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Labor shortage holding back e-commerce

Labor shortage holding back e-commerce

Labor shortages are holding back e-commerce, with many online shops having to stop advertising online because they cannot cope with the increased demand, according to a press release sent to the Budapest Business Journal.

Kristóf Gál, founder of Klikkmarketing, said that companies able provide good working conditions and salaries are still able to recruit skilled professionals. However, retaining workforce has become the new recruitment, he added.

Gál noted that recruitment has become more important than ever before, as most people don't realize how much work and expense it is to find a new person for a position.

According to research by GKI Digital, the turnover of online retail in Hungary was HUF 909 billion in 2020. The 45% increase compared to the previous year is largely due to the circumstances caused by the coronavirus epidemic, and the results are above average even by international standards.

"We know of several companies that have to scale back their marketing because they simply can't meet the demand. Some are even shutting down their online advertising at the weekend because by Monday they have so many orders piling up that they can't even meet their commitments in time. This is clearly due to a lack of staff in the business," Gál said.

30-40% of online shops are affected

The expert also said that companies are not recruiting well online and there is actually a shortage of good employers in the market.

"Any company that has values, a vision, can offer good pay and working conditions, and values its employees, is sure to find efficient and skilled people. In many companies, labor shortages are a symptom, but they are really just badly organized," he explained.

He estimates that 30-40% of online shops could be affected by this problem, as this year they are so buoyant that they could be doing twice as much business as they do at Christmas, even in the previously slowest months.

He also suggests that work organization needs to be thought through more strategically. It's not unusual for someone to have a very good first quarter of the year, but then see a drop in demand in the summer season. So sometimes you need 15 people, other times only 5, which has to be woven into the plans. The best way to do this is to work with non-fixed workers, possibly students.

"Labor costs go up, you have to adapt to that. The new recruitment is clearly retention, it's become much more important to keep the best people, to pay more attention to them. Another solution is to improve efficiency, because it's not inconceivable that you can do the same job with fewer people," he said.

He added that firms misjudge the time and cost of recruiting new staff. On Facebook, one may spend up to HUF 300,000 to find the right person, but most people are not willing to spend that much. And the more expensive an employee is, the more one has to spend to "hire" them.

Finally, he noted that customers also feel the effects of staff shortages, with slower customer service response times and delayed deliveries, which in the long run damage a company's reputation.


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