Q&A with the Cofounders of ShipHero, a Fulfillment Provider Whose Revenue Quadrupled in 2020

ShipHero’s revenue grew from $5 million in 2019 to $22 million last year, amid the e-comm surge
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Francis Scialabba

· 4 min read

US e-commerce grew 32% in 2020, fueling demand for digital shopping know-how and logistics expertise. ShipHero is one of a number of companies trying to meet that demand by outsourcing e-comm fulfillment and warehouse management for brands.

ShipHero’s cofounder and CEO Aaron Rubin told Retail Brew that revenue more than quadrupled YoY to $22 million in 2020, up from $5 million in 2019. The company also shipped $5 billion in orders last year, up from $1.7 billion the year before. Rubin said most of this came from growth among existing customers, not new ones.

The company offers two primary services to brands: 1) cloud-based software that helps brands run warehouse operations and 2) a fulfillment service that ships e-commerce orders around the country from its warehouses.

ShipHero hopes to ride the e-comm wave to close its first-ever funding round, with a $50 million goal, Rubin told Retail Brew.

Read on for our conversation with ShipHