Would You Hire a Boomerang?
At many companies, the practice of rehiring former employees has been frowned upon. Given the current labor market, those days may be over.
Here are today’s highlights:
Halloween costumes are still arriving in ports.
Producer prices rose sharply in November.
Google says employees who don’t get vaccinated will get fired.
More retailers—Kroger, Express, J.Crew, Urban Outfitters, Macy’s—are copying Amazon by creating online marketplaces to sell third-party goods: “The immediate economic appeal is obvious: They are a relatively low-cost, high-margin opportunity. There is little upfront investment on the part of the retailer, which doesn’t have to buy and hold inventory. Instead, they list third-party sellers’ items on their website and take a cut—typically 15 percent—of the seller’s revenue. That rate can get as high as 40 percent for some established marketplaces that offer fulfillment services and advertising to their sellers, according to Edward Yruma, managing director at KeyBanc Capital Markets.”
“Assuming a modest 15 percent take rate, if Macy’s had an online marketplace in 2019, it would have had to sell roughly $108 million—or less than 2 percent of its digital sales that year—to move gross margins up by 0.1 percentage point.”
“Retailers have their own reasons to embrace the approach, including to introduce new categories. Kroger, for example, is using a marketplace platform to sell goods from Bed Bath & Beyond. Urban Outfitters uses one to sell secondhand clothing.”
“For retailers, there are clear risks. Brand dilution is a huge one, especially for apparel. If the customer experience with the third-party seller is bad—whether on quality or shipping speed—it can sour perceptions of the retailer.” READ MORE
We used to think convenience stores could never be disrupted by ecommerce: “The earliest start-ups designed to work with corner stores popped up a few years ago, but this market, like so many others, really boomed when the pandemic hit. Lockdowns forced people around the world to start shopping for groceries and packaged goods online—items they used to get at their local corner stores. Tech companies seized the opportunity, offering apps that allowed them to take e-commerce orders, fill their inventory with cheaper products, and make additional income through services like package delivery.”
“Over the past few years, dozens of start-ups flush with more than $1 billion from investors have sprung up to turn mom-and-pop stores into digital retailers and mini–tech hubs.”
“While the tech investment in corner stores is happening everywhere, much of the money has flowed to South and Southeast Asia, where these shops are particularly dominant.”
“Amazon has partnered with thousands of corner stores in India to build a network of mini–fulfillment centers.” READ MORE
Halloween costumes are still arriving in ports: “With the pressure to fulfill the holiday deadlines of their customers, logistics companies like C.H. Robinson are deploying employees to open these containers and sort out time-sensitive items in an effort to get them on store shelves on time. ‘One of the unique things we’re doing is using our warehouse space in port cities to sort their containers and pull out the most urgent product,’ said Noah Hoffman, retail expert and vice president of North American Surface Transportation for C.H. Robinson. ‘Why take up space on a truck with late Halloween costumes or Valentine’s inventory that’s arriving when toys and wrapping paper need to get to stores right now?”
“‘[In past years] all the Christmas merchandise would be somewhere a consumer could buy it well before Black Friday — off the ship, out of containers, at a distribution center for online orders or physically on a shelf,’ Hoffman explained.”
“‘What’s different about this year is that Christmas merchandise is still on its way. Believe it or not, Halloween costumes are still coming through the ports.’” READ MORE
THE COVID ECONOMY
The prices that suppliers charge businesses rose sharply in November: “The Labor Department said Tuesday that its producer-price index rose 9.6 percent in November from a year earlier, the most since records began in 2010. The so-called core PPI, which excludes often volatile food and energy components, climbed 7.7 percent from a year ago, also the highest on record. The higher-than-expected producer-price numbers suggest that consumer inflation, which hit a nearly four-decade high of 6.8 percent last month, will stay elevated into 2022 as price pressures persist.” READ MORE
The CDC is warning of an omicron wave that could hit in January: “During the week that ended on Saturday, Omicron accounted for 2.9 percent of cases across the country, up from 0.4 percent in the previous week, according to agency projections released on Tuesday. In the region comprising New York, New Jersey, Puerto Rico and the U.S. Virgin Islands, the percentage of Omicron infections had already reached 13.1 percent. In a briefing on Tuesday with state and local health officials and representatives of public health labs across the nation, CDC officials warned of two possible scenarios.”
“The first was a tidal wave of infections, both Omicron and Delta, arriving as soon as next month, just as influenza and other winter respiratory infections peak.”
“Federal health officials also proposed a second scenario in which a smaller surge in Omicron cases occurs in the spring. It was unclear which forecast was more likely.” READ MORE
A survey from Small Business Majority finds that business owners support vaccination requirements: “Of those small businesses with employees, 42 percent require all or some of their workers to be vaccinated, and an additional 21 percent are considering doing so. The majority of small businesses support (56 percent total support, 45 percent strongly support) the administration’s rule that would require businesses with 100 or more employees to require coronavirus vaccines and/or regular testing for their workers, compared to just 1 in 3 (33 percent) who oppose it.” READ MORE
Google says employees who don’t get vaccinated will eventually get fired: “The document said employees who haven’t complied with the vaccination rules by the Jan. 18 deadline will be placed on ‘paid administrative leave’ for 30 days. After that, the company will put them on ‘unpaid personal leave’ for up to six months, followed by termination. A Google spokesperson didn’t immediately respond to a request for comment. While much of the tech industry continues to push back return-to-work plans and companies large and small prepare for a flexible future, Google is requiring its workforce to eventually come into physical offices three days a week at some point in the new year. And it’s showing limited patience for those who refuse to get vaccines, which have been widely available for months.” READ MORE
As we discuss in this week’s podcast (below), more businesses are re-hiring former employees: “An increasing number of people, often dubbed boomerangs, are returning to companies they once worked for. Some left and worked at another firm for a time, while others simply left a company expecting to never come back. Now, many are returning and in some cases even working for their former bosses. The situation can be mutually beneficial to employees and companies. For workers, many have been able to secure a higher salary and a promotion with elevated responsibilities. Employers have the opportunity to bring back proven workers, quickly. This is particularly beneficial now as many companies struggle to fill jobs.”
“LinkedIn data shows that boomerang workers have increased across the companies on its platform this year, with tens of thousands more people returning to old employers.”
“Boomerangs accounted for 4.5 percent of all new hires among companies on the professional networking website in 2021, according to LinkedIn, up from 3.9 percent over the same period in 2019.”
“‘Employers should be thinking about, ‘OK, in the last two years who left and who would we want back?’ said Cammas Freeman, founder of a recruiting firm in Boise, Idaho.” READ MORE
THE 21 HATS PODCAST
The Vomit List: This week, Jay Goltz and William Vanderbloemen talk about what it takes to hold on to your best people, the ones whose departures might send you looking for a trash can. They also discuss whether “hire slow” still works, whether it’s a good idea to rehire a former employee, whether it’s still possible to do a meaningful reference check, how to use 360 reviews and personality tests, and finally, whether Jay and William would be ready to sell their business if someone were to come along and offer them twice what they think it’s worth.
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