At a time when on-demand everything has made moving stuff around one of tech’s most interesting challenges, Kevin Gibbon thinks he’s cracked a core logistical problem: push-button shipping.
Gibbon is the CEO of Shyp, a San Francisco-based startup with a simple premise. Snap a photo of anything you need to ship, then push a button inside an app. Within 20 minutes, a Shyp-dispatched courier comes to your doorstep and whisks away your items. Not much later, the app gives you a tracking number so you can watch as the package gets delivered—all for $5 per shipment, regardless of how many items you want to send. No post office lines, boxes, or packing tape necessary.
In an era where customers have come to expect nothing short of Amazon Prime-level efficiency, Shyp faces a huge challenge in making its operation not just scalable but cost-effective.
Investors apparently have a lot of faith in the idea. Today, Shyp announced that it has raised a new $50 million round of funding led by KPCB, with the firm’s most prominent investor, John Doerr, set to join Shyp’s board of directors. The startup, which launched just a little over a year ago, has already extended its operations to New York City and Miami and has launched a beta test in Los Angeles. The number of shipments sent by Shyp has grown nearly 500 percent since the company closed its first round of funding—$12 million—back in July 2014. And the company says its customer base is growing by more than 20 percent month over month.
Shyp has been quick to capitalize on new business opportunities, as well. Early last month, the company rolled out a feature called Shyp Returns that folded a common customer use case right into the app: e-commerce returns. At the time of the product’s launch, returns already made up about 15 percent of Shyp’s overall business. But after formalizing the feature in-app, that number jumped to 25 percent, the company says.
All of this signals Shyp’s effort to move from experimental startup to full-fledged business capable of operating in widely different markets. But in an era where customers have come to expect nothing short of Amazon Prime-level efficiency, Shyp faces a huge challenge in making its operation not just scalable but cost-effective.
Flexible Engineering
It’s always a challenge to start off with a scheme that works for a certain market and scale it so that it is reproducible in other markets as well, says Gibbon. “Our system on the backend is extremely adaptable,” Gibbon says.
Gibbon says Shyp has been able to adapt by smartly identifying the areas within their operations that they’ve been able to optimize. For instance, Gibbon and his cohort have invested in machines that can take raw cardboard and create custom-sized boxes so customers’ items are always packaged snugly—eliminating the need, in most cases, for excess bubble wrap and paper stuffing. Smaller boxes often also mean cheaper shipping prices. Gibbon also argues automation sets his business apart from other buzzy startups that rely on a more labor-intensive human workforce.
Of course, you can’t get around the physical limitations of shuttling packages from point A to point B, but Gibbon argues that there are ways you can still maximize efficiency. In each of the cities where it operates, Shyp sets up strategically placed vans that can act as nodes—convenient intermediaries between couriers on the move in bikes and cars and the warehouse where the actual packing and shipping take place.
Being geographically strategic, along with predicting the patterns of demand for shipping servies makes it easier for the company to know where to dispatch its network of on-demand workers. The more effectively deployed, the easier for the company to guarantee its 20-minute pickup window.
One Size Doesn’t Fit All
Unlike many startups that have found business customers are the quickest path to revenue, Shyp has consciously focused on consumers. The company’s top three use cases include people sending gifts, small-scale sellers on platforms like Etsy and eBay who need a convenient way to move inventory, and e-commerce returns.
But the service has also become popular over the past year with users the company didn’t anticipate, including hotel concierges and high-rise property managers who frequently deal with residents and guests wanting to send packages. Stylists are using Shyp to send clothing to clients and return items back to designers, the company says. Personal assistants and office managers are also using the service to handle shipping for executives.
In the end, Gibbon says that scaling is a kind of self-fulfiling prophecy for Shyp. The more users Shyp has, the more cost-effective it becomes, as higher volume means steeper discounts from the major carriers, such as FedEx and UPS. In the meantime, Shyp still charges users retail, plus the five-dollar shipping fee, meaning as its user base grows, so does its margins.
What’s more, unlike many other on-demand businesses, shipping isn’t as time-sensitive, Gibbon points out. That may sound counter-intuitive, but as long as Shyp picks up and packs your item in a timely fashion, getting it to its destination becomes a logistical problem the carrier has to solve, not Shyp. And Shyp doesn’t have to carry much inventory beyond cardboard boxes and tape. Once Shyp sets up an efficient pipeline in a city, the main challenge becomes sticking to its promised 20-minute window.
Like other on-demand companies such as Uber, however, Shyp also doesn’t plan to stay in one place. Once they become profitable in a certain city, Gibbon says, the company’s philosophy is to prioritize expansion into new markets. “We’re always looking to continue to invest any money we do make in growth,” he says. That’s a sentiment that should excite anyone who hates going to the post office. Or who just gave Gibbon $50 million.
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