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How Shippo has outperformed the surging U.S. shipping market

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Laura Behrens Wu, Founder & CEO at Shippo, joins Yahoo Finance to discuss the surge in e-commerce, the genesis of the company, and plans for Shippo to expand their market place internationally.

Video Transcript

MYLES UDLAND: All right, shipping and logistics-- one of the hottest spaces in the market right now as we all sit at home and continue to order increasing amounts of stuff online. Shippo is one company hoping to make that process easier for small- and medium-sized businesses. The company announcing today that they've raised $45 million in a strategic growth round. Valuation now $495 million.

The company's CEO and Founder, Laura Behrens Wu, joins us now to discuss. Laura, great to talk with you this morning. I'd love to begin, maybe for our viewers who aren't as familiar with the Shippo platform, how they might come in contact with it, where you sit, I guess as I would call it, within the stack of e-commerce these days.

LAURA BEHRENS WU: Yes, good morning. Thanks for having me. OK, so let's see. Our customers are typically SMB businesses. And I think what they all have in common is that they're doing e-commerce. And when they're selling a physical product, they have to find a way to ship it to reach their customers.

Typically, they use some of the pre-existing platforms. Let's say Shopify, Magento, BigCommerce, WooCommerce. There are a lot of different options out there these days.

So what we do is we're a platform-- an API layer, but also a dashboard-- that connects to all of these different platforms. We pull in their orders, and we make sure that they're able to ship out their items in the most efficient and cost-effective way. And I think that is especially important nowadays, because Amazon Prime is setting customer expectations really, really high. Consumers expect free and fast shipping. They want their items to arrive tomorrow, and they're not willing to pay for shipping.

And then at the same time, we've got these different shipping companies that are really good at delivering packages but not great at building software. So we're really sitting at the intersection of e-commerce, software, and the offline world, and connecting that, making sure that the experience is super smooth and intuitive for SMBs to understand.

MYLES UDLAND: Now, your guys' valuation has doubled just in the last year. Certainly, there's been a lot of growth within the space. I'm curious how much the trajectory that you had maybe planned for the business to take was changed as a result of the pandemic. We've heard a lot of the, you know, 10 years in one year, however you want to kind of frame that. But I'm just curious how different the world looks to you guys today maybe versus it did a year ago, when COVID hadn't really become a primary concern yet.

LAURA BEHRENS WU: Yeah, no, that's a very good question. I mean, when the pandemic started we were just mostly looking at, how can we best serve our SMB segment? Our SMB segment, they're the customers who were hit the most by the pandemic. We had a lot of businesses that were moving online very last minute, trying to figure out how to transition from offline businesses to being online businesses for the very first time in their lives.

So what we started doing was we first of all offered all of our product for free, making sure that we removed all of the friction from customers being able to ship and start their online stores. And in terms of growth, at the end of the day we're actually positively surprised. We're seeing all of our existing customers outperform. Our existing customers were shipping more than before. All of our new customers were shipping more than previous cohorts as well.

And looking at that in hindsight, I think it's because of changing consumer behaviors. So customers are buying more on the internet. They're avoiding going to the stores. And when they buy on the internet, the online businesses are benefiting from that. So we're seeing that all of our online businesses were actually growing pretty well last year, and we're able to just stay on track supporting them.

In terms of growth, right now we're shipping for roughly 70,000 different businesses in the US. And we've been growing most of our core metrics by 150% year over year last year.

BRIAN SOZZI: Laura, I'm interested, what's your origin story? What pushed you to found, or to start this company?

LAURA BEHRENS WU: Yes. Yeah, it's a good question, because most people don't grow up wanting to build shipping software. And that was kind of the same for me. I'm originally from Germany. I came to San Francisco to work at a fintech startup back then as a summer intern. That was maybe seven years ago. And my now co-founder and I, we decided to start an online store.

So that's really how this all began. We wanted to build a company together. We couldn't think of any disruptive or game-changing companies to build, so we decided to just build an e-commerce store ourselves. And we ran that as a side project for a little bit.

And then building that e-commerce business, we realized that everything in e-commerce is actually quite smooth and intuitive to figure out. Companies like Shopify, BigCommerce, WooCommerce, Stripe, Braintree, PayPal-- they've paved the way for you to look very professional on the internet as a store owner. But when it came to shipping, we were spending too much time going to the post office, too much time trying to figure out the different technologies offered by FedEx, USPS, DHL. And then it was just not-- it was not intuitive enough for us to understand.

So the founder I used to work for, he had this tagline that he kept repeating religiously, which was build something that's a painkiller, not a vitamin. And we realized that shipping is a giant pain point. Every e-commerce store has to figure out a way to ship, and it's not easy to do.

Our customers are not logistics experts. They have no desire to become logistics experts. But they're facing the pressure of retail giants just making shipping faster and faster. And yeah, that's how we decided to get into the business. We were-- there are a lot of inefficiencies that our SMB businesses are facing. And it's just nice to be able to remove inefficiencies for real-life businesses.

BRIAN SOZZI: So you raised this sizable amount of money. Where do you plan to spend this? Are you going to create a new building? Are you buying robots to speed up even more? Where are you spending it?

LAURA BEHRENS WU: Yes, none of that, just yet at least. So we have-- let's see, we have a good customer base, the SMB customer segment that we've been focused on, and really want to make sure that we're not losing sight of our customer base. There are a lot of additional inefficiencies to remove just for SMB businesses. So we're doubling down on our core, making sure that we're building the best shipping product for SMBs.

And then in addition to that, we're starting to go up market. A lot of our SMB customers, they've actually grown to become mid-market customers already. We ship for Aesop, for Bumba socks, for MeUndies-- a bunch of the startup brands that are pretty well known.

And then in addition to our SMB segment, we've really seen the trend that a lot of platforms and marketplaces are now starting to integrate shipping as a default functionality into the platform. So in addition to payments, you also want to offer shipping functionalities. And we think we're well positioned to power that. We're powering shipping for OfferUp, for Makari, for eBay Canada, [INAUDIBLE]-- a bunch of platforms and marketplaces already. So we're just building out our platforms and marketplace product.

And then, in addition to supporting this platforms and marketplace product, we're also going international. A lot of our platforms and marketplaces are already international, and that leads us to expanding with them. Going international means most of Western Europe, more of North America for us this year.

MYLES UDLAND: All right, exciting times. Interesting company, Laura. I hope you'll join us again soon. Laura Behrens, who is the Founder and CEO at Shippo, out with a new strategic growth round. $495 million valuation. Laura, appreciate the time.