On-Demand Shipping Startup Shyp Calls it Quits
Calling a company a startup that was founded in 2013 is probably a bit of a stretch, but it was one of those early innovators that tried to find new ways to ship products for ecommerce sellers.
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Starting out as a company that offered a simple one fee structure for virtually any smaller size package was a novel idea, but ultimately commercial realities made it change much of its early vision.
App-based on-demand pick and delivery was innovative when the company was founded. But Amazon, Uber, and others have picked up on the idea and brought large-scale competition to a fledgling industry.
Some startups like Instacart, DoorDash, and Postmates are still left standing servicing a wide variety of industries and forged alliances with major retailers to preserve a revenue stream.
But others like Shipt (purchased by Target) or Parcel (purchased by Walmart) found large retailers as buyers that needed an immediate solution to their delivery problem.
eBay and Shyp, Not Enough
At one time, eBay jumped into bed with Shyp and started a test program in 2015, with further expansion in 2016.
While the company saw growth and eBay comprised a significant part of their business, it may have ultimately been this partnership that led to its demise.
“So, we partnered with eBay and launched a first-of-its-kind integration. Before we knew it, online sellers and similar small businesses were accounting for more than half of our revenue. We made major movement on unit profitability and increased revenue per transaction by 150 percent. But it wasn’t enough.”Shyp Founder Kevin Dobson
Shyp was never a cross-country solution and limited in reach to select local delivery areas it served. It gained a significant revenue bump from the partnership, but there was also a built-in plateau with volume sellers requiring something different.
Fundamentally, it didn’t fit into the mid to high-volume eBay seller model, as most professional sellers were looking for inexpensive solutions to ship nationally and globally.
Volume eBay sellers, those that could help Shyp, needed a more comprehensive solution that could tackle the increasing problem of Amazon and other online retailers offering low-cost, fast delivery.
Shyp was not that solution, and thus USPS, UPS, and FedEx continued to be the only choices for most eBay sellers.
With so many changes happening at eBay and in ecommerce and Shyp relying on eBay for half of its revenues but still not covering operational expenses, it decided to retrench to the San Francisco market only.
But as much as such downsizing occurs, that is usually the beginning of the end. And while the company showed early promise in its restructuring, it simply ran out of time to generate enough revenue to cover past mistakes that continued to hamper the company’s financial situation.
While Gibson in is LinkedIn post doesn’t discuss trying to find a buyer for its technology or service, that probably was one of the last-ditch efforts by the company.
With Amazon, Walmart, Target having solutions now, and Instacart mostly dominating the grocery business, the pool of potential interested parties was likely small or even non-existent.
As of Tuesday, March 27, 2018, the company has suspended all operations and delivered all remaining packages.
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Richard is co-founder of eSeller365. He has over 17 years of experience on eBay which includes tens of thousands of sales to buyers in over 100 countries and even has experience with eBay’s VeRO program enforcing intellectual property rights for a former employer. And for about two years Richard sold products on Amazon using Amazon FBA in the US.
To “relax” from the daily business grind, for a few weekends a year, he also works for IMSA as a professional race official.