The traditional holiday rush looked significantly different this year. People who once flocked to brick-and-mortar stores to purchase gifts for family and friends turned to e-commerce retailers to avoid big crowds and long lines amidst the ongoing COVID-19 pandemic. Coupled with the current supply chain crisis and limited shipping resources, increased consumer demand has caused delays and lag-times across our favorite retailers. Thus, propelling technology into the spotlight to combat these challenges.
Meet Laura Behrens Wu, Co-founder and CEO of Shippo, which is one of the fastest growing technology companies in the supply chain/logistics space. Shippo is building the shipping platform for the 21st century and beyond by providing next-gen shipping software to online merchants and e-commerce businesses. This technology also integrates shipping with multiple carriers through its API, ultimately making the shipping process swift, reliable, and seamless.
I’ve had the pleasure to work closely with Laura over the past year and have been wildly impressed with what her team has built, how they combat these challenges, and how Shippo continues to disrupt a historically antiquated space. Recently, Laura shared some remarkable insights with me regarding the state of play, where this industry is headed, and how Shippo is paving the way for a future of smarter shipping.
Give us the ‘reader’s digest’ version of your life story and how you became the founder and CEO of a company leading the way in the e-commerce, shipping, and software space.
I first started my tech journey as a summer intern at a Y-Combinator company called LendUp; this was my first interaction with San Francisco and VC-backed tech startups. I’m originally from Germany and had worked for a number of startups in Berlin and Zurich, but I had heard about Silicon Valley, and frankly I read a lot of TechCrunch. I was super excited to interact within this ecosystem. I was in customer acquisition at this YC startup, so it was all about month over month growth. From there, I wanted to find a way to stay and decided to join the team full time. As a part of that, I became curious if there’s anything that I could incubate myself.
I have known my now co-founder Simon for years as we went to school together in Switzerland. The two of us were brainstorming and decided to start an online store as something that we could do fairly safely as a side project, while still working for other companies.
We built an online store using Shopify and started selling products on the internet, which was really just meant to be a learning experience for the two of us. From that online store, we realized that shipping is really complex as the technologies offered by USPS, UPS, and FedEx are difficult to integrate and are not standardized. It was one of those things we had to do during lunch breaks: going to the post office, handing over packages, and we didn’t have the right resources to learn how to do it better. That was our light bulb moment.
I told my idea to the founder I worked for over lunch and he liked the idea as well. We got some angel funding from him and others and decided to drop the e-commerce storefront to just focus on shipping software full time. From there, one opportunity led to another as it turned out that other e-commerce businesses had similar problems to ours.
From there, we were able to find customers to help us build the first version of the product. At this point in time, Shopify was a great customer acquisition channel, so we decided to use Shopify early on to find our customers.
How are some of the large e-commerce players, like Shippo partnering with Shopify, changing the game for companies in this ecosystem?
Companies such as Shippo are changing the game for e-commerce merchants by making it easier than ever to start an online store. When you use an existing tool such as Shopify, there are many building blocks that have been integrated with Shopify that you can simply put together to create a very professional looking storefront. That was partially the inspiration for Shippo: shipping should just be another building block that anyone could piece together with existing software solutions, and you should not have to become a logistics expert to do it really well.
How did this change the game for Shippo? On the one hand, it’s because these e-commerce merchants have really high expectations for their software solutions, which made it more necessary for a company like Shippo to exist. On the other hand, they’re not experts anymore. They’re expecting a shipping solution that they can configure really easily by themselves, which is where the antiquated shipping solutions fail and where we come into play.
It was also really great for customer acquisition. Because Shopify customers are presumably also great Shippo customers, these companies create an ecosystem for us to be able to plug into and piggyback on as they go hand-in-hand. I think it’s also beneficial for fundraising because those who backed Shopify ended up backing Shippo as well.
It’s clear that the supply chain right now is suboptimal: car prices are through the roof, chip shortages, etc. How did we get here? What are some of the systemic problems affecting our supply chain and has the global pandemic brought the industry to its knees?
We talk about the supply chain crisis as if it is one big problem, when in fact there are lots of different problems. Every step in the supply chain has some kind of bottleneck right now. Starting with the production side of things, a lot of our inventory comes from warehouses in Asia which are short staffed, so production is not happening at the speed that it should normally and inventory is not being produced. Because of the pandemic, this disruption extends past production into every piece of the supply chain.
The inventory that is being produced needs to be put on ships or container ships to be able to reach the U.S. Once it gets to the U.S., it needs to be offloaded from the container ships onto trucks where we also face staffing issues. There are not enough truck drivers to pick up the containers to get to the U.S. and that has slowed down the process. When inventory gets to warehouses, there aren’t enough warehouse workers due to layoffs and fairly strict COVID protocols that have significantly cut back on how many people can work in a warehouse at the same time. As we are facing these massive staffing issues throughout the supply chain, more shopping is happening online because people don’t want to leave their homes which is leading to this major crunch.
Lately we have seen a ton of innovation in this space as new shipping providers are emerging because existing shipping providers can’t keep up, leading to more fragmentation in this space.
Looking forward, what are some of your predictions for the future of supply chain? Are we seeing a more diverse future? And how can technology be a predictor for moving forward?
The part of the supply chain that we’re most familiar with is last mile delivery. My prediction is that we’re going to see more fragmentation, meaning that more carriers are emerging to focus on one specific way of delivery that they’re really good at, like DoorDash is really great at same-day delivery. With this fragmentation, we see our customers wanting all of those options. They want to be able to offer same-day, nationwide, and international shipping.
Given that all of these different modes of delivery will then be offered by different kinds of shipping providers, it’s important for our customers to have access to that choice and be able to always know what shipping provider is best at what.
In addition to shipping providers not having standardized technologies, it’s not super transparent where they specialize, how well they’re doing, and how fast they’re delivering their items. I think that’s another big opportunity for the future, bringing transparency into an industry that’s fairly fragmented and making sure that customers can make the best choices there.
Zooming out a bit, I think the supply chain will remain global and move away from local sourcing. Recently, I was talking to a customer who produces and manufactures in the U.S. and they told me that they’re affected by the supply chain crisis as well, even though they’re sourcing locally, because many other merchants who have been sourcing internationally are now trying to source locally as well. Therefore, we have found that local sourcing is not the solution and that the supply chain should remain a global marketplace.