I was trying to
look for a good article for my social media blog post and one of the things I
did to get on the right direction was to go over again all the earlier posts of
this blog. We have discussed several times in class and in this blog about
angel investors, entrepreneurs following the Lean Start-Up method, how accurate
the ideas have worked, and many other things. We have mentioned AngelList a
couple times and how helpful this have been for many new ideas. I was reading
again the post about Tim Ferris and how he was also an angel investor himself
and made me do a little more research and finally got to learn about Shyp.
Shyp is a San
Francisco-based company that utilizes a mobile app to provide an easy on-demand
shipping experience. The app aims to replace the need for consumers to visit
the post office. The company picks up, packages, and ships items through USPS
and other major carriers. The company was founded in 2013 by Kevin Gibbon,
Joshua Scott and Jack Smith. Shyp's service is currently running in the San
Francisco area; with "Shyp Heroes" aiming to arrive on demand within
10-15 minutes of being requested. On September 23, 2013; Tim Ferris posted a
blog post encouraging his readers to invest in ship alongside him, which
resulted in the company raising $250,000 in only 53 minutes.
The product? The
product is an iPhone app in which users enter pick up and destination
addresses, upload a photo of the item that will be shipped, and their contact
and credit card information. The process was described in a Techcrunch article
as: "You open the Shyp app and snap a picture of the item you'd like to be
sent away. This picture is sent out to Shyp's network of contracted employees
(which they call 'Shyp Heroes'), any of whom can then elect to pick up the
package. They show up at your location, grab the item, put it in a padded bag,
and take it back to be packed and shipped."
Here is the link
to a short video explaining how Shyp works: https://www.youtube.com/watch?v=DheulkmtR7Y
So, after doing
some more research I found that the company was going to expand to different
locations around the U.S. and found a great article in entrepreneur.com about
how Kevin Gibbon, who is the CEO and co-founder provided 5 lessons in expanding
to a new city.
1. Make sure
your current customers love you.
Gibbon said
customers’ repeat usage helped him realize that Shyp had found the right
product-market fit.“It was about people continuing to use it over and over
again … and over time, people started shipping more items as well from their
eBay stores or their Etsy stores. They started selling more since using the
platform, so it was a key indicator we were on to something,” Gibbon said.
2. Know what
characteristics you need in a city.
New York City
may seem like a no-brainer for startups looking to break into the major
leagues, but Gibbon said the Big Apple also had the right factors in place for
Shyp to succeed. “Just the overall population in the areas we’re starting in,
in Brooklyn and Manhattan … our service works in denser areas, so we’re able to
do more pickups per hour with the same drivers,” Gibbon said. He added that the
high concentration of artists, makers and small businesses made NYC a prime
target.
3. Dip your toe
in first.
Before
announcing the expansion, Gibbon and his team launched a private beta program
in New York City for four weeks. “We looked at the pickup times, and then
started expanding to more zip codes,” Gibbon said. (Shyp promises to pick up
packages 20 minutes after orders are placed.) Gibbon said that here, they
realized that they could use more people on bicycles to cover areas more
quickly and efficiently.
4. Stagger your
expansion plans.
Gibbon said Shyp
will expand to Miami in November, giving the company time to get used to the
New York City market. As with New York, the decision to open up shop in Miami
was strategic: According to Gibbon, Miami has the greatest number of e-commerce
sellers per capita in the U.S. Additionally, the launch will occur right before
Miami’s Art Basel festival – just in time to ship those paintings and
sculptures to buyers’ homes.
5. Find the
right people.
When you’re
launching in a new city, it’s important to make sure you’ve assembled the right
team, Gibbon explained. “We look for a lot of experience and for people willing
to take on a lot of risk,” Gibbon said. “We are mildly successful in at least
one city … but we want people who are going to make it their mission to grow
this company.”
So, these steps
may look pretty obvious for many people, but is always good to hear what real
entrepreneurs think about what a company need to succeed in a different
environment in this case, and what details should people look before making a
move with their businesses.
