We Tried to Make Shipping Simple, and Things Got Complicated.
3 months ago we started our journey towards better understanding the start-up process. Things got very very hairy when we dipped our toes into the shipping industry.
The Initial Idea
It all began with an unlikely partnership between two students: one with knowledge of the shipping advantages of large companies, and a logistical expert. We sat down together to figure out how we could apply these unique skills to improve upon what has been considered one of the most frustrating parts of selling a product. Shipping has long been a headache for many small business’ and start-ups and we knew that we had the energy, drive, and creativity to solve these problems. We decided to establish a question for ourselves to answer:
How do you make small-scale shipping more affordable and manageable for entrepreneurs and small businesses?
This became our guiding ethos as we entered into the process of validating a startup.
Neither of us has ever been involved in developing a startup concept from the ground up. This meant learning a lot of lessons. We knew this and used it to our advantage, everything would be tested and validated to ensure we were not giving in to our own biases. Our first concept was a shipping co-operative that would purchase bulk shipping at a lower cost and distribute it to our members. We thought this was a solid idea that could cut costs and allow people to save money on their shipping expenses. From the very beginning we started tracking down competitors, including Black Box Shipping. We studied the way they operated their business’ and made sure that we had ways to differentiate ourselves. One of the ways we did this was by not having a centralized depot. Each business or individual could still ship from their house and just buy the labels from us.
We were confident in our idea for a short period of time.
Turns out this is already being done. This was not exactly a validation of a good idea though. None of these businesses were overly successful and appeared as if they were struggling startups or wings of larger business’. We needed to do something different. We needed something that leveraged the best of what the modern technological trends could provide.
as Industrial Designer’s, we decided to use design thinking to help create an original means of differentiating our shipping company. This process was long and exhaustive. We needed to be sure that we filtered through all of our ideas to come up with only the ‘best’. This lead us to create what became known as “hubs”.
Many shipping companies offer pickups for packages. These services would normally cost the entity or individual shipping the package. However, if you had a large enough volume the cost would be distributed widely or even eliminated. We decided to take advantage of our co-operative to establish shipping hubs. These hubs would be where packages could be dropped off to be picked up by shipping companies. Unlike a standard shipping center, they would be based out of the co-operative members own locations. This would allow dynamic changing of the locations based on when and where shipping volumes are concentrated. This ensures that travel to these locations is minimized as much as possible.
These Hubs are made possible from real-time technologies and the growth of the sharing economy.
We were very excited about this new dynamic shipping concept. We returned to our search for competitors. We wanted to see if anyone had attempted or succeeded at this or something similar. We knew that to be successful we had to at a bare minimum be differentiated from the rest of the industry.
Uniqueness! We had found it. Now what? Uniqueness alone wasn’t enough to validate our business. We were confident in our strong ideas but we had never been in our customer’s position before. We needed to reach out and understand them.
Construction Zone — Fixing Our Idea
To validate our ideas, we needed to look deeper into the experiences of who we were trying to serve. Our lack of intimate knowledge about small business needs was apparent: we needed to understand currently, what really worked for these people, and what didn’t.
We started by diving into the information about shipping in our base city, Ottawa.
By calculating the number of users on platforms such as Etsy and Shopify, we estimated that over 2000 small online businesses call Ottawa home. These businesses varied in size, but were largely operated by a single or pair of entrepreneurs.
In regards to the state of shipping, Ottawa is dominated by the density of Canada Post access. With over 40 locations for drop off, largely downtown, none of their competitors could compare in terms of accessibility. With large enough volumes, competitors will provide a pick up service. However, if you are a smaller company with lower shipping volumes, they may vary in accessibility greatly based on where you live.
To really understand business’ needs, we needed to do the primary research and ask them details about their experiences.
To find entrepreneurs in Ottawa, we followed Facebook groups that targeted craft and small businesses, in addition to taking note of businesses that participated in local craft shows and maker fairs. From this list we methodically contacted dozens who currently had stores linked to their Facebook pages, asking for their time to discuss their shipping needs with us. From this list, we were lucky enough to have five in-depth interviews with entrepreneurs from a wide variety of small online businesses in Ottawa. This was the most exciting and pivotal time of our project, these insights helped inform our understanding of the current needs of businesses in Ottawa, and make changes to our business plans. The three primary insights that we gained were:
Convenience is King
The primary focus of our initial idea was cost saving through shared expenses and bulk shipping rates. We were very surprised when we spoke to small business owners, and this didn’t seem to be their only or even top priority. Of the five interviews we conducted all of our participants sited that they ship exclusively with Canada Post, primarily because their locations are convenient to places they frequent such as work and grocery stores. When asked to elaborate, many discussed the stresses of working multiple jobs to be able to support the business that they are passionate about, and their ability to fit shipping into this schedule was difficult. When asked, many noted that they cared about price, but chose not to explore other options because of the inconvenience of accessing their locations.
Although many small business owners cared deeply about shipping cost, as it directly affected their margins, they saw prioritizing convenience as a necessity for managing their business and other obligations. We saw the challenge we faced with our current plan; how would we compete with the accessibility of Canada Post locations in the city? This may have been possible after lots of growth, but would be impossible while starting with only a small group of businesses. This sparked our new concept: the only way to be more convenient than Canada Post would to provide a pick up service, and a larger number of available hours of service. These two elements would allow us to meet where our customers needed us, when they needed us.
Border Hopping to Decrease Costs
A number of the business owners that we spoke to also sacrificed hours of their personal time to decrease costs when shipping to the US. We had not realized how substantial the savings were when crossing the border, with shipping costing as much as 70% less than on the Canadian side of the border. This one hour drive, even when you factor in the associated costs, over the long term can save businesses a lot of money. As a team, there would be a number of technical details to navigate to ensure a smooth crossing of the border, but it could provide the opportunity to decrease costs. This is currently being done by a company in the greater Toronto and Vancouver area, called Chit Chat Express, which targets larger established businesses.
Make Picking Inexpensive Shipping Easier
Most importantly during our research, we heard from our interviewees how time consuming and confusing shipping companies make the research process. On top of the challenges of producing their products and managing their online stores, it’s difficult to find the time to research the differences between shipping companies and weigh the costs. Business owners felt they should be doing more to research shipping, but that it was too time consuming and difficult to compare all of the options presented. We identified it would be a huge asset to these business owners if our service could help inform their decisions based on the constrictions of the package size, weight, destination, and scheduled arrival time. Simply, we could help identify the least expensive shipping option available based on their needs, and help them drop it off at the appropriate location (whether that be a local shipping company or company across border).
This time in our project was extremely exciting- it felt as if we had made a series of discoveries that pushed our business in a more promising direction.
The New Idea
Some lessons are hard learned, some, like this one, are an opportunity. We discovered something that we had never thought of before. We had always assumed that cost was the number one driver for small and tiny businesses. and assume will make an ass out of u and me. This was a breakthrough moment for us. It was clear that a lot of work we had done up to this point was dripping in implicit biases and a misunderstanding of the industry at large. We regrouped and sat down to create a new plan.
Our business had to be built around our customers. Convenience was King, Queen, and Court.
We created a plan to help our customers involving 7 steps, only two of which the customer needs to be a part of. We wanted to minimize the effort of our customers part and maximize the benefit through convenience.
- Business owner provides us with the address it is leaving from and going to, how much the item weighs, the size of its package, and how quickly it needs to arrive. They can also select from previous dimensions/ weights if they have consistent shipping habits.
- The business owner selects a date and window of time for the package to be picked up from their office or home.
- ShipTrick selects the least expensive shipping options based on the shipping prices of all major shipping companies prices. These labels are prepared and printed.
- Our hired drivers create a route using all of the addresses and times for the day for pick up.
- Upon pick up, our driver attaches the labels to each package and separates them based on shipping company.
