Shippo wants to become one of the primary endpoint of shipping by abstracting the shipping infrastructure layer to allow businesses to provide cheap and easy shipping.
Shippo latest round was a 2 million Seed in September 2014. Current investors include 500 startups, Slow Ventures, SoftTech VC, Version One Ventures.
[Update - February 11 2017] Shippo received a $7M Series A in September 2016 from USV, SoftTech and Version One.
- Shipping Technologies are not easily available for small businesses
- Businesses are not always eligible for bulk discounts; Prices without bulk discounts are usually 80% higher
- It’s difficult and time consuming for businesses to compare shipping rates
- Amazon and other large retailers have taught consumer to expect free and fast shipping, but businesses don’t know how to optimize or negotiate efficiently
- 63% of all ecommerce consumer want to see free shipping at checkout
- More than 90% of shoppers are ready to add more item to their shopping cart to qualify for free shipping
Shippo is a B2B business providing value through their shipping API. Shippo gives access to better rates offered by smaller courier companies that are difficult to find and compare. The solution Shippo is offering is especially valuable for Europe, Asia, South America and Africa.
Increasing Sales: Shippo has created a single system that brings multiple carriers together. With the Shippo API and dashboard, businesses just need to enter the shipments and it will automatically generate the best prices from the biggest brands in shipping (currently 15 carriers from local to international).
Increasing Customer Retention: Shippo has also created a Tracking API that gives more information about the status of the items they order. The API allows businesses to provide the tracking feature on their website and to notify customers through other channels like SMS.
Shippo’s growth will come as a result of these recent development:
Ecommerce is still at the early stage and represents a fraction of the retail sales
- Worldwide Package shipping market is a $300 billion market
- Worldwide ecommerce Sales as Percent of Retail Sales is at a level of less than 10%
- Worldwide ecommerce is expected to grow between 15 to 25% YoY
Smartphone penetration maturity and favorable demographic in the US
- In the US, millennials are representing one of the largest population
- They grew up during digital era with internet, mobile computing, social media and are more willing to spend online
- Optimistic, earn to spend approach and spending power rising significantly in the next 10–20 years
APIs and Playbook development
- Many shipping providers do not have APIs (or they use very outdated technologies)
- Twilio IPO and other successful APIs focused company like Stripe, Fliptop and DataSift can act as a framework for growth and go-to-market strategy
- Explosion of channels like O2O, Social Media, Messaging and Voice require strong and flexible APIs in order to do a good integration
Initially, Shippo targeted small businesses, because it represented the market with the most need in the short term. This phase enabled Shippo to see which verticals showed stronger growth while growing with their smaller customer. We can assume Shippo will move up the stack in their stronger verticals by getting clients with more volume while still providing the service to their smaller customers. Shippo will then be positioned to be at the middle of the logistic layer and establishing themselves as a provider of trust for B2B companies that want to provide fast and efficient shipping.
Amazon — It’s not clear whether ecommerce is a winner take-all market or not. Amazon built the logistic infrastructure and more businesses are selling on the Amazon marketplace. Amazon is now one of the layer of trust in ecommerce. Shippo can help others businesses by providing an abstraction of this infrastructure.
USPS — US is still one of the biggest consumer market and in the US, USPS already offers very good rates for shipping internationally — at a huge loss. USPS ships almost 50% of all online packaged goods in the US.
- Shyp: Shyp performs on demand pickups for parcel shipping whereas Shippo aggregates parcel APIs. Shyp uses Shippo to power their fulfillment process.
- ShipHawk: ShipHawk is similar to Shippo although they focus mostly on the US. ShipHawk is also focusing more in shipping items that are oversized, diverse or decentralized.
- International Parcels: Access the customs documents and fill them out in one workflow
- Return Labels: Create return labels for free
- Discounts: Compare rates side-by-side and access to discounts
- Add Insurance to the package
- Address verification: Shippo verify every adresses so you don’t ship to bad addresses
- Track Packages with the tracking API
Webhook connections Connect shipment data with tools and services like businesses website or a messaging app
Build custom tracking tools
- Access to current and past shipments
- Access to Orders and Carriers
- Access to API and Apps overview
- Integrating individual carrier APIs is a long and highly manual process
- Hard to find carrier APIs and use old technology with poor documentation, code samples (XML, SOAP)
Sales & Distribution
Revenue Generating Options
- No monthly fee
- No setup fee
- No cancellation fees
- Free API calls to compare rates across carriers
Standard Shipping Solutions
- Shipping cost + 0.05$
Custom Shipping Solutions
- Building integration with marketplace, app, platform or volume shipper
- Charge for integration
- Charge for shipping calls
- Charge for getting insurance on packages and shipping
- Already integrated within Shopify (10/10 ratings, 215 reviews)
- Could look into other CMS and ecommerce platforms (Sitecore, Lightspeed, Magento, Woocommerce etc.)
- Build up brand value and a partner/developer network
Focus on specific verticals
- Allow to build interesting content
- Allow to reduce sales cycle and search cost for businesses
Focus on Inbound Marketing
- Need to make money on volume because of “cheap” API calls
Shippo have a good balanced team focused on mixing product, design, customer acquisition and technology. They have weak spots in marketing, sales and business development.
APIs are building blocks of software and they are focused on solving smaller problems but hard to crack. This is the case with Shippo which is building an abstraction on top of old technologies used by carriers. A large and growing ecommerce market combined with favorable demographic allow for a certain margin of safety.