Questions:
1. What do you
think should be the factors defining the decision of expansion of your business
2. What do you
think about the concept of Shyp and how would you approach to potential
customers to get their attention?
3. What do you
think about the future of the company against bigger shipping competitors
around the U.S.?
4. If the
company is already starting to expand through the U.S. do you think that it
could become really successful expanding to different countries? Why?
-David
Arismendy-
So at first I didn't really get why this app is so great or why Tim Ferris would back it, but then I remembered how annoying it is when I want to ship something or even just mail a simple letter. Packaging, stamps and postage, going to the post office or UPS.. all pretty tedious. The idea is awesome and I really like their video.
ReplyDeleteI think the five factors that Gibbon mentioned are very on point. However, I think there can be other factors depending on your product and industry. For example, if you had a very specific target market, you would want to go to cities that have the highest populations with that target market. If your business was in the fashion industry, I'd imagine you would want to go to places like New York or LA.
If I were Shyp, I think one way I would try to get customers' attention would be to do something that Uber and Lyft do. Both Uber and Lyft have similar business models as Shyp, with people that go around driving people around instead of delivering packages. Both Uber and Lyft offer one free use the first time you use their service. People are drawn in by being able to get a free ride somewhere, and then they experience how easy it is to use. I think this could definitely be a way for Shyp to attract customers as well.
As far as their future against major competitors goes, I really don't think that the major shipping and postal services are competition. When you think about it, Shyp is making it easier for people to ship items, but they still use the major carriers. I would say they are actually helping the big guys out. The only threat might be that these bigger companies decide they want to create their own pick up and packaging service. They have a lot more capital that would enable them to do something like that, however it would require a lot and they may not be willing to invest in that big of an added service.
I definitely think that Shyp has the potential to expand to other countries. Many of the major cities in Europe are very densly populated, which is one of the characteristics that Shyp wants in the cities they expand to. However cultures are different in every country, they would need to do their research.
1. The factors defining whether or not you should expand your business are very hard to define. Whenever a business reaches a point of economies of scale, they start to consider expansion. However, how do you know how the customer will react? Will expansion mean remodeling the current store you have or does it mean leasing a whole new space? Are the customers in the new area the same type of customer as the ones where we are currently operating in? How far away should one store be from the other? Should each business be managed separately? How will this affect inventory controls? There are so many questions that come into play, and they are different depending to the industry they pertain to, it makes it really hard to narrow down what the factors for expansion should be.
ReplyDelete2. I think the concept of shyp is absolutely perfect. They found a perfect nitch-the “hassle” it is for everyone to mail something. People are so lazy and used to using an app for everything, that putting an object on a box and labeling it and taking it to the postal office is just too much of a hassle. Its true, sometimes having the time to take it to the postal office can be a bit annoying. But Shyp has solved that problem and has simplified it marvelously. The way they market this app in a very simple manner I think really portrays the “effectiveness” message. Simply take a picture of it, and “we’ll take it from here”.
3. I think companies will now have to evaluate the possible expansion into the cater-to-home mail service business. Whether or not it can be as profitable to have a whole new line of trucks only designed to pick up packages people want to send and have all the supplies needed to package each object inside the van, so there is a person packaging while they are picking all of them up. It’s certainly a possibility. If companies don’t find this business either something they want to pick up or they don’t find it an actual threat to their business, since this business actually encourages people to mail things, then I don’t think they wouldn’t mind much about it. I think shyp can actually partner with one or more of the logistics companies for cheaper shipping prices, increasing profitability.
4. I think it can succeed in other countries, but the proper experimentation and study should be conducted beforehand. One of the many benefits the United States have is that the means for a proper logistics industry to succeed-actually exist! There is proper management of package tracking, customs processes and due diligence from a company’s agents. There are many problems including truck assaults, customs bribery fees and high rate of lost packages kind of problems that occur in many parts of the world that the United States does not endure, benefitting them immensely. So just because it succeeded here does not really mean it will somewhere else.
Eduardo M
It is so interesting how entrepreneurs look at a situation and understand there is a niche that needs to be filled. Shyp is a prime example of a system in place, postal delivery, that was missing a whole market of consumers that would pay for personal pickups and delivery. I found a Youtube video on "This Week In Startups," hosted by Jason Calacanis:
ReplyDeletehttps://www.youtube.com/watch?v=1mr3YnULZs8
This video highlighted the process of Shyp and why we, the consumer's, should trust the company and it deliverers. Jason introduced the Co-Founder and CEO of Shyp, Kevin Gibbon. Kevin stated how easy it was to utilize Shyp. You just open your iPhone Shyp App, snap a picture of the item you want shipped and upload it via your Shyp App. Shyp prides itself on having a Shyp Hero to your door within 15 minutes. You don't even need to have your item packaged, the Shyp Heroes weigh, package and ship for you. The customer gets a tracking number and is guaranteed up to $1000 of insurance from Shyp itself in case anything happens to your item. According to Kevin Gibbon: Shyp is "the easiest way to ship your stuff."
Jason asked Kevin: "Why trust Shyp?" Kevin stated that the trust starts with the way they treat the Shyp Heroes, employees. Shyp Heroes are treated as customers and keeping them happy is a sure remedy for happy, dedicated Heroes. Shyp Heroes pass background checks and once they are hired they are paid a whopping $20 per hour. I'd say this logic is one reason Shyp is so successful. Treat your employees with respect and acknowledge their value and in return you will have an efficient staff.
To answer question #2. What do you think about the concept of Shyp and how would you approach to potential customers to get their attention?
As I stated above Shyp has found a way to keep their employees happy and I think to attract potential customers they should utilize the same logic. Understand the value Shyp brings to consumers and promote that. I think great media exposure with customer testimonials and faces will be a way to be personal with potential customers and by validating the realities of the process, customers and Heroes, Shyp could grow in any market. Thank you for introducing the story of Shyp.
This comment has been removed by the author.
ReplyDelete1. I think the factors defining expansion should be based on demographics and past technological adoption rates. Certainly more forward thinking cities such as New York San Francisco and Austin would be good places to start. It also depends on the product so one must look at what kind of products are popular in different cities.
ReplyDelete2. I personally don't see the value in Shype. In my mind I dont see why UPS couldn't just make an app that does the same thing. It has value on its own and could easily be sold, but Shype themselves aren't the best implementors of it. A UPS of fedex made app would be popular more quickly.
3. I think Shype is not adding enough value as a product. All the work is done by the shipping companies who could easily add an app to their list of features.
4. Shype might work better in places where UPS or Fedex are not as prevalent or willing to pick up packages from customers. Maybe they could get that business, but as soon as UPS sees that it is a need they would likely take over.
- Trent
Shyp works in densely populated areas because they make their money by getting discouted shipping prices from UPS or FedEx since they are shipping in bulk. They are still charging their customers retail plus a five dollar pick up charge. This is essentially where they get their profit from and people are willing to pay for it because it is a chore that most people do not enjoy doing. Having someone pick up whatever your shipping and have them box, package, and ship it is a major convenience for busy people. I do not know how competitors like UPS and FedEx might take this in the future but Shyp is still only located in San Fransisco and New York so it is in the very early stages of its growth. It will be interesting to see if major shipping companies provide a service similar to Shyp and see how the consumers react. Shyp has a great name and they are getting to the customers first so I wouldn't be surprised if they stick around and keep majority market share over this type of service.
ReplyDelete-Louis Mendoza
-In my opinion, before you decide to expand you should do a market research like Shyp did with Miami. They see a potential since they know Miami is very big in e-commerce sellers.
