EquaShip ramps up e-commerce customer base after price drop

EquaShip, the parcel delivery startup seeking to be the “fourth carrier” in the US for e-commerce shipment – rivaling USPS, FedEx and UPS – is now rapidly ramping up its customer base. The Seattle-based company that launched its B2C shipping services in October had a relatively quiet Christmas since most online retailers were not risking a change of delivery provider so soon before their busiest season.

But, CEO Ron Wiener told Post&Parcel yesterday that with the festive season over, the situation is “moving very quickly”.

EquaShip is targeting generally smaller online retailers – those sending out under 300 packages per day, though it has no actual upper limit.

The company has investors including consumer products firm Newell Rubbermaid, and is essentially a parcel consolidator that provides access to SMEs, using Minnesota-based Blue Package Delivery to provide a physical transportation network, and the US Postal Service for last mile delivery.

One of the company’s key selling points is offering the same price for all customers, with no discounts for larger players merely for having a larger volume.

Yet Wiener said because his service is now attracting many more larger retailers than originally expected, this month EquaShip has been able to reduce its prices further, while all three of the major shippers raised prices above inflation.

“Instead of customers with five packages a day, we’re now getting 30-300 packages-a-day customers,” he said.

The situation has only intensified with the 4.9%-5.9% price increases from the major shipping firms, Wiener added. EquaShip now claims savings of 40% to 79% for smaller shippers, compared to FedEx and UPS residential ground delivery.

“Shocked”

Wiener said from this month, EquaShip is now challenging FedEx SmartPost and even some flat-rate products from the Postal Service on price, particularly for those smaller shippers that can’t get a significant discount from SmartPost.

“This is something we never really expected,” said Wiener. “We dropped our prices a little, but they raised theirs a lot. It’s shocked us. But we’ve now got larger customers, so that means better economics and because we only have one price, we don’t do discounts for customers, if we’re going after bigger customers we can afford to drop the prices because the first mile costs get averaged over a greater number of parcels.”

Last year prior to October’s launch, EquaShip changed its original collection model from one that was originally intended to be dominated by a network of drop-off boxes to a model where providing pick-up services was the priority, since there was more demand from larger customers than had been expected.

However, over Christmas such has been the continued demand, Wiener said his company has taken another step to adjust its model, recruiting an in-house sales force to cater to customers that previously required a FedEx or UPS account manager.

Such has been the demand for domestic services, the move into providing international services has taken a backseat for now, the EquaShip CEO said. When it does move forward, EquaShip is intending to use USPS international services.

Even in the US, EquaShip’s pick-up service expansion has also slowed a little as it contends with the level of interest along the Atlantic Seaboard. Some customers are being asked to be patient until EquaShip is in a position to provide them services.

Wiener said his pick-up network will be expanding westwards, though it is as-yet unclear when nationwide coverage will be achieved. Expectations are for later this year.

“Initially we thought we’d be covering the country by now,” he said. “What we’re really doing is more saturation of the eastern states – the more we can do that, the lower we can keep our prices. At this point we’re more interested in building a customer base than building a national customer base.”