On-demand shipping startup ShipBob has selected an expansion city and picked up $1 million in seed investment, Built in Chicago reported on Wednesday (April 29).
The new money — in the form of a convertible loan from SV Angels, FundersClub, WeFunder and other angel investors — will let the Chicago-based company launch its service this summer in Brooklyn, where it will help small businesses such as antique and craft stores ship their goods to customers. ShipBob will also use some of the money to hire developers and engineers to advance its logistics platform.
The expansion to Brooklyn marks the second time ShipBob hasn’t set up shop in the San Francisco Bay Area, where the founders went through the Y Combinator accelerator last summer. It launched in September in Chicago instead, and New York City seems like a similarly large small-business market.
“Most of the small businesses who we are focusing and targeting to actually have warehouses in Brooklyn,” ShipBob CEO Dhruv Saxena told Built in Chicago. “So it just becomes a much more effective place for us to be in, instead of being in downtown Manhattan, which is mostly retail outlets and not the warehousing space for these businesses.”
Saxena said ShipBob has about 200 small-business customers in Chicago and has shipped 40,000 packages since its September launch, with the number of packages growing at 35 to 40 percent a month. Unlike similar on-demand shipping services such as Shyp, ShipBob focuses on business customers who will provide a steadier stream of shipments.
When a business wants to make a shipment it calls ShipBob, which sends a “Ship Captain” to collect the items to ship, then packages and sends them through whatever shipping service is least expensive. The company doesn’t charge for pickup of packing materials for customers that ship 40 or more packages a month, and it makes its profit from savings on shipping costs.
Some customers also keep inventories at the ShipBob warehouse, and the company can receive orders directly from Shopify, eBay and Etsy stores.