How Any E-Commerce Business Can Ship Like Amazon [Q&A]
Every e-commerce store that deals with physical goods has to, at one point or another, navigate the confusing world of shipping. Enter Shippo, an API that allows any business to connect with multiple shipping carriers in one place and easily compare shipping rates, buy labels, and track packages. We chatted with Laura Behrens Wu, founder and CEO of Shippo, to find out how e-commerce merchants can meet the high shipping expectations of today’s shoppers without breaking the bank.
What problem is Shippo solving for your customers?
Shipping is really hard. There are thousands of carriers around the world, each offering a variety of service levels. Shipping costs are also based on 5-6 different factors. Especially with companies like Amazon priming customers to expect fast and free shipping, businesses cite shipping as one of their biggest pain points.
Shippo is one of the first companies to build a modern shipping API that’s easy to integrate, reduces the cost and complexity of shipping, and provides data insights to help customers ship smarter. On top of our API, we’ve also built an easy-to-use dashboard and negotiated volume discounts with carriers to truly provide businesses of all sizes the benefits of shipping at scale.
How did you identify shipping as a pain point for e-commerce businesses?
When I first moved to San Francisco on an internship, my expenses were really high, so I decided to take on a side business running an e-commerce store. I soon realized that shipping is expensive, and I wasn’t able to offer the “Amazon experience” of fast and free shipping, plus fast and free returns. Shoppers reached checkout, saw there was an additional shipping cost, and just abandoned the cart.
One of the things that makes Amazon so successful is that they’re able to work with a lot of different shipping providers – from regional and national providers to their own. They leverage every kind of shipping possibility out there to find the cheapest and fastest option.
Small e-commerce stores don’t have that kind of knowledge or resources. It takes a lot of time and effort to connect with multiple carriers and support them, so merchants end up just using one. But even though it’s easy, it’s not the most cost-effective solution.
How have e-commerce and shoppers changed over the past 5 years?
E-commerce is the fastest growing trillion dollar market globally. In fact, global e-commerce has grown 15% year over year. Of course, customer expectations have also grown, with Amazon paving the way. In a survey done by the United Postal Service, free shipping was found to be the most important option for customers during the checkout process.
However, there are nuances and opportunities there for businesses to operate with.
In a recent survey we did on consumer shipping expectations, we learned that free shipping doesn’t necessarily have to mean fast shipping. As many as 85% of consumers are willing to wait 2-3 days for their delivery, and 37% are willing to wait 4 or more days. Even more, 95% of shoppers don’t care what carrier their shipments are sent with.
This means that small businesses who are able to keep their shipping programs healthy and updated to meet specific demands of their customers will be able to take advantage of opportunities in shipping to save.
What has your experience been like working with shipping providers?
Shipping providers have been fantastic partners for us. They are great supporters of technology that helps lower the barriers to working with them. With e-commerce on the rise, they understand the importance of getting modern online businesses working with them – and the value that we bring to the table.
Depending on the business, we’ll often loop in a carrier representative to help with a specific setup. All the carriers – including USPS, FedEx, and UPS – provide on-the-ground people for support in different markets, and they’ve been a great help.
Who are some other API-based businesses that are leading the way in e-commerce innovation?
The obvious one is Stripe, the API for payments. When I was first starting my e-commerce business I wished that there was a Stripe for shipping. There wasn’t, so I decided to start one of my own.
What’s next for e-commerce technology in the next 5-10 years?
A term that Albert Wenger (our board member and USV partner) said at a recent fireside chat really resonated with me: “unbundling scale.” I think that’s going to be very important over the next few years, as it becomes even easier for anyone to start businesses.
At Shippo, we’re recreating “shipping-like-Amazon” for businesses of all sizes. If you’re able to integrate our API (or use our dashboard), you’ll be able to tap into the same knowledge and resources to ship at scale like Amazon does.
This is also what Sift Science is doing for fraud and abuse prevention. Now, businesses of any size can tap into data that only companies-at-scale had, and use that to help them protect against fraudsters.
What’s next for Shippo?
As you might’ve heard, we recently raised our Series A, led by Union Square Ventures. We will be investing in the development of Shippo’s API and dashboard, adding more carriers, functionalities, and begin to build a shipping recommendation engine to help customers ship smarter. The goal is to provide customers with suggestions on how they can save, based on data from the millions of packages we’ve sent over the years, plus industry knowledge.
For example, we want to tell customers that by taking 1 inch off their box dimension, they can save x dollars. Or that because they’re sending a shipment to a nearby location, by just purchasing ground service they can expect the package to get there overnight.
Right now we are focusing on hiring. We need the right team of people with the expertise, skill sets, and experience to help them through a period of rapid growth and scale.
