Spotting Ecommerce Trends in Shipping Data - Laura Behrens Wu
How about we just start with a quick intro? Cool. Yeah, thanks for having me! My name is Laura. I run a company called Shippo. We power shipping for e-commerce. What that means is we connect our customers, who are e-commerce stores, platforms, and marketplaces, to a network of different shipping providers.
Then we help them figure out which provider to use for which one of their packages. The reason why people care about shipping today is that shipping directly affects conversion rates. So, it's no longer just a means to an end to get your item from A to B. E-commerce stores, they needed to be able to convert their customers because customers are expecting free and fast shipping. Amazon Prime has taught them that. Whenever they see shipping rates at checkout that are unexpected or too high, they drop off and they go to Amazon to try to find the same things.
Okay, and so how does your customer interact with Shippo exactly? So it's an API. It's a restful API that they can integrate. Either they integrate the API or they use the dashboard that we've built on top of the API. Both work. If you integrate the API, there's more flexibility; you can do more with that. SMEs that are just getting started that don't have developers in-house, they typically just use the out-of-the-box dashboard solution.
Okay, and so what's a normal customer of yours like? What do they make? What do they sell? So a normal customer of ours, they're an e-commerce store that sells products that are differentiated. They have their own brand. They don't want to sell their products on Amazon. They want to own their own brand experience, sell through their own e-commerce store, and ship typically either out of their own workshops or their own warehouse, or a 3PL that takes care of shipping for them.
Okay, and so what's a 3PL for people? A third-party logistics provider. Okay, and did you know anything about this stuff before 2013 when you guys started? I do not, Anna. Like, I would never have imagined that I now know all of these things! It's been crazy. I started this as like a complete logistics noop, and I got into e-commerce by pure chance when trying to build an e-commerce store on the side together with my co-founder, Simon.
We built an e-commerce store using Shopify. It was a really easy solution and it was just a fun thing to do on the side. When we tried to integrate or connect with different shipping providers, we realized that the technology experience provided by shipping providers was just so different compared to the technology experience provided by Shopify or Stripe.
The shipping providers aren't tech companies, so their API documentation isn't great and intuitive. If you have to be a logistics expert to be able to read the documentation, sometimes you have to request API access, or it's a SOAP API. It was just strange to us that everything's been solved except for the shipping component, and it is a frustrating experience.
So we were like, why is there nothing comparable to Twilio or Stripe in the shipping industry? Let's give that a try. And were there other critical understandings that you didn't quite get in the beginning that now are like obvious as integral to running a shipping company? Yes, we were learning on the job.
I mean, we didn't know anything about shipping back then, and we tried to solve shipping from the customer perspective. I think that was a good perspective to have so we weren't influenced by the restrictions coming from the shipping industry. We were able to look at it from the perspective of this is how an e-commerce store wants it to be, and this is what modern technology looks like.
Let's build it like that. I would say, like, back then, I'd say we underestimated just how different the different shipping providers are. There is no standard across different shipping providers, not in terms of pricing, not in terms of technology; they're all totally different. Building that layer of abstraction on top was harder than expected, but that's now also a great competitive advantage.
Okay, because who are your competitors?