ReplyDelete- Shyp is a great idea because as time passes by people are getting more comfortable and would rather pay $5 extra, which is not a huge price difference, to get their package picked up. They don’t have to go through the hassle of packing it, Shyp does it for you and it’s included in the price. Other companies charge you an extra fee for packing your stuff.
-f Shyp becomes very popular and successful, competitors like Fedex, DHL, UPS, etc. can start copying the concept of picking up the mail for shipping, and they can even offer lower prices since they are huge worldwide companies.
-This company could have the potential to be successful in countries like Europe, where most of the people don’t own a car so they have to walk and use public transportation. But I do think it would not be successful in Latin America since most of the people own a car and have the facility of having other people who can do you the favor, and they don’t mail too many things.
- Florence T
Expanding your business always seems like a good idea, a sign that you are doing good. What we as aspiring entrepreneurs should look out for is unhealthy expansion. Be sure that you are already in a good position to expand. To expand first you have to make sure that your current place of business is doing good. Expanding means you already have a good replicable business model. Now having already an established busines model for one specific place means that it will work for others. What first came to mind when Shyp mentioned New york and how they are thinking of expanding to miami is the delivery and pick up times. New York City is relatively small in terms of territory. You can ride your bicycle through all manhattan in like 1 or 2 hours max, and not to mention the highly effective subway system. In a city like Miami, where the territory is much bigger and you have to take in consideration a lot more variables. So this is why I think it is important to know where you are expanding to and how your business model can adapt.
ReplyDelete-Pablo Rangel
1-I think the decision to expand should be based on how well the customers are receiving the product in current markets and also on the availability of markets with similar characteristics to the current ones. If you switch to a market that differs greatly it will increase the risk of incorporating into this new market.
ReplyDelete2- i find the concept of Shyp to be a good one because it I believe there is a need for their product. The whole process of shipping letters or packages can be tedious at times with having to go to the post office, buy stamps, etc. so the idea of an app that eliminates that hassle seems like a viable idea. To be able to simply take a picture of an item in order to ship it is a great idea.
3-While i think shyp is a great product I think they need to find a way to add value to their product and differentiate themselves from potential imitators. Their current value comes from the development of their app and their partnership with shipping companies and this could easily be replicated in a better way by another company.
4- I think it could work in other countries but it would be a lot harder to implement. Shipping companies in other companies can prove to be more difficult to work with and they are also known to be less efficient.
-Alejandro Joya
1) There are many factors to consider when deciding whether t0 expand your business or not. First and foremost, as you stated, your current customer base must be strong and satisfied with the company otherwise you will not attract new customers when you have negative reviews and offer a poor service. Next, you must conduct a financial audit of your company to determine if it is capable of expanding at that point in time. After all of that you should conduct some research to see if there is even a market for your business in the area you are expanding to.
ReplyDelete2) I believe the concept of Shyp is a great idea for a big city such as New York, Chicago, and Los Angeles but not for smaller ones. I am not sure if I would pay extra on top of the FedEx or UPS fees for someone else to mail my package for me. People in the bigger cities may not have enough time or they do not care about spending the money on stuff they are not able to find time to do. I would attract potential customers by offering promotions, going on Groupon, and offering package deals in offices around the city that they are located in.
3) I think the company could do well but I know for my father’s business, UPS picks up the packages in the evening or early the next day when you call and have that special service. Shyp is still going to use these shipping companies I understood from the article but they could take away business from the shipping companies that already have a pick up package service already in place.
4) Yes, if Shyp is successful in New York and Miami then it would be perfect for places like London, Paris, Madrid, Etc.
Derek Davies ^^^^
Delete- An expansion is one of the most difficult decisions a business can make. As an entrepreneur/ business owner there are several factors you need to consider before you decided to expand. Before an expansion the business should be in good shape, this means all your product lines or services should be well accepted by current customers. Also before an expansion you need to take into consideration if there is enough market demand for your product or service. Your business model should be one that could be easily replicated and flexible enough to be able to adapt it to the new environment of where you are expanding.
