Help Wanted: The Labor Challenge Facing Ecommerce

by Rakuten Super Logistics | eCommerce, eCommerce Strategy

Autumn will soon be upon us, and as is the case every fall, the nation’s ecommerce merchants will begin to anxiously look forward to the busy holiday shopping season ahead.

With consumer confidence riding high, and GDP growth said to be in the neighborhood of 4 percent, this holiday season carries with it the potential for prosperity for the nation’s online retailers.

However, there is one sizable, dark cloud that looms over what might otherwise be one of the best holiday sales seasons in years: the ability to find—and retain—high quality employees.

Earlier this month, the U.S. Labor Department reported that the number of job openings jumped by 1.7 percent, for a total of 6.9 million employment openings—the highest number on record since the year 2000. Perhaps even more troubling for the nation’s retailers was the accompanying statistic: according to the Labor Department, there were also 3.6 million workers who quit their jobs last month, a 3 percent jump in the number of employees changing jobs.

While both those labor statistics indicate a healthy economy, they also raise potential ‘red flags’ for US employers looking to staff up in preparation for their critically important holiday shopping season. And with Christmas Day barely three months away, ecommerce merchants (and their brick-and-mortar ‘brethren’) will have to face these labor challenges with a national unemployment rate that is hovering around the 4 percent mark.

Employers Looking To Hire & Retain Staff May Face Even Tougher Days Ahead

The Labor Department also reported that US businesses added about 201,000 new jobs in August; looking forward, the report also found that employers in all 13 major industries tracked by the Department, reported that they planned to add additional workers in the next three months.

While these indicators are good news for American workers, US companies are now facing the double-edged challenge of both recruiting new employees and retaining existing staff; Federal Reserve statistics indicate that workers who do choose to switch jobs are getting raises that are about one-third larger than those raises offered to employees remaining at their current positions.

Andrew Chamberlain, Chief Economist at job site Glassdoor, recently told CBS that “it’s clear there is a gap in wage growth that’s widening between people who are staying in their jobs and people who are switching.” Federal Reserve statistics show that those switching jobs saw their wages grow by 4.4 percent this spring, about double that of workers who remained with their employer.

Perhaps the biggest ‘asset’ that many employers seeking to retain workers have in their favor is residual fear of unemployment; in the wake of the Great Recession, job mobility—referred to by economists as the ‘quit rate’—is below the level recorded in previous boom economies. Analysts point to lingering fear from the last recession as a reason some workers remain reluctant to change jobs, despite the economic benefits proffered by doing so.

Interestingly, for those who are choosing to seek out greener employment pastures, the ‘job hopping’ trend seems to span across a wide array of industries, including retail, construction and even food-services. Almost one in seven of the 6.1 million Americans without jobs this past spring were unemployed by choice, the highest voluntary unemployment level in 17 years.

Ecommerce Struggles To Meet Staffing Needs Amid Worker Shortage

According to a recent report by the international real estate firm CBRE, the rapid growth within the ecommerce space is expected to require as many as 450,000 more warehouse and distribution workers in 2018-2019.

The CBRE study said companies looking to hire warehouse and distribution workers will, essentially, only have three options to consider in order to meet the staffing shortage: recruit staff from other industries, turn to automation to increase efficiency, or expand into new markets with larger, available workforces.

Although many labor analysts have expressed concern that robots and automation could potentially lead to job losses, the CBRE study found that robots—particularly those deployed for use in warehouses and in autonomous trucks—could actually assist businesses that would otherwise be searching for laborers who simply are not available for work.

In addition, the locations selected for new supply chain centers will also play a vital role in helping to mitigate the shortage of available workers; companies will have to consider ‘going where the workers are’, into markets that have above average unemployment levels.

New Job Sites Emerge To Assist Ecommerce Meet Staffing Shortages

Another method of meeting the staffing challenges faced by ecommerce companies is the emergence of ‘on-demand’ staffing websites.

According to the Society For Human Resource Management (SHRM), sites such as Snag, Wonolo, and Shiftgig can assist businesses to fill job shifts, often on very short notice.

Designed specifically for ecommerce, retail and hospitality industries—all of whom tend to have a high need for hourly or short-term workers—candidates on these sites are pre-screened and pre-qualified by recruiters working for the platforms.

There is, without question, a sizable economic need for these types of workers; US Department of Labor statistics indicate that, in 2017, hourly workers represented almost 60 percent of the entire US workforce.

By pre-qualifying workers through interviews and background checks, sites such as ‘Snag’ allow companies to post hourly openings, while the workers in the site’s system are then alerted to job openings that match their skills and availability. Snag’s CEO, Fabio Rosati, recently told SHRM that his company has placed workers at over 300,000 workplaces in the US and Canada.

San Francisco-based Wonolo is an hourly staffing platform specifically designed to help ecommerce companies, retail businesses and third-party logistics firms meet their short-term employment needs. The company’s co-founder, AJ Brustein, said his platform can assist an ecommerce site experiencing an unexpected spike in sales who, as a result, “finds itself in need of additional workers ASAP”.

He added that, unlike more traditional staffing sites, Wonolo looks for candidates “possessing the five Ps—prepared, professional, positive, polite and punctual.”

Ecommerce Growth Will Require Innovation To Meet Its Staffing Needs

Still, as the ecommerce sector continues its rapid growth, all avenues will need to be explored in order to meet the staffing needs of an expanding business sector in a very tight labor market.

For example: according to the CBRE survey, North American companies lag behind their counterparts in Asia and Europe when it comes to relying upon automated shipments. As a result of the current labor shortage, the CBRE predicts an acceleration of the automation trend—which had already been growing rapidly even before the recent staffing shortfalls.

Whether it be short-term hiring via staffing websites, greater reliance on robotics, proffering higher wages to attract more quality workers, or relying on other innovative recruiting methods, successful ecommerce businesses will have to use all available tools in order to ‘get the job done’ as the busy 2018 holiday season approaches.