A major factor in the success of a retail ecommerce business is fast and affordable shipping. Studies have repeatedly shown that long delivery times and high costs frequently cause consumers to abandon items in their virtual carts. Competing with companies like Amazon.com who have large economies of scale, offering the lowest shipping rates available, is incredibly difficult for small retailers.
However, a new startup company called Shippo may change shipping practices in the future. Shippo currently has eight employees and is preparing to develop its breadth of operations. In order to accomplish its goals, Shippo recently raised $2 million in seed funding with the help of venture capital firm SoftTech, according to Techcrunch.com.
Shippo is cheaper and faster
Shippo essentially aims to provide online retailers with a cheaper way to ship products to their consumers. It will provide their customers with an API that is easy to use and automates all their shipping orders, connecting with other ecommerce solutions like Shopify and GoDaddy.com. The result is that shipping is both easier and more affordable for consumers.
Shippo can offer its clients discounted costs that will amount to 80 percent less than the retail price. By pooling shipments together from multiple vendors under one client order, Shippo will receive significant discounts. Using the volume of goods being delivered to bring down the price, Shippo will be able to offer those reduced rates to its retail customers. Creating significant economies of scale for itself, Shippo will be able to charge $0.05 per label, in addition to the actual shipping costs, according to Venturebeat.
In essence, Shippo will operate a virtual warehouse of products that are constantly moving. Additionally, the process of automation, included with the API, will help with filling and printing customs forms for products being shipped to various regions of the U.S. and around the world.
Shippo has been experiencing rapid growth of approximately 20 percent each month. It is partnered with independent retailers such as Membox, GoDaddy, Vinted and Mercari; and it already has 5,000 customers signed up. Shippo is looking to partner with major distribution channels in the near future to continue its expansion and service a larger pool of clients. Co-founder Laura Behrens Wu believes that actualization of company goals will be attained by attracting business clients, such as small retailers, instead of individual consumers in the market at large.
“I personally see the most opportunity in connecting to marketplaces…. That opportunity is much larger than going into individual small businesses” said Behrens Wu, reported Venturebeat.Back To Blog