Seattle firm to take on UPS and FedEx as "4th US Parcel Carrier"
Small and medium-sized businesses in the United States are set to be offered a brand new parcel shipping service from this summer – potentially to rival the nationwide offerings of FedEx or UPS. EquaShip, formerly known as ShipSweet, is a Seattle-based company started by a team including Earth Class Mail founder Ron Wiener and former Amazon logistics guru Shawn Childs.
It is particularly targeting the flourishing e-commerce market, seeking to bring on board smaller shippers with the offer of the same kind of discount shipping rates that their larger ecommerce rivals are offered by the big shipping firms.
EquaShip CEO Wiener said FedEx and WalMart was effectively subsidising its major accounts with the likes of Amazon and WalMart, by charging smaller shippers higher fees, and that for smaller shippers his company would be offering pricing up to 30% lower than FedEx or UPS.
“We decided not to have any enterprise customers, so we don’t have to subsidise them,” he said. “We’re really designed for a small and medium-sized shippers, where we can give them the same benefit of efficiency, but without giving them an artificially inflated price.”
Speaking to Post&Parcel yesterday, Wiener said his company was aiming at a July or August launch for the new service, making use of third-party carriers including major partner Blue Package, Inc.
Wiener said after five years at Earth Class Mail, mail was now declining and the better opportunity was in parcels – particularly in the business-to-consumer segment, now being pushed by e-commerce.
“We saw a lot of converging trends there that were pointing at B2C being more than half of the mix of parcels within the next two years,” he said.
Service
Two years in preparation, EquaShip’s new service will be available for collections in 1,600 zip code areas in the continental United States – covering around 98% of the US population – and hopes are for Hawaii, Alaska and Puerto Rico to be included as well from launch date.
Delivery will be available to both domestic and international addresses.
Drop-off points for packages will be made available at major retailers set to be announced over the coming weeks, and should be in place by Independence Day on July 4.
Customers will also be able to request a scheduled or on-demand pick-up of packages, with later pick-up times than they might be offered by rivals FedEx or UPS – potentially 5.30pm to 7pm in the evening.
Transportation will be arranged through third-party carriers, with parcel consolidator Blue Package set to be Equaship’s primary carrier partner and operator of the company’s first-mile network.
Items will then feed into the US Postal Service system at a local post office level for the last-mile delivery, in the same way that FedEx and UPS arranges last-mile delivery for millions of parcels each day in the US. International deliveries will be arranged via a standard stable of international carriers.
e-Commerce expectations
With a priority on e-commerce customers, the EquaShip chief executive said his company aimed to respond to the pressures that smaller internet-based retailers are currently facing in competing. Not least, he said, the ever-growing expectations among internet shoppers for free shipping and fast delivery times.
The larger internet marketplaces like Amazon and eBay increasingly require sellers to state the day items will be delivered, but customer feedback on shipping services is also vitally important for sales performances.
Wiener notes that for those websites now, a good shipping service means a better ranking in internet search results – directly affecting sales.
“Free shipping was yesterday’s story,” Wiener said. “Now, the next story is, it’s free shipping but your expectation is you’re going to have it in three days! So they’re massively squeezed in order to stay performing.”
EquaShip’s solution is to provide services in which the transit time will form part of the service name, to avoid confusion. Service options will have names like EquaShip overnight am delivery or EquaShip overnight pm delivery, through to EquaShip two-day, three-day, four-day, five-day delivery services, for example.
The company’s CEO said the was aim to “delight the end customer” by stating delivery times to include extra leeway beyond the journey times stated by carriers.
“If you tell customers Friday, and it arrives Thursday, they’re going to go on and post something positive – and in the eBay or Amazon world, customer satisfaction directly relates to sales.”
Post-DHL America
Shipping giant DHL spent close to $10bn on a failed attempt to rival UPS and FedEx in the domestic American market until 2008, and since then others have been reluctant to try where DHL failed.
Coincidentally, EquaShip’s head office is actually based close to the old corporate headquarters of Airborne Express, the express delivery firm acquired by DHL when it entered the domestic US market in 2003.
Wiener said that particular company “just didn’t have a sustainable pricing model”, but added: “we’re doing things a little bit differently.”
Through relationships with firms like its primary carrier partner Blue Package, which is also set to run EquaShip’s first-mile network, the new company will make use of existing infrastructure and trucking operations.
“We know that these more efficient carriers exist, they just have no marketing, no websites, no customer relations departments – they’re trucking companies. But we put a front-end on it,” said Wiener.
