Laudable Logistics: Simplified Shipping for Consumers & SMBs
In September, San Francisco-based B2B shipping start-up Shippo raised $2 million in seed funding and announced a partnership with GoDaddy to instantly connect with all of its small business customers. The company built an API that makes shipping easy and affordable for small businesses by aggregating its small business customers under the umbrella of a single customer account, thus enabling the small business to be eligible for bulk discounts for up to 80% less than retail price.
Shippo is one of many examples of innovative shipping solutions targeting the consumer and SMB markets. Another is Shyp, a shipping on-demand startup (think: Uber for shipping) which is powered by Shippo’s API on the backend. Shyp recently launched in San Francisco and provides the services to eliminate angry lines of people at FedEx: users simply download the Shyp app, photograph what they would like to ship and enter the item’s destination.
With a contract-worker model similar to Homejoy and Washio, Shyp employs a network of “Heroes” who pick up, package and send the item anywhere in the world. Shipping one item costs the amount that UPS or FedEx would charge plus a $5 pickup fee, and the fee is waived when shipping two or more separate items. Like Shippo, Shyp is able to offer these compelling prices because of the discount earned on the high volume of packages shipped. Shyp is currently serving San Francisco and New York, with plans to rollout Miami next. Shyp will compete within Manhattan with UberRush, a service that has become popular for everything from traditional messenger services to circumventing long delivery waits at Juice Press.
Convenience, pricing and reliability are critical for shipping services to gain traction, and these innovative consumer- and SMB-centric shipping solutions bring logistics and supply chain management (SCM) to the mainstream. Similarly, last holiday season we looked at SCM through the lens of a consumer in our blogpost about the importance of having efficient SCM systems to ensure that gift purchases arrived on time and in the correct size. We have continued to research the B2B SCM software sector, and we created a supply chain management cloud-based challengers market map and research report to highlight the key trends. We outline our top themes in SCM below:
Point/specialized SaaS solution for SMBs: Highly specialized SCM point solutions with best-of-breed technology (similar to the services Shippo and Shyp provide) are of particular interest. Specifically, the procurement and order fulfillment functions within the SCM continuum have experienced accelerated adoption as companies are expanding retail channels. Additionally, solutions with a focus on SMBs are rapidly growing as many SMBs could not previously afford legacy on-premises software and have been fast adopters of SaaS solutions. A specialized offering of SCM SaaS solutions could be of strategic value to a larger ERP platform as larger players may eventually want to move down market to acquire customers and/or more differentiated technology.
Vertically-focused product suites and point solutions: We are interested in SCM solutions that serve verticals with industry-specific supply chain requirements, including chemicals, entertainment, financial institutions, pharmaceuticals and restaurants. According to Gartner, many organizations can be adequately served by a horizontal SCM product suite; however, there is opportunity for SCM providers to carve out an attractive niche in certain verticals with highly specialized supply chain needs.
Catalyst Investors employs a proactive, research-based approach to investing. We target sectors that are experiencing above-average growth. If you are a growth-stage supply chain management company seeking investment, our team would love to start a dialogue. Please send inquiries and business plans to mia at catalystinvestors dot com.