Anyone who sells products online is competing with Amazon to some extent, whether they like it or not, and with other large marketplaces to boot. Shippo's mission is to help independent online stores bridge the logistics gap. Its service makes it easy for e-commerce merchants to provide a wide array of shipping options, seamlessly fulfilling orders for customers.
The gap yawns especially wide when it comes to optimization. The people running SMBs are busy, and most of Shippo's customers don't have a dedicated logistics person to analyze their shipping usage, Shippo CEO Laura Behrens Wu explained.
"Amazon is able to use all their data points across all the packages that they're shipping in order to further optimize," Wu said. "Our customers are not shipping that kind of volume right now; they're still scaling into it or they might be running midsize businesses. We want to give them access to these kinds of optimization opportunities through the data points that we've gathered, not just for their shipments but for also what we're seeing for other people's shipments."
On Wednesday, the company announced that its workflow will now include "smart" recommendations powered by machine learning. "We've taken a look at all the data that we're sitting atop and figured out, 'What can we make that's configurable for the user to save them from having to make repetitive actions?'" senior product manager Stephen Conn said.
"For example, we know that there are hundreds of ways you can ship a package to get it from point A to point B, from Albuquerque to San Francisco. We want to save the merchant from having to input repetitive facts about which service levels they want to pick, their package type, whether or not they need to turn signature confirmation on, all these extra services."
Shipping label parameters such as package weight and preferred carrier will be pre-populated on the basis of a merchant's history and preferences. Shippo is also making templates and provider defaults available, as well as streamlining return label creation.
It's a classic startup strategy: Tackle one domain and make it 10x more efficient for users (or at least try to). Then use what you've learned from reaching initial product-market fit to expand what you offer. Shipping may seem like a utility, even a commodity, but Shippo says that it is a key component of the e-commerce user experience. Make customers happy and you'll get more sales.
The inclination is well supported. "Over the past several years, free and fast shipping have been top incentives in driving consumers to buy more online, and this year is no exception," according to the 2017 Walker Sands Future of Retail report. "Four in five consumers (80 percent) say free shipping would incentivize them to shop more online, followed by fast shipping (54 percent). In the past year, 13 percent of consumers have ordered something for same-day delivery, up from 9 percent in 2016."
Contending with Amazon, as well as eBay and Chinese entrants like AliExpress, is still a formidable challenge. Marketplaces are a double-edged sword; they provide incredible access to a large group of consumers, but the competition is cutthroat when you are competing on price and don't own your customers.
"Only 2 percent [of online merchants] are not using a marketplace, while 81 percent get more than 41 percent of their e-commerce revenue via an online marketplace," Accenture found in 2016. "Our research showed a positive correlation between the use of online marketplaces and the e-tailers' sales growth, but only to some extent. Indeed, a majority of e-tailers relying on marketplaces for more than 51 percent of their sales have seen their sales declining or remaining stable."