‘Amazon-izing’ Shipping For Small Merchants


Among the many consequences of the eCommerce explosion of the last year-and-a-half or so has been a tremendous upgrade of consumers’ expectations of faster delivery. Two-day shipping – the standard a scant two years ago – has given way to next-day, same-day, same-afternoon and even same-hour offerings as the “bring it to me” economy burgeoned to meet the needs of homebound consumers.

And once consumers get a taste of speedy delivery, they really don’t want to go back to waiting – and they expect retailers to keep pace with the market, ShipBob CEO Dhruv Saxena told PYMNTS in a recent conversation, shortly after the firm announced a $200 million funding round and a new $1 billion valuation.

Saxena said the funding confirmed that the intuition they had when starting the company in his Chicago living room seven years ago proved to be correct. They could create a shipping infrastructure for small businesses that would enable them to compete with mega-retailers like Amazon and Walmart, who could use their massive internal logistics capabilities to continually increase the pace of the race.

“An eCommerce brand that is selling on their own website, they don’t have the infrastructure to compete on these ever-increasing consumer expectations,” Saxena said. “That’s effectively what ShipBob is trying to do: to help these eCommerce brands access the same infrastructure that Amazon has built exclusively for itself.”

An SMB Alternative for Faster Shipping

Combining data along with its expanding international network of fulfillment centers, ShipBob gives small merchants two capabilities they have lacked until now: the ability to look at their own data to see where they should prioritize their sales based on consumer interest, and the ability to have goods on hand in those locations so they can fulfill those orders with precision and speed.

If that playbook sounds familiar, he noted, it’s because they borrowed it from Amazon – but reapplied it to independent, direct-to-consumer (D2C) brands so they could look at sales data and then distribute inventory to be positioned closer to the customers who most want it.

“ShipBob is no longer shipping things via UPS or FedEx to get the two-day delivery – we are actually using the post office or other regional carriers, because we’ve shrunk the distance from the inventory location to the final destination,” Saxena explained.

“Looking ahead to the future, we are building a network to allow our merchants to offer next-day and same-day delivery options as well, based on where that inventory is placed in the network.”

What’s Next 

ShipBob is already profitable, so its latest fundraising wasn’t so much about bringing in needed money, but about speeding its growth to capture rapidly rising demand in the U.S and around the world, as small and medium-sized merchants rush to accelerate (or match Amazon) with their delivery game.

The Chicago-based startup says it will expand its domestic delivery network as well as its international network, so merchants that want to sell globally will still have the ability to ship locally and quickly. They also plan to upgrade their B2B offerings so SMBs can easily send products to consumers, while also allowing larger brands to display their goods on their shelves.

And while he would not rule out an IPO, noting that it would be an “amazing milestone for the business,” Saxena was quick to emphasize that going public is not on the company’s current priority list. “We are very much focused on the short term, and building the capabilities that we know our merchants want.”