Co-founder Laura Behrens Wu explains how the startup is reshaping the logistics industry by helping startups, SMBs, and enterprise companies compete using big data and cloud shipping tools.
"I bought an album last weekend," said Shippo's Helen Phung. "I bought the vinyl because I like to have the actual record, and love the way music sounds on my turntable. The package arrived at my house fast, but the music was on my phone the second I bought the record." Phung was rocking instantly because the record label and distributor used Shippo's API to integrate with Spotify and sync her digital music collection with her album purchases.
Phung, Shippo's director of communications, purchased her album through VNYL, one of the thousands of retailers that use Shippo to handle logistics and shipping. Though Apple, Spotify, and Amazon are in a hot battle to dominate the low-margin content streaming business, consumer adoption spending on material goods is at an all-time high. According to music business bible Billboard magazine, vinyl records have reached a sales apex unmatched since 1991. Publishers Weekly, the publishing industry trade journal, reports similarly optimistic figures for physical book sales.
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Media is just one slice of the digital logistics revolution. Powered by innovations at Amazon, Walmart, and other large retailers consumers now expect overnight or same-day delivery on mechanical items in hundreds of business verticals. SMBs and startups in particular, Phung said, are under pressure to provide the same services—fast delivery, cloud integration, mobile package tracking—as big box stores.
Content management system Weebly uses Shippo to offer merchants the ability to buy and print discounted shipping labels directly within their dashboard. Sellbrite uses the platform to let merchants create shipping labels. Memebox uses Shippo's data dashboard and API to select shipping rates and services for each order. Each of these companies started small, Phung said, and relied on Shippo to scale business quickly.
Scalability issues were the impetus that inspired Shippo to solve big data logistical challenges for small business. "Wrought by the challenges of running my own ecommerce store—including daunting daily trips to the post office and decision fatigue over which carrier or service to use—[we] began chipping away at building a simple interface that would help us make nimble decisions about how to ship smarter," said Shippo co-founder Laura Behrens Wu. "What began as a 'Kayak for shipping' evolved to become a Stripe or PayPal [platform] for shipping."
Shippo is a data platform that simplifies the logistics process by giving companies access to multiple carriers with one integration. "Our platform consists of a scalable multi-carrier shipping API for all ecommerce merchants, as well as the ecommerce platforms and marketplaces like Shopify and Etsy," Behrens Wu said. "Businesses of all sizes can sidestep hurdles that often slow down operations, which typically involves a heavy upfront investment of time and resources to integrate with shipping carriers, one-by-one."
In an interview with TechRepublic Behrens Wu and Phung explained how data technology transformed their small business and how Shippo is shaping the shipping industry.
Can you explain how your tech stack helped you innovate in the logistics industry?
Shippo operates at multiple AWS centers enabling the company with speed, scalability, and enterprise-level failover capability. Tens of thousands of businesses today rely on our technology and in return, we ensure maximum uptime and transparency. Shippo is built on the Python stack, backed by PostregSQL for the database, and EmberJS for the front-end dashboard.
What was the most significant small business technology challenge you had to solve?
The success of our customers depends heavily on the uptime and reliability of upstream technology. For instance, an ecommerce business can be heavily impacted when UPS or FedEx systems are down, since they could have innumerable outgoing parcels in any single day, all with specified transit times. By far, the biggest technology challenge has been building a platform that is resilient in spite of the downtime or overall reliability of upstream technology.
What was the most significant marketplace challenge Shippo had to solve?
The shipping landscape is actually incredibly fragmented. In the United States, UPS, FedEx, and DHL are ubiquitous, but there are actually thousands of longtail shipping providers out there. Our customers rarely know how to navigate all the options, let alone offer these services as a differentiator in their business. Pricing is opaque and confusing. Businesses with volume can and do negotiate with shipping providers such as UPS and FedEx. But it takes time to build relationships and industry knowledge to understand how to approach these negotiations. Not only is it difficult to just access the inner workings of the industry, especially pricing models, it is also incredibly time-consuming to navigate cost-saving details like what box dimensions to use or which shipping zones your next warehouse should be in. We think now is the time to solve these challenges.
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How did you identify logistics as a market ripe for innovation?
The shift to online sales has evolved to become heavily reliant on shipping, but not without its own set of challenges. Shipping infrastructure, as it exists today, was not designed to accommodate the rapid rise of e-commerce. With e-commerce in a rapidly evolving state, we want to be the technology layer that helps businesses keep up with demand and the huge gap created by the "Amazon-effect"—the online retailer's ability to grab market share from department, apparel, and other ecommerce and brick-and-mortar businesses.
Advice that my former CEO gave me: painkillers, not vitamins. Meaning: Build something that is really making the lives of people significantly better, not something that is just nice to have. So while shipping is not the sexiest industry to tackle, we're really excited to build a world-class platform that helps businesses solve real problems.
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What does the next 18 or 36 months in the logistics industry look like?
We've seen that same-day delivery and hyperlocal delivery have gained popularity in the last couple years and we consider it a channel for growth. We've also seen that return logistics is often an overlooked opportunity for merchants. For example, it's considered a cost center to deal with returns, rather than an opportunity to increase brand loyalty and so there is actually more opportunity to innovate in return logistics to improve the customer experience. The idea is that there isn't one silver bullet to make shipping and logistics work magically for your business, but to deeply assess how you want to make shipping a brand touchstone to engage with your customers and create a delightful experience. Companies that explore fearlessly, rather than creating the same shipping experience as everyone else, will win by differentiation.
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