April 1, 2020
Lessons Learned from 100 Million Packages Shipped | SheCommerce Barcelona 2019

Lessons Learned from 100 Million Packages Shipped | SheCommerce Barcelona 2019

Hello everyone.
I am super excited to be here. I loved hearing Cat’s presentation.
I couldn’t agree more what that she said. I’m super excited to be
on a panel with her afterwards. As as mentioned, my name is Laura Behrens Wu,
founder and CEO of a company called Shippo. We power shipping for ecommerce.
What that means, I’ll explain in a moment Today, my talk is going to be
about ecommerce trends, and, more specifically, how to remain competitive
in an age where Amazon is really quite dominant and setting customer expectations. Before talking about ecommerce trends,
I want to tell you a little bit about myself and how I got here,
because starting a shipping business was not really something
that I wanted to do growing up. It kind of happened to be
by accident. I am originally German. I came
to San Francisco as a summer intern and I worked for a company called Lend Up. At Lend Up, I was able
to work closely with the CEO. I think that’s what I love the most
about working or being a part of startups. The CEO gave me an incredible piece
of advice that I will remember forever. He said, if you find a problem to work on that’s helping people solve something
really painful and that’s a painkiller, not a vitamin. In this analogy a vitamin
is something that’s nice to have, while a painkiller really takes care of
something that people struggle with every day. He said, if you find something like that,
you should focus on solving that problem. What I started out doing first,
while I was still at Lend Up, was to work on an ecommerce store. I started an ecommerce business originally
together with my now co-founder Simon. Simon and I met in college.
That ecommerce store was more meant to be like a weekend project, a site business. We didn’t really know how to run a business, so we wanted to build something. We wanted
to see how running a business works. We also wanted to get secondary income. San Francisco is a really expensive city, so we just wanted to play around and building that online store. We realised that there were a bunch
of existing technologies available to us. We were able to piece together
all sorts of existing technologies like Shopify. We used a Shopify store front and we’re able to connect that
to Stripe to accept payments. and, when it came to shipping,
we realised it was really clunky. It was a clunky experience, nothing compared
to Shopify or Stripe user experience. Either we had to walk physically
to UPS or FedEx location, or we had to figure out how to use outdated
technologies provided by the shipping providers. We were wondering
why is it so hard to connect to FedEx, to connect to UPS, when it’s really easy to do
and everything else ecommerce related. When we realised that every
ecommerce store has the same problem and is probably facing the same pain point, I remembered what the CEO
I worked for told me and we decided to stop working
on our ecommerce business, stop working for other companies and focus
on a shipping software business full-time. I can only echo what was said previously. I think the most important part
is really about getting started. You have to take decision at some point
to take that leap, get started. There’s never a perfect time for this,
there is never a perfect idea. You just have to leap forward
and make that happen. By now, our my team is roughly 75 people.
We’re all based in San Francisco and we’ve shipped, it’as a little outdated,
more than 100 million packages in the last four to five years. We have roughly 35,000 customers
that are using us every day to ship their packages. Today, I’m here to share
a few of our key learnings, helping our customers ship, our SMBs. They’re all ecommerce businesses. We have a few larger direct-to-consumer
bands working with us as well. We have established retailers. We’re able to see whole variety of how
people ship and start take away some trends. I’ll try to keep it
relevant for the business, not going into too many
shipping specific trends, but I’m happy to talk shipping
afterwards as well. The most important or the most obvious trend
that’s why everyone is here in the room is that ecommerce is still the
fastest-growing trillion dollar industry and it’s the fastest-growing trillion dollar
industry because more people than ever sell online and more people than ever buy online. When we look at people buying online, I think we can all tell
that purchasing behaviors have changed. We can sit on on the couch at home,
we pull out a mobile phone. With our mobile phone we can buy anything
we want from anywhere we want. We could buy something based in Barcelona
or from an online store based around the world. We don’t really care. We expect the package to arrive
at the doorstep within a reasonable amount of time. At the same time,
I would say like it is quite interesting what people these days
decide to buy online. I wouldn’t have imagined that people are too lazy
to go to the grocery store to buy toilet paper, but people still order that on Amazon. I also wouldn’t have imagined that people
would be comfortable buying something as expensive and high involvement
as a mattress online, but still there are a lot of very successful
direct-to-consumer startup mattresses that are doing exactly that selling
mattresses directly to the consumers. If we look at the Internet, it’s not just
that people buy things online, buy things differently. It’s also that people are able
to sell things in a very different way. What I mean by that
is that ecommerce stores are easier than ever
these days to get started, to start an ecommerce business, to build
an online store, and your online presence. At the same time,
you also don’t need an offline location. It’s totally fine to be
an online only business. So, the upfront costs are also
significantly lower than in the past. When I say it’s easier than ever, in addition to these Facebook or communities
that the previous speaker mentioned, it’s really cool that all the infrastructure
components are readily available to you. You’ve got all the building blocks
available, you can piece them together and, by building blocks, I mean
that you’ve got ecommerce platforms, such as Shopify, Bigcommerce, Magento.
