Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
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Such healthy growth for e-retailers ensures steady work for their human resource departments. So does the turnover rate for hourly warehouse workers, which stood at 29% in 2011, according to the Hay Group. "E-commerce growth has led to the development of more online fulfillment centers, creating greater opportunities and turnover among both hourly workers and management positions at distribution centers," the consulting firm says in a May report that included survey responses from 54 U.S. retailers. That turnover rate is leading many retailers to focus more on retention, such as through offering a way for seasonal workers to snag permanent jobs, Hay Group says.
No dead ends
Back in Wisconsin, BuySeasons employs about 350 full-time workers, of whom 60% started out in seasonal work, says Karst. The company doesn't shy away from sharing that statistic with its temporary workforce. "We don't want them to think it's a dead-end job," he says.
Promoting possible career growth is also a strategy for Toys ÔR' Us, which hired about 1,000 seasonal distribution workers for the 2011 holiday season, a spokeswoman for the chain says. "Some of our seasonal or part-time employees have even gone on to full-time management positions," she adds.
Knowing they may want to retain some of the seasonal workers, some e-retailers are looking more closely at seasonal job candidates. That's the case at Spreadshirt.com, a customized apparel e-retailer whose production increases about 100% per month between October and late December while its staff grows from 100 to about 250. Most of the temporary hires work full-time hours, and they include high school graduates, college students on break, moms and retirees looking for extra cash, says Mark Venezia, vice president of sales and marketing. With the recession have come candidates with deep skills in other areas—for instance, a finance professional now working shifts in the warehouse.
But a bigger change over the last three to five years has been in the way the e-retailer has tightened up peak-season selection, Venezia says. "If we spend a little more time getting the right employees, they will stay with us for longer periods of time. We are looking for people who really shine in the interview, and trying to weed out the ones who won't be hard workers or consistent."
Finding workers capable of making eyeglasses is not easy for eyewear e-retailer Coastal.com, even though 100 to 200 applicants often vie for 10 or 20 open positions, says CEO Roger Hardy. Those openings typically come during the early fall back-to-school season when the e-retailer's sales increase 20% to 30%. "It's a challenge to get people into the manufacturing jobs," Hardy says. "They need dexterity and some specific skills."
At Spreadshirt, training can last up to four weeks and involve digital production skills and cross-training on multiple jobs. At Redcats, temporary workers spend the better part of a week in the company's interactive training department—the program covers everything from safety to how to work a packing station—before being let loose on the warehouse floor. "That significantly reduces turnover because of the investment we make up front," Edgington says, "along with the fact that our buildings are all air-conditioned, well-lit and clean."
Another Redcats training program gives the e-commerce operator flexibility when it comes to its peak seasons. Redcats cross-trains all employees, and Edgington says 60% of them can function in two jobs, and a few in seven. "You have the ability to shift your workforce around, and that allows a lot of flexibility," he says.
Pay and atmosphere
Incentives and overtime also serve to boost peak-season efficiency. Redcats operates an incentive program that enables employees to set their own production goals; meeting higher goals brings in more bucks. The program applies only to permanent full-timers, as they are more likely to be able to reach those marks than can new temps, but Edgington hopes to find a way to expand the program to seasonal workers.
At Spreadshirt, a worker can earn a bonus if she doesn't call in sick during the peak season. That cuts down on workers missing work on snowy days, Venezia says; the retailer's production facility, near Pittsburgh, is hardly a winter paradise. "If you have 20 to 30 people call in [sick] for a shift, it can really can put us behind," he says. The program has proved successful over the past two years, with up to 90% of workers earning bonuses, though he allows that last year's winter was relatively mild.
Atmosphere also helps to bring out the best work from peak-season workers. Hoping to keep the workplace enjoyable and interesting, Coastal.com lets employees blow off steam by holding box-folding competitions, team trivia contests and ping-pong tournaments. At Redcats, the call center—another key area during peak seasons—recently underwent a renovation, in part driven by the relative youth of new hires. Gone is the bland 1980s décor; in its place are new couches, plasma TVs in the break area and charging stations for iPods. "If we have happy employees, we do a better job of selling and satisfying customers," Edgington says.
Happy employees can make the next peak season easier. "As our retention improves, we don't need to hire as many people," Edgington says. And with e-commerce continuing to grow, more e-retailers will certainly be thinking along the same lines—how to turn the best of their seasonal hires into permanent employees.