ShipBob, an online brand that offers on-demand delivery services, wants to make sure its business model works. It uses a variety of tactics to ensure that it makes enough money to stay afloat.
ShipBob charges the following for its order fulfillment services: an initial setup charge, per-item handling charges, storage charges, and shipping costs. Its prices are based on a full-service cost of direct-to-consumer order fulfillment.
You’ve probably seen the ShipBob vans cruising down the street. They’re everywhere; on TV, radio, and billboard ads. Their slogan is “We ship. You grow.” What exactly does ShipBob do? Is it a legitimate company? And how does it compare to other companies who also offer similar services? Read on to find out!
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ShipBob is an eCommerce platform that helps companies ship their products directly to consumers. It was co-created by Dhruv Saxena and Divey Gulati who met at college and knew each other since they were children. They started working together when Divey moved to San Francisco to attend Stanford University.
ShipBob is a privately held startup that has been funded by venture capitalists for the past six years. It was valued at $1 billion+ when it received an investment from Bain Capital Ventures in June 2019.
How Does ShipBob Make Money?
ShipBob offers its 5,000+ customers for online ordering and delivery services. In 2019, the firm earned $57.9M, per Craft. The firm is profitable and it invests its profit back into the business. Last year, it raised $200M in June 2020. That money will go towards expanding the business.
ShipBob’s prices are standard for clients that ship 1 to 400 items per month.
- You need to pay an initial fee for receiving inventory ($25 for the initial two hours, $40 for each additional hour).
- There is a monthly fee for storing products ($40 per pallet, $10 per shelf, and $5 per bin).
- Each shipment requires packing, handling, and delivery services. These fees vary depending on the weight, size, a destination address, and method of transportation used.
- You get up to four free picks with every purchase ($0.20 per additional pick after that).
ShipBob as an Amazon Alternative
Unlike Amazon, which takes a cut from every sale made through its own platform, ShipBob is not directly engaged in selling the items.
If you’re an eCommerce retailer who has an active web presence, ShipBob can help you achieve the efficiencies of an Amazon-like service without having to pay Amazon’s fees.
Amazon has high prices for some companies and products. Some professional vendors on Amazon must also charge variable closing fees. These fees range from $100 to $1,000 per month, depending on the category. Most Amazon commissions are between 6 percent and 25 percent of the sales price, averaging 13 percent.
In March 2021, Square announced a partnership with ShipBob. Square is an online marketplace with millions of sellers. Sellers on the Square platform can easily set up their products and ship them through ShipBob. ShipBob then fulfills the order through its network of global fulfillment centers.
After an item has been ordered, packaged, and shipped, Ship Bob notifies the interested party(s) about the status of their shipment. It is easy for everyone involved to see exactly where the item is at any given moment. Once the item leaves the warehouse, it is tracked by GPS until it arrives at its destination.
ShipBob plans to expand its network of warehouses by opening up to 100 locations across the globe.
ShipBob’s Extraordinary Growth
ShipBob was founded in 2014 in Chicago. Early funding support came from YC. In terms of valuation, ShipBob is 37 among the top 161 companies funded through Y Combinator. Investors include Hyde Park Angels, Hyde Park Venture Partners, and Menlofeast venture.
The startup raised $5 million of seed money in 2015. In 2016, they raised $10 million for series A. In 2017, they raised $17.5 million for series B. In 2018, they raised $40 million for series C. In 2019, they raised $68 million for series D. In 2020, they raised $200 million for series E.
The pandemics help ShipBob grow. Revenue for 2020 is estimated to increase by over 70%.
ShipBob supports sellers who sell products online on the following popular marketplaces: Amazon, eBay, Etsy, Shopify, WooComerce, and others.
Even though ShipBob is competing with Amazon on e-commerce orders, it also works with Amazon retailers who choose not to use ShipBob for their own shipping needs.
Before ShipBob was released, every aspect of an online store could be automated except for shipping and logistics. Ship Bob fills an immediate demand.
ShipBob estimates that an eCommerce company would be able to cut up to 25 percent off their shipping expenses if they outsource their order fulfillment to them.