- The driver delivers the packages to each shipping depot and pays for the shipping, which is then charged to the business owner with the addition of a small fee.
- The business owner sits back and relaxes, not needing to research or manage their shipping.
However, all the costumers view of the process is as follows:
- They provide us with the relevant information about their package and their availability for pickup.
- The package is picked up and their credit card is automatically charged through the app.
This is the service that is built around the customer that we couldn’t conceive of before talking with them. This new idea was no longer designed for us.
A Road Block
Armed with this new business plan, we wanted to efficiently discuss with a variety of craft business owners about their interest level in the concept. To do this we went to the Glebe Craft Show on a sleep Friday night, with business cards and bursting with enthusiasm. Our goal was to have five of the fifty sellers express enough interest in our business to take a card and follow up with us for a free beta pick-up. This was not what happened.
Generally, we learned that this was the wrong location to find our ideal customers. Most of the sellers primarily sold at craft shows because they lacked technological literacy to manage a store, their crafts were too delicate to ship reliably, they made one-of-a-kind products that were difficult to manage in an online store, or they lived far from the downtown areas near shipping locations. Many did not have a store available on their website, and those who did were not keen on anyone handling their precious cargo. As we have referred to it in the past, it was our “dumpster fire” evening, and the lowest we felt about this project.
What we later realized that although these business owners were not our ideal users, it didn’t mean that we weren’t onto something. We needed to go back and tap into the networks we had started to address earlier, and understand from them how they felt about the experience we were creating.
Persistence and Testing
This was the moment of truth. We were going to build our service and deliver it to our potential customers. We would go out and pickup packages on our customer’s schedules and find the cheapest shipping provider to handle the shipping. We were very confident in the success of this trial run. We ran over every aspect of it and wrote down what could go wrong at each step of the way. We then came up with solutions to ensure that we could overcome any obstacles to be 100% sure that this trial would be successful.
This was going to be great!
Enthusiasm was high this week. We called up our customers and spoke with them about their shipping needs. Everyone had high sales volumes and very little time as the holiday season approached. This was a perfect test for us. With very little time to run around shipping products it was bound to be easier to go with our service. We had a lot of interest and we moved to press our potential customers for pickup times and package details.
We got no responses.
We experienced the worst failure we could imagine. We had never even planned for this outcome. Everyone was interested but no one wanted to follow through with that interest. This was crushing for us as we tried to gather up all of the pieces. We had tried for three weeks to establish these trials and got nothing. This was a big wake up call. People and there shipping habits are a lot more complex than we anticipated. What we thought was convenient maybe wasn’t viewed the same way for our customers. Maybe trust is harder to establish than we thought. Maybe everyone is already happy with the shipping solutions provided.
This process has taught us a lot about entrepreneurship, both from the difficulties that other small businesses face, and our own limitations as a team. We are both happy with the research and realizations we came to, and some of the problem solving that we did to help pivot our idea. We really did learn that this problem is a lot larger than either of us anticipated.
The size of this problem we were trying to tackle was especially clear when we presented our current research and proposal at an entrepreneurship event at Shopify this past week. The feedback that we received on the research we did, and the interesting and engaging conversations on the needs of small business owners we had were invaluable.
It also put in sharp relief how large this problem is, and how in many ways our team was ill-equipped to tackle it single-handedly.
In a business perspective, the risk (and costs) of moving forward greatly outweighed the likelihood of reward. This specifically related to the capital and time to launch a product, compared to the agility of larger companies likely moving to improve services they have developed. Through feedback and our own reflection, if we were to pursue this project the greatest value would be from a digital service that empowers small businesses to easily compare across shipping options. This most strongly resonated with business owners we spoke to, and highlights one of the most achievable goals within the system.
Despite our relatively grim result, we had a lot of fun working towards this point. We loved learning more about small businesses, entrepreneurship, the tangled web of shipping, and our own ability to work towards the goal of forming a business.