Ecommerce Opportunities Amid Tech Layoffs

Warren Buffet once said to “be fearful when others are greedy, and greedy when others are fearful”. How can ecommerce companies apply this advice in light of the large number of layoffs in the tech industry over the past few weeks and months?

You can’t open up your favorite news site or social media platform without reading another story about tech layoffs. After years of aggressive hiring backstopped by inexpensive financing, tech companies are laying off what is totaling to hundreds of thousands of employees. However, a recent Stanford Business article outlines that these layoffs aren’t actually driving financial improvements for the companies that are executing them and these companies aren’t actually in financial trouble. Instead, they’re engaging in what Jeffrey Pfeffer, a professor of organizational behavior at the Stanford Graduate School of Business, calls “copycat layoffs”. Tech companies are laying off talented, well qualified individuals that just months ago they were fighting each other over — and they’re doing so just because everyone else in the industry is doing it.

Talent Wars

For several years, companies like Facebook, Amazon, Apple, Netflix and Google engaged in talent wars — where they tried to top each other with higher salaries, better bonuses and more perks. This drove salaries higher and made it incredibly challenging for brands outside of this core of tech companies to hire qualified developers, designers and engineers.

Be Greedy - Hire This Talent

But now, those same companies are laying off thousands of employees and beginning the process of letting them go. This presents an enormous opportunity for ecommerce brands who are looking to hire talented workers and have been struggling to do so. Make it clear that your company and department are in an industry that has never had a down year — ecommerce has grown year over year every year since its creation — and that it represents a safe place to grow and apply your talents without fear of these copycat layoffs.

Facing Your Own Budget Cuts?

If you’re facing budget cuts and considering layoffs, consider what Dr. Jeffrey Pfeffer shared in his article - layoffs don’t cut costs, they harm your stock price and they harm employee productivity. Look at your underlying strategy and determine if there are changes you can make to increase revenue in the current economic environment. If not and you must cut personnel expenses, consider the alternatives presented by Dr. Pfeffer based on his research - cross-train your employees into other roles that you have a greater demand for to replace existing job requests or consider asking your entire workforce to take a pay cut in lieu of a portion of them losing their jobs.

However, based on the slowing rate of inflation and other economic data being released each week — challenge a request to cut your personnel expenses. Explore if it’s being driven by a material change in your business’s operating environment or if it’s simply because “everyone else is doing it” or fear that there might be a future change to your environment. Look at the retailers and service providers that made preemptive cuts earliest during the COVID-19 pandemic - they have struggled to re-hire and as a result they’re providing worse service, have lower customer satisfaction and are having to spend more money on marketing to acquire new customers since they aren’t retaining their existing customers.