ShipBob has the followings fulfillment centers open and running (as of August 2021) :
- Here are some cities where you might want to consider moving Cicero, Yorktown Heights, Woodridge (Illinois), Edison, Budd Lake (New Jersey), Bethlehem Township, Pennsylvania, Moreno Valley, California, Carrollton, Texas, Chattanooga, Tennessee, St. Petersburg, Florida, Twin Lakes, Wisconsin, Phoenix, Arizona, and Louisville, Kentucky.
- In Canada: Ottawa
- In Ireland: Kilkenny
- In the UK: Feltham
- In Australia: Melbourne
One of the Fastest-Growing American Companies
According to the Financial Times, ShipBob grew by 1,024%, which makes it one of the fastest growers in America. Its CAGR was 124%.
Earnings grew from $5 million in 2016 to $57 million in 2019, representing an increase of 10 times during that time. ShipBob has grown from having four people working for them in 2016 to having 431 employees in 2019, and they want to add more workers to reach 801 by 2021 and beyond.
For 2021, INC.’s ranking of ShipBob places the company at number 47 out of 5000. The average annual rate of expansion for the Midwest is 110%, according to data provided by Inc. The median rate of expansion for this region is 100%. In addition to being ranked among the fastest-growing companies in the Midwest, ShipBob was also named one of the best small businesses in America by Forbes Magazine.
Fast Company named ShipBob among the top ten most innovative logistics providers in 2021.
By 2020, ShipBob had grown into an international business. It launched a new, free-of-charge app called ShipTime which accurately calculates shipping time and cost for any destination worldwide.
It is integrated with eBay, Loop, Shopify, and Squarespace. An innovation with Google Adwords allows for accurate estimates of shipping times appearing in Google ads in real-time.
Vendors who use ShipBob can now provide guaranteed delivery services that compete with Amazon’s Prime service.
There are several companies competing against ShipBob, including Amazon, Easyship, FlowSpace, Oberlo, PrintFul, ShipHerO, ShipStation, and Splay.
Growth of Global Logistics Market
According to Grand View Research, the global online retail fulfillment industry was valued at US$86.4 billion in 2019. It is expected to reach US$168.7 billion by 2028, growing at a compound annual growth rate (CAGR) of 10% between 2021 and 2028.
The Advantages of Using ShipBob
ShipBob is an online platform that allows companies to send out their products via USPS Next Day/Two-Day Select. It offers free tracking and insurance.
Small companies often struggle to meet these high expectations because they don’t have the resources available to them.
However, by using a sophisticated eCommerce platform such as ShipBob, smaller businesses may be able to provide the same shipping and delivery services as larger ones.
Some companies that outsource their orders to ShipBob report an increase in average purchase values of up to 97%, reductions in abandoned carts of up to 18%, and savings of up to 70%. However, not everyone experiences the same results.
The reason ShipBob has been able to keep growing at an impressive rate is that it solves real customer pain. It integrates seamlessly into the most widely used eCommerce platforms, which means that it saves its users time and effort.
ShipBob allows a smaller business to offer excellent services to ship and return items as a large corporation does. The prices are customizable to meet the client’s specific requirements. There are numerous fulfillment centers that can be used strategically as part of an overall marketing campaign.
The ShipBob warehouse locations are situated near major metropolitan cities, including Chicago, Dallas (two days), Los Angeles, San Francisco (four days), and New York (five days). This enables next-and two-days-delivery options.
ShipBob packs and sends items using either standard non-branded boxes or the user’s own branded boxes. Amazon doesn’t allow companies to ship their own branded boxes when they ship through Amazon Fulfillment Center.
Each ShipBob customer receives a personal account representative who helps them set up their business and manage their orders. ShipBob controls the entire order fulfillment system and provides the tools necessary for each client to run their own business.
ShipBob manages inventory, warehousing, and the entire fulfillment process. It’s cloud-based, so it increases efficiency and makes it easy to monitor things in real time. This means you can forecast better.
Conclusion: How Does ShipBob Make Money?
ShipBob connects consumers directly to stores through its app, allowing them to shop and purchase items at any store they want. They earn revenues by charging businesses fees for storing, delivering, and processing their purchases.
ShipBob enables anyone to build their own online store without having to worry about the hassle of dealing with complicated logistics. They connect directly to your inventory and pick, pack, and ship your products to customers for you.
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