of us more nervous about spreading germs. Even as we return to workplaces, or get back to networking face-to-face, will the habit, or for some - the ritual - of handing over a paper business card become a thing of the past? And what technology could fill the gap?”

• “Edward Senju appears on the computer by video link from Singapore. On the screen above his left shoulder is a QR code. Amid the pandemic, these black, barcode-like squares have become increasingly common, and can be scanned to open up a webpage, such as a restaurant's menu.”

• “Mr Senju is regional chief executive for a Japanese tech firm called Sansan Global, which supplies database software to help businesses to manage and share customer and supplier contact details internally.”

• “Mr Alvarez-Cohen is the co-founder of Popl, a California-based contact-sharing app. It uses NFC (near-field communication) technology, via a small round tag that you stick to the back of your mobile phone, to beam your details to another person's handset.”

• "All I have to do is hover my Popl next to your phone and it sends the information. The other person doesn't need to have either the firm's app or tag installed.” READ MORE

THE 21 HATS PODCAST

Episode 76: Our Best New Accounts Are Coming Through LinkedIn: This week, Stephanie Stuckey talks about how she’s been winning her biggest retail accounts for Stuckey’s candies without a sales pitch. She also explains her latest manufacturing snafu, which she calls, “the case of the squishy pecan log rolls.” Laura Zander, meanwhile, tells us about the supply chain challenges she’s faced getting products from China, Vietnam, and South Africa. Plus, she talks us through how her latest price increases have resulted in a doubling of orders.

• You can subscribe to The 21 Hats Podcast wherever you get podcasts.