Weathering the “Richcession” This Back to School and Holiday Season
The UPS delivery driver strike has shown us just how much jobs have changed over the past few years as companies continue to scramble to meet customer expectations for speed and convenience. The pandemic accelerated changes, pushing every business into ecommerce to survive and provide consumers with everything from services and virtual healthcare appointments, to streaming tv shows and zoom meetings for business, to consumables like dog food and toilet paper. All under the already created two-day shipping right to the front door.
Unfortunately, overworked and underpaid employees took the brunt of this and describe 14-hour days in trucks without air conditioning as the continued norm, since many industries never really returned to the pre-pandemic normal.
It was also described as “Christmas on steroids for two straight years, while being forced to work six days a week to meet the delivery demands.” So as consumers continue to desire instant gratification and push delivery drivers to the brink of burnout, what does this mean for the economy?
“Richcession” or a Rolling Recession?
For the past year we have all been warned of the potential upcoming recession. However, it seems that in spite of all the factors and the Federal Reserve continually increasing interest rates to spike the cost of borrowing— the economy has remained resilient.
Consumers continue to spend and employers continue to hire, and that coupled with inflation reaching its lowest level in two years helps consumers to stretch their paychecks for this back to school and upcoming holiday season. This typically leads to a “soft landing,” where growth slows and inflation falls without a full-blown recession.
Many economists consider this era a rolling recession, while others attribute the characteristics to a “richcession.” Rolling recessions are when some industries shrink while the overall economy manages to proceed successfully.
Others will argue this is more like a “richcession” where the industries impacted were higher-paying industries like technology and finance. Typically, these have professional workers with financial cushions to withstand the impacts of layoffs and job cuts are less likely to sink the overall economy.
The threat for a full-blown recession is still there, as the interest rate is the highest level in 22 years and the Fed still threatens to raise it again before the end of the year to fix inflation, impacting consumers and businesses looking to borrow money.
Benefits & Challenges in eCommerce
eCommerce business owners are facing issues like reduced consumer spending and changing preferences, which leads to cash flow constraints as suppliers are left with excess inventory that’s not selling and potentially the inability to purchase products that may sell quicker. With decreased consumer spending, there will also be increased competition amongst suppliers as they duke it out over who can capture market share.
Though there are challenges, there are still numerous benefits to this type of market. Automation streamlines processes and allows you to know your data so that you can make informed decisions as the market continues to shift.
Agility & Flexibility:
eCommerce businesses have the opportunity to capitalize on changing market dynamics and can adjust quicker than its huge retail competitors. This competitive advantage henges on the ability to quickly adjust pricing, placement and advertising within a matter of minutes– decisions that typically take days in larger organizations.
Price Sensitive Consumers:
Consumers are savvy and when times are tough and cash is limited, most are price sensitive and prefer online shopping for the ease of price comparison. Automation allows you to know your inventory, know the price you paid, and confidently manipulate the pricing to remain competitive and profitable.
Supplier Negotiations:
When times are tough for consumers, it usually impacts through the entire chain. Understanding your products and what is selling or sitting on the shelf will help you to better negotiate prices with your wholesalers, as well as rates with warehouses and shipping. Software will help you to know your data so that you’re able to make informed decisions and appropriately negotiate new rates that benefit your business.
Overcoming the challenges can be overwhelming, but implementing a software solution can enhance operational efficiency, optimize inventory management, streamline logistics, and provide valuable insights through data analytics, empowering your small businesses to adapt swiftly, reduce costs, and maintain a competitive edge amidst economic uncertainties.
Simplify with OPAL’s 4-in-1 Software Solution
EDI | Order Management | Warehouse Management | Shipping
OPAL is the innovative solution to simplify your small to mid-sized to enterprise business fulfillment needs in today’s rapidly transforming retail world.
As you gear up for this back to school season, we are here to help you know your data and make your processes more efficient – OPAL is here to partner with you on this journey.
To learn more about how your eCommerce business can thrive this year, click here!