Market Vertical Dynamics

How Vertical Market Dynamics are Impacting the Staffing Industry

The Jombone Interview Series gathers subject matter experts to discuss emerging concepts in staffing recruitment and management. 

In this installment of the Jombone Interview Series, Sumit Sahdev, CEO and co-founder of Jombone is joined by Eddie Diaz, Jombone’s Director of Sales and Business Development to explore the effects of vertical market dynamics.

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The e-commerce fulfillment and logistics industry is a rapidly expanding vertical market. With more and more potential customers turning to online shopping in recent years, the need for warehouses and fulfillment centers is skyrocketing, and with it, the demand for blue-collar workers to staff these facilities. However, this surge in demand is causing concerns about a potential labour shortage, as too many companies are chasing too few workers.

A shifting blue-collar landscape

In the past, brick-and-mortar stores were a primary source of employment for blue-collar workers. However, as more and more consumers shop online and business models change, there has been a shift in the type of jobs available – instead of working in retail, blue-collar workers are now needed in warehouses and fulfillment centers to help process and ship consumer products ordered online.

This surge in demand has created a labour shortage in a wide range of areas, as companies need help finding enough workers to fill their open positions. This problem is especially acute in areas with a high concentration of warehouses and fulfillment centers. As a result, organizations are offering higher wages, more flexible schedules, and other incentives to figure out how to attract workers.

“Companies who are currently operating in this segment [are] pushing smaller companies to move away from their traditional brick and mortar retail space”, says Sahdev. “Everybody’s drawing from the same labour pool… most likely it is going to result in a shortage of workers.”

Shortages and regulatory changes

Another example of an industry experiencing significant growth is transportation. As it is responsible for distribution channels transporting goods from warehouses to customers’ homes, this industry is critical to the success of e-commerce. However, the transportation industry is facing its own challenges.

“It’s a sector that is getting really, really busy, but then it’s also finding some barriers”, says Diaz. “There’s a disconnect between supply and demand. There’s a gap.”

The need for more drivers is a significant problem for the transportation industry, making it harder for companies to transport goods efficiently. This, in turn, can lead to service delays and increased costs, which can impact the entire supply chain. New regulations, such as the Electronic Logging Device (ELD) mandate, have made it harder for companies to find qualified drivers.

Manufacturing comes home

Another industry experiencing significant changes to its staffing challenges is manufacturing. While new technologies (including automation and artificial intelligence) are reducing the need for production staff on the factory floors, it has increased the demand for skilled labour needed to operate and maintain the technology used in manufacturing.

“Canada has to rely a lot on countries outside of Canada for manufacturing, China being one of the primary hubs. I think there’s an increasing awareness to be able to become self-sufficient.” Sahdev says. 

“The government is really offering good incentives for businesses to ‘re-shore’, which means that they are looking to bring on the manufacturing from third-party countries like China and other countries, which is also going to make sure that there’s a need for more workers to be hired.”

Modern problems, modern solutions

The retail industry, the front face of this vertical market, is also affected. As more and more manufacturers move to online sales, workers need to not only help package and ship products but also provide customer service. And the fluid nature of modern demand cycles is requiring a more modern staffing strategy.

“There’s going to be a need for more workers and for more worker flexibility so they can be available at any given time. The only way that is going to be sustainable for those retail giants [is to] have that contingent workforce because otherwise, it would not be a sustainable model”, says Diaz.

Shared problems and unique challenges

The staffing industry is closely tied to the dynamics of vertical markets. E-commerce fulfillment and logistics, transportation, warehousing, manufacturing, and retail are all industries that are experiencing significant changes linked to the increasing adoption of online shopping. 

While these multiple industries are interconnected and impact each other, they also have specific needs and face unique challenges that require attention and solutions to ensure a stable labour force.

As companies navigate these challenges, they must be proactive in their approach to hiring and retention, work with regulators to create a regulatory environment conducive to growth and stability, and explore flexible staffing strategies to meet the demands of business operations.

“It is extremely important for businesses to be able to think out of the box and plan for these factors in advance”, Sahdev concludes.