The tech industry's effort to master the last mile of delivery is well documented. Online retailers are obsessed with finding ways of getting packages to your door as quickly as possible. But what about the first mile---the mile traveled when you send a package to someone else?
Amazon's massive fulfillment centers are one way that small businesses can take hold of the first mile. But San Francisco startup Shyp believes that by offering up just one piece of that Amazonian process, it can give just about everyone the power of push-button shipping, creating a new kind of logistics layer for the world's cities.
The premise of Shyp is simple by design. The idea is to provide the next best thing to pure teleportation. Download the app, take a picture of the thing you want to ship, put in the address where you want it to go---and you're done. No bubble-wrap. No packing tape. No weighing or deciding between UPS and FedEx. A Shyp courier just comes to your door within about 20 minutes and takes the stuff off your hands. That's it.
Of course, that's not really it at all, and that's where the question of whether Shyp can really work comes in. As with so many other startups that merge mobile apps with services to make life in the physical world easier, the convenience Shyp offers means offloading all the inconvenient labor on someone else. People are expensive, and the physical limitations of moving stuff can't be virtualized away.
Still, Shyp co-founder and CEO Kevin Gibbon believes his company has hit on a model that can provide all the promised convenience and still make money. If it works, he says the opportunity to streamline the sending side of shipping---the first mile---has massive potential that as yet isn't being realized. "We're trying to provide the Amazon logistics for everyone else," he says.
Gibbon describes his company as a kind of Kayak---the travel site that finds the best prices on plane tickets---but for shipping, and with a big dollop of Uber thrown in. Back at its warehouse, Shyp weighs and measures your item, boxes it up, and finds what the company says is the cheapest rate for getting your package to its destination, regardless of carrier.
"Depending on what you're shipping, packaging a thing can be a pretty big deal---not knowing how to package it," Gibbon says. Many of Shyp's packers, he says, have backgrounds in transporting fine art, perhaps the most demanding kind of shipping because it requires moving valuable, fragile items that often come on non-standard shapes and sizes. In the tradition of San Francisco tech startups becoming one another's customers, he says many small operations are using Shyp in lieu of a shipping department. That allows them to outsource not only the labor of packing and shipping, but also the expertise.
In Shyp's modest digs---the company is moving to a bigger space in San Francisco soon---a small team is pulling items to be shipped off carts and bins for measuring and weighing. Each item is brought in by a courier either in a logo-emblazoned Shyp bag with a unique QR code attached, or with a QR-coded lanyard attached to the item itself to track its progress through the shipping process. Everything is tracked via tablet app. The coolest---and also biggest---tech in the place is a machine that takes raw cardboard and cuts custom-sized boxes that eliminate all the empty space that Amazon so often fills with those plastic air-filled bags. And smaller boxes can mean lower shipping prices.
A decade ago, Gibbon got one of his first experiences as an entrepreneur by selling merchandise on eBay. He would buy low and sell high. The pain of having to ship his sales became part of the inspiration for Shyp, he says. But so did that early experience of arbitrage---profiting off the difference between what he could pay for something and how much someone else would pay him for it.
Because it ships so many packages, Gibbon says Shyp gets significant discounts from the major carriers. This makes sense because pooling packages saves their drivers a bunch of trips. "It's actually a lot cheaper for them to just go here," Gibbon says. Meanwhile, he says Shyp charges customers the cheapest retail price they would pay to ship an item, which still ends up being more than what the company pays. Shyp keeps the difference. "As soon as you have volume, there's margin you can play with," Gibbon says.
What's more, he says that difference only grows the more packages people ship through Shyp. Right now the company only operates in San Francisco, but it's aiming to launch in New York in early October. "It's only going to get better," Gibbon says. "This is something that with scale, our margins will continue to increase."
Lest you think this sounds like Shyp being greedy, city-level logistics have proven challenging for even the richest companies, like Amazon, Google, and eBay, because the associated costs are so high. The prospect of a service like Shyp being financially sustainable is still a fairly untested proposition. Even with its margins, Shyp also charges a $5 fee on top of the shipping charge for its services, money that Gibbon says mostly goes to pay Shyp's couriers.
More than two-thirds of those couriers in San Francisco use bikes, while the rest use their own cars and vans, which saves on overhead. The company's model is to start in a city by paying an hourly wage, then moving to a per-pickup model when demand increases. Shyp says their schedules are very predictable and can be planned in advance, unlike driving people around for Uber or Lyft, because most package-sending happens during regular business hours. Sending packages also doesn't require nearly as much urban real estate as delivering them, since merchandise is always just passing through. They're also working to save time and space by positioning vans around the city that can act as intermediate nodes between bike couriers and the warehouse.
>'We're trying to provide the Amazon logistics for everyone else.'
Such cost savings that come from its exclusively first-mile focus would seem to give Shyp an advantage over such icons of last-mile failure like Kozmo and Webvan. The question then becomes whether the demand is there. Is going to the post office or boxing up something in your own office's mailroom really that onerous?
Perhaps the answer isn't that shipping something yourself is really that tough. It's more the new kinds of potential that open up when a new kind of capacity becomes available. Last week, Dropbox upgraded all its Pro subscribers to one terabyte of data for the same price they had been paying for ten times less space. Chances are a lot of those users don't have anywhere near that much stuff to put in their Dropboxes in the first place. And yet it inspires vague musings on new possibilities: "Now that I do have that space, what could I do with it?"
Gibbon believes Shyp could have that same effect on the way commerce transpires between individuals. He thinks a lot of people use Craigslist for face-to-face selling because shipping is just too much of a pain. He also has aspirations to integrate Shyp to handle returns for major e-commerce companies. Just scan a QR code, the idea goes, and a Shyp courier would show up and handle the whole return. Take away the hassle by turning shipping into a service, and people re-imagine what it means to move stuff. "I think that would just open up the market so wide," he says.