ReplyDelete- I think the concept of Shyp is great. People rather pay extra money for comfort. Personally I would use Shyp because it would make sending packages “easier” for me.
David Grijalva
Great post! Kevin Gibbon’s five lessons in expanding are pretty spot on and I see a lot of similarities to The Lean Startup Method. One of the main defining factors in expanding my business would probably be the market. You can have an amazing idea but if the market doesn’t want it, you won’t succeed. It’s not enough just to be liked by your current customers; you need to dip your toe in before deciding on expanding. I hadn’t heard of Shyp before reading the post but I think it’s a cool concept. However, I am surprised that they’re already expanding. I don’t really see it lasting long-term. In order to compete within the market, you have to stay ahead of the game. The fact that they haven’t made it available to Android devices is killing it for me. I would’ve made that a priority before thinking of expanding.
ReplyDeleteKim Zapata
1. I don't know if I can define a set of factors when deciding to expand one's business. I suppose the market would always be one. Figuring out innovative ways to reach more consumers in an existing market or exploring some entirely new ones. One should also know the geography of where they are expanding. They must know who they are selling to. You also must make sure you have the right team in place in order to properly expand. Lastly, I would suggest estimating your company's valuation before/after expansion. If the jump isn't big enough, it may not be worth the hassle and other options should be explored.
ReplyDelete2. I like the concept of Shyp a lot. It is a new approach to an existing market. It is the same approach that has been used to shake up a number of service industries. To reach more consumers, I would approach them by highlighting how big of a nuisance it is to ship items. Postage, stamps, packaging, waiting in line etc. While they are definitely not major issues, many people would prefer to pay for someone else to do it in today's fast paced world. They do not need to rapidly expand; however a copycat could pop up in another area of the country before they get there.
3. It's hard to compare the future of this company with already established shipping services. This is a relatively new start up with a lot of potential that utilizes current shipping methods. I believe they can coexist. Traditional shipping services need to be revamped though.
4. I am unaware how shipping works in each country. I would assume the principles would be fairly similar so I do not see why this idea wouldn't work in other parts of the world.
- Jeran S.
I think it was incredibly smart for Shyp to first beta test in the New York area. Though a market can seem like a perfect fit, there are necessary steps to take and ensure that the bugs are all ironed out before they begin and understand the new dynamics of the market they are entering. New York City is an insane and high traffic area. If they hadn't done the beta testing they may not have figured out so quickly that bikes could also work very well given how high traffic the city is most of the time. It's important to start out with a Build-Measure-Learn feedback loop.
ReplyDeleteDeciding when to expand and where to expand is very subjective and varies from business to business. I believe that it's time to expand when you can sense that becoming overwhelmed is just around the corner. Let's say your business is strong but there are times when there are moments of tension, and they are becoming more frequent. Businesses need to have plans in place for how they will manage growth. If a business is expanding to another city or state, they need to take a look at market segments that exist in areas they are interested. They should search for market segments that are similar to the one they have already impacted, but also for new markets that may not exist where they currently are, that would use the product. For example, Shyp found that Miami had the greatest number of e-commerce sellers per capita (an extension of the market to tap).
If I were marketing for Shyp, I would definitely try to utilize viral marketing and create a social media campaign that is fun, fresh, and engaging. I would also try to partner with sites such as Etsy or EBay and work to create a strategic partnership.
As one of my colleagues pointed out, Shyp is not in direct competition with these shipping companies. They are working off of a need and service these large shippers do, but are not stealing but rather promoting the other businesses. They work well off of each other. It would be a great expense with the structure of larger companies to offer a pick up and pack service for individuals, they may have that available for businesses, but it does not make much sense cost wise for larger companies to have such a service in place.
Going international is an option for the company. They would need to locate themselves in high density areas and areas where there is a lot e-commerce and shipping occurring. Strategically, they need to find a company that has similar cultural values to the company and expand from there (to make transitioning into a new economy easier).