Shipping is a huge pain point for smaller e-commerce businesses of any size. They don’t process enough volume to grant them bulk discounts from the major providers. It’s costly and resource-intensive to work with shipping carriers, and the barrier to entry is extremely high. Prices aren’t transparent and negotiating as a small business is next to impossible.
Shipping is one of those unsexy, not-often-talked-about areas that is critical to an e-tailer’s bottom line. While most e-commerce companies these days use an existing payment solution (PayPal, Stripe, Balanced, etc.) to handle payment processing, they are still handling the shipping aspects on their own.
That’s why we are so excited about our latest investment, Shippo. They simplify shipping by giving e-commerce stores one streamlined solution to work with different shipping providers at once. They provide an API that connects online stores to all the relevant shipping providers both locally and internationally. This allows Shippo to leverage economies of scale to pass on discounts. At the moment, Shippo offers up to 80% off compared to retail prices.
The opportunity is huge as the shipping industry related to e-commerce is $360B in the US and Western Europe alone. The annual rate at which e-commerce is growing is 20%.
Other mashup APIs already exist that aggregate data from different carriers, but there’s yet to be any clear winner in the space. We believe that Shippo offers the right algorithm, API, and web interface to change the game for mid-sized e-commerce shipping. The ultimate vision is to do what ITA did for the air flight industry: create the technology to enable dynamic pricing in the shipping industry and make shipping cheap, easy and efficient, across the world.
E-commerce businesses can either use Shippo’s apps or API to get shipping rates and labels within minutes. It offers direct integration with shopping cart platforms like Shopify, Etsy, Magento, and Bigcommerce. Or, developers can integrate the Shippo API directly to their own website. Since Shippo negotiates pricing by aggregating its users, the more e-commerce companies that join Shippo, the greater the discounts for everyone.
Co-founders Laura Behrens Wu (CEO) and Simon Kreuz (CTO) launched Shippo in October 2013 and the company has already seen intense growth since launch. Laura and Simon are first-time entrepreneurs and alumni of 500 Startups (Batch 8).
We are thrilled to be investing alongside SoftTech VC with participation from 500 Startups LP, Accelerate FC, Funders Club, East Ventures Investment LP, Mena Ventures Investment, DBF Digital Business Factory, Slow Ventures, Joanne Wilson, Fabrice Grinda, Dave Shen, and Karl Jacob.