Why Shyp has a huge opportunity but an incredible challenge

If you’re on Twitter, chances are you’ll encounter customer service shout-outs from the people you follow. Mostly these are cases where customers are frustrated with larger companies and have had no luck resolving their problem in a traditional way (calling the dreaded call center) and have taken to social media to try and get a reaction, any reaction. Anecdotally, it seems that shipping companies, airlines and cable companies have the dubious honor of leading the list of social media outcry. Airlines are a lost cause and cable companies are being challenged by everyone, including Apple, Netflix, YouTube and HBO. But what about shipping?

Still life with packages

Still life with packages

With the increase in ecommerce, it’s only natural that there are more packages shipped, ergo more shipping problems. Today, it was this shipping fiasco that caught my attention. Missing package, bad driver behaviour, terrible followup, no communication, the works. There’s a new one every day.

Clearly, the bat signal is up for Silicon Valley to come in and disrupt, right?

Right now two companies, Shyp and Swapbox, both cover one side of the equation: when a customer wants to ship something. Both save customers the hassle of packing and delivering the package to the shipper. But Shyp only solves the pickup part of the shipping problem, not the delivery. Swapbox has lockers that customers can divert their packages to, thereby reducing the risk of stolen and misdelivered packages, but while this solution solves many delivery headaches, it will take scale to make it effective. Both of these companies still rely on the big shippers to actually get their package where it needs to go. This makes sense as shipping is a complicated operation and requires sophisticated logistics.

There is also a specific challenge with ecommerce shipping. When both shipper and recipient are individuals, startups have a way in to try and make a change. The challenge is when the shipper is an online merchant whose only incentive is price. The lower, the better. The recipients, absurdly, are not the customers in the shipping equation. The merchant is the customer and that is why recipients have such a hard time resolving problems: they are not the customer. The challenge is to motivate merchants to switch or to at least give recipients a choice. Swapbox’s method of providing an alternative shipping address is a good solution in that it doesn’t require merchant cooperation, but as locker placement is sparse, this solution is limited.

So, I have a few questions for the new shippers:

  1. So many issues with are with the “last mile” of the shipment, with drivers and trucks that take the packages from the distribution centers to be delivered. Perhaps startups could focus on that part?
  2. Is there an “Uber of” sharing-economy solution possible? Something like Postmates where a “messenger” can pick up a few packages from the distribution center to deliver? Or a Shyp in reverse? At scale and with smart use of data, the messenger could deliver more than one package to a specific zip code.
  3. When both shipper and destination are in the same metro area, can the big shippers be avoided completely? Again, using data to consolidate deliveries and private messengers?
  4. Could neighborhoods be encouraged to cooperate via networks such as Nextdoor? Leave a package with a trustworthy neighbor instead of on the porch? Could the shipping startups be the ones to coordinate this?

Finally, the big challenge is to get the big merchants to cooperate. It seems that Amazon already understands that there is a “last mile” problem and started its own locker system. But there are plenty of merchants that aren’t Amazon who currently rely on UPS, FedEx and their ilk, who might be interested in serving their customers better. Nordstrom comes to mind but there are surely some additional high-end merchants who want happy customers, right?

Go forth and disrupt!

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One thought on “Why Shyp has a huge opportunity but an incredible challenge

  1. good points. But you forgot the obvious answer – tele-porting 🙂
    on a more serious note – Amazon is also working on the last mile using the parachutes – sounds like a very interesting project.

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