Shippo is an online shipping software that helps companies to simplify their order fulfillment processes by providing real-time rate quotes from multiple carrier options. You can select the most affordable option for your shipment.
If you’re curious about how Shippo makes its money, read on! The purpose of this article is to delve deeper into the company’s financials and list down all of its revenue sources.
So how does Shipt operate? Shipt operates on a subscription-based SaaS (software as a service) platform for online grocery shopping. Shipt makes money by charging monthly fees for its various services.
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About Shippo
Shippo is a usage-based SaaS for e-commerce businesses. It integrates these businesses as well as online marketplaces and platforms with multiple carriers through web applications.
With Shipwire, sellers can easily set up an online store for themselves and get paid by Shippo for each sale they generate. Essentially, all of the selling-related activities are handled by Shippo.
Business Model of Shippo
Shippo’s business model is that of a usage-based Saas within the e-commerce sector.
What makes ShippO effective is its ability to support shipments through its own proprietary logistics platform and what makes that platform effective for a company is the fact that it’s a usage-based SASS rather than just another SASS.
For a typical Saas, every customer would be charged a fixed monthly fee, regardless of how much they use the service or not.
For a subscription-style SaaS (like ours), the fee is usually calculated by how much the product was used during the billing period. This way, people who don’t use our service frequently won’t pay for it.
Therefore, they can sign up for Shippo without investing large amounts of money into their business. If they actually do want to pay a higher price for the service, they won’t mind because they will get several times their investment back from its effectiveness.
To note, the usage-driven SaaS provided by ShipPo is a smart shipment platform. Therefore, all shipment information is gathered and stored for future use in proper datasets to be used in BI: shipment histories, email notifications, billing information, custom regulations, etc.
The first batch is free.
Usage-based Software as a Service (UBSaaS) is the software equivalent of usage-based marketing. Free doesn’t necessarily lead to revenue, but it does help increase awareness.
That is how Facebook and YouTube grew from startups with $2 million seed funds to billion-dollar unicorns within five years.
The mid-level services are the “Professional Package” plans which range from $10-$200 per month subscription.
It obviously has all of the features found in the starter package, plus some additional ones too!
- Added users
- Automation
- Create custom packaging slip designs for your business
- Email notifications need custom-branded emails.
- You can customize the emails you send out by adding custom text
- Track package delivery using custom branded labels
If you want to make serious money from online marketing, then the premium packages are where the real money is at. They vary in terms of pricing depending on the size of your business, but they include technical implementation assistance.
Remember that in a usage-driven business model, it isn’t enough to just sell a service to a user; they must use it for the long run. Therefore, most customers will fail to become paying customers, but those who remain will be highly active.
With a usage-driven business model, Shippo could focus on its most valuable customers (the high volume ones) and minimize the time spent dealing with the “here one day, gone the next” dabblers.
By focusing on a small, yet important, group, Shipper can customize its service and improve the quality of such service in a unique manner that it wouldn’t be able to achieve in a traditional SaaSSolution.
Shippo‘s high-value, long-term clients include but aren’t limited to the following:
- Capterra
- Shopify
- BigCommerce
- GetApp
- Software Advice
Jeremy Levine, a Partner at Bessemer Venture Capital, says that Shippo is one of a relatively small number of companies in the Usage-Based Software (UBS) market. He predicts that UBS will continue to expand.
How Does Shippo Make Money?
Its label service generates revenue through its labeling services, its subscription plans, and its customized plans. What draws people to its revenue sources is its own proprietary technology, its integrations with platforms and shipper APIs, and its web application.
Labeling Services
To provide customers with a professional appearance, Shippo provides a variety of label-specific services including printing labels, designing them, and shipping them.
- Automated label creation
- CSV upload
- Label formatting
- Packing slip creation
CX is greatly improved by using returns. That way, if a user doesn’t like their order or shipment, they can send it back with a pre-paid envelope and get their refunded funds right away.
With its starter package, Shippo charges 5 cents per label. However, this 5-cent per label arrangement is ideal for new clients who want to test out Shippo on a smaller scope.
Users who sign up for the subscription plan pay a monthly subscription, which means that they aren’t actually billed per label. However, the cost of using the service scales according to the total amount of time spent creating new content and the total amount of content created through the platform.
Paid Plans
As mentioned before, it is the marketing strategy for the premium version that is the real secret behind Shippo’s growth from a $ 2 million startup to a billion-dollar company.
These prices are not per label, but rather a custom arrangement between the customer and the sales team. They are not guaranteed for any particular order.
If any business uses more than 10,000 label sheets per month, then it must be a premium service.
The incentives that high-quality, long-term users get from using Shippo’s premium service include but are not limited to the following.
- Discounts
- Address validation
- Tracking
- Pickups
- Manifests and SCAN forms
- Shared accounts
- Split orders
- Complete integration
- API services
With Shippo’s software, you can easily and effectively shop for the lowest prices from any of the major shipping companies. These include FedEx, USPS, UPS, DHL, TNT, etc.
- USPS
- DHL
- UPS
With Shippo’S software, discounts can be as high as 40 percent below what one would normally pay at the postal service.
With Shippo, users get real-time updates on their shipments and can easily view shipment details through a simple interface.
You can send packages through USPS or DHL Express using Shippo. You can create manifest files for carriers by filling out the appropriate form. And you can prevent package delivery failures by validating addresses before sending them off.
You can share your account with others without creating new accounts. Split shipping lets you split an individual shipment into multiple shipments for back-ordered items. And, you can use the warehouse management tool to track which items are available at each warehouse.
It should also be mentioned that Shippo was never a single entity. It has always been part of a larger ecosystem.
Its technology partners include:
- Square
- Wix
- WooCommerce
- Squarespace
- Weebly
- GoDaddy
- Webflow
- Magneto
Its carrier partners include:
- FedEx
- AxelHire
- CDL
- GLS
- Canada Postes
- Australia Post
- Deutsche Post
- ePost Global
Its fulfillment partners include:
- ShipBob
- Soapbox
- ShipDaddy
- Wisma
- Growthjet
- Cahoot
- Flex
- Delivery
- Baja Fulfillment
Shippo‘s API allows its own applications and the user s application to talk to each other.
Through its API services, Shippoo’s platform can automate many tedious, time-consuming manual processes that users would otherwise be forced to perform themselves. Examples include:
- Researching carriers
- Negotiating with carriers
- Integrating carriers
- Building shipping functionalities
- International capacity verification and compliance
- Ongoing maintenance
Shippo’s API services are also integrated with:
- Warehouse management software (WMS)
- Inventory management software (IMS)
One of the easiest ways to understand why Shippo is so effective is that once you sign up for an account, you don’t need to go through any intermediaries.
Sign up for an account with Shippo and you’re ready to start shipping.
Shippo Funding
Fundraising isn’t a problem for Shippdo, especially during their A-D round. During the past five years, total funding from investors has increased by over 40x. Notables include Union Square Ventures and Bessemer Venture Partners.
Shippo‘s valuation has increased by six times to $1 billion in just one year. According to Bloomberg, this increase is due to the boom of online shopping.
Is Shippo Profitable?
Shippo has an innovative and successful revenue model that helps ensure its continued success. They create added benefits for everyone involved in the industry, from the shippers to online sellers to small businesses.
According to the burn, Shippo has an average gross margin of around $80 per user. Their funding and valuation have increased exponentially, which is also a positive sign.
Conclusion: How Does Shippo Make Money?
Overall, Shippo offers a ton of features at an incredibly low cost. It’s definitely worth checking out!
We expect Shippo to continue growing at an aggressive pace over the next couple of years.
This was a huge article that we spent more than eight (8) hours (s) on research and writing, just so that we could answer one simple question: How does Shippo make money? We hope you found our post helpful. If you have any further questions, please feel free to contact us. We’ll do our best to get back to you as quickly as possible.
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