You can use those. You can use domain registers, marketplaces
that you can use to list your products, their website platforms. These platforms
that are readily available for you to piece together. Then, I’ll let it leave a moment
for you guys to take pictures. I’m sure you can see the slides
or get the slides later on as well. Then, more in the backend,
their payment gateways that are available, plug and play that you can use,
such as Stripe and PayPal. There are shipping companies
that offer software interfaces, accounting software. Everything
that you would need to start a business and to build an online presence
is available and at your fingertips. You don’t need to be a developer
or an expert to be able to use them. Any first-time ecommerce merchants
can use them to hit the ground very fast. When we talk about
running an online business, the other very fascinating thing is that,
everything about running an online business, happens online, obviously,
until you need to ship the package out. When the the consumer clicks buy, something
complicated happens in the background. You need to figure out how to ship out
the item that the consumer bought, how to ship that to the consumer
from your warehouse or workshop. For every single ecommerce store,
shipping is a necessity, it’s a must-have because people
are no longer walking into your store to pick up the item.
They expect it to get to them and they expect that to happen
within a reasonable amount of time, that’s probably anything
between two days and a week. At the same time,
shipping is quite messy, it’s intransparent. It’s difficult for people to figure out. It’s also not something that people
love figuring out by themselves, it’s not super exciting. The other thing to call out
is that customer expectations around shipping
have become significantly higher, which means that shipping
is one of the most important cost or the highest cost factors in ecommerce. Shipping really eats into ecommerce margins
if you don’t figure it out correctly. Here are a few big numbers. The cost
of delivery in the United States in 2017 for businesses has gone up to $99 billion
and the cost of note logistics in 2017 was roughly $1.5 trillion. These are two huge numbers
growing from 2016 to 2017. They grew at a rate of more than 6%. The reason why these numbers
are growing as mentioned is really because of customer expectations. Customer expectations around shipping
are higher than ever today. People expect free fast shipping,
mostly because of Amazon and Amazon Prime. Amazon Prime has reset
those kinds of expectations and customers care about them, I mean that customers are looking for
these kinds of shipping options at checkout, so, shipping is no longer something
that happens in the background, that’s invisible to the customers. They’re looking for the right
shipping options at checkout and, that, in terms of transit times, in terms of costs,
in terms of the return options. When customers don’t see the right shipping options,
they might choose to buy somewhere else. Shipping these days is something that
affects conversion rates and consumer behaviors. Getting it right can mean that you get
more customers, more businesses. Getting it wrong means that customers decide
to close the window and buy somewhere else. It’s really unfortunate because shipping
is something that should be happening, that should be more invisible,
it should not be as dominant. Amazon with Amazon Prime
has got it really right. That means that their market share,
their market size in the US, is now bigger than most of the other
brick and mortar retailer put together. They’re roughly 49% of US ecommerce. When I look at that chart, I think
the first question. It’s incredible. it’s really impressive
what Amazon has been pulling off, but, at the same time, I read a lot
of these analysts and reporters journalists, writing headlines such as Amazon
is killing retail or ecommerce. There is no room
for other ecommerce anymore. and I think that is hugely exaggerated. You need to look at it from
a much more nuanced perspective. What I mean by that is that
Amazon may be dominant in big-box retail, but the Amazon is not
the destination that people go to to find special or unique products. People go on Amazon and roughly 70% of searches on Amazon
are generic word searches. People type in something like black pen. They don’t type in a specific brand.
They’re not looking for anything special. They’re treating Amazon more like
a search engine to find generic products that are convenient and easy to buy,
that our low involvement and that they can get an easy
and fast and cheap convenient way. What that means is that
we’ve seen a lot of opportunity on the direct-to-consumer site
to build a much more authentic and special relationship with your consumer,
with your customers as a brand. I think, as an ecommerce store,
what we’ve seen is really the trend is that consumers are looking
for unique products. They’re looking to express themselves
by buying certain products, by showcasing certain products. They want their lifestyle to be merged
by the products that they buy and they’re looking for direct-to-consumer
rounds that speak their language, that are offering
something unique and different. That are, I think,
more than ever, authentic. The authentic part is something
that consumers these days are looking for. In my opinion, that’s were the most successful
director consumer brands set themselves apart compared to Amazon. When we look at this
from another chart perspective, I love this chart because it shows that direct-to-consumer brands are unbundling
the large CPG companies. Direct-to-consumer brands are tackling
just one specific product and they’re going after it. They’re
building a brand around that product. An example would be Harry’s
or Dollar Shave Club, that only sell razors and they
sell razors in a subscription model. That means that they send razors directly
from their warehouses to the end customer. They do that on a subscription model.
By bypassing physical locations, they’re able to sell them
for a cheaper, for higher quality and direct-to-consumer brands
are all about bypassing the middlemen, so they don’t need shelf space
in a CVS anymore or Walgreens anymore. They’re able to ship it directly
to the end customer. Those direct-to-consumer rents look at
shipping as part of their customer experience. They look at shipping as a way to make sure
that customers are truly satisfied to end. Your job does not stop
when the customer clicks buy. That’s when the customer is waiting
and is excited about getting the package. I think that’s the perfect time
to take care of the customer and make sure
that customer expectations are being met, that the return experience
is the right one as well, that shipping reflects
your brand values, your identity. One thing that continuously surprises me is that people love unboxing videos. Unboxing videos up are consistently in
the top 10 most viewed YouTube watch lists. People film themselves opening up a box,
getting very excited about the product. The boxes are super cool,
really well-branded and that’s the other part where
I can see that direct-to-consumer brands are walking the extra mile. They make sure that the box
is like a beautiful experience. Some of our smaller customers
who don’t have the resources to really spend money on the packaging, they write a handwritten note
and put it in there. I think that’s
a perfect way to get started, to form an emotional connection
with the customer, to show them that they’re not buying
from an anonymous company like Amazon, but they’re buying from a real human. I think the other human part that we see is that direct-to-consumer brands
or smaller ecommerce businesses, they do super well on social media. People love following small businesses. No one would follow
something like Amazon or Walmart, but people love following
direct-to-consumer events. They look at these direct-to-consumer
brand’s pictures in their social media, feed directly next to their
friends’ and family’s pictures. It’s a very intimate experience. A few steps here. There are roughly
25 million businesses on Instagram today and roughly 80%
of Instagram users follow a business. That means that like it’s
a pretty common thing that people do. They’re looking to follow businesses
that convey a lifestyle, that make them feel like
they’re part of a special group of people. To sum all of this up, I would say that the trends
I’m looking at is that how you can stand out
is having a deep emotional connection with the end customer. Go the extra mile, make sure that the end customer knows
that they’re buying from a real human, that you tell the story around
the products that you’re selling, that you make sure that the customers know
they can reach you when they want to, that they’re dealing with a small business,
not a big enterprise company. When I look at what
the future of retail looks like, I think like it’s really
about that human aspect. We’re seeing more automation,
more machine learning and AI employed
in these commerce enabled tools, and that’s wonderful, because that allows ecommerce merchants
to be able to focus on what they’re best at. Ecommerce merchants, humans,
are really best at creative aspects. By allowing people to be creative and taking
care of what happens in the background, we can see each other
as more humans in the age of Internet. Thank you.

Leave a Reply

Your email address will not be published. Required fields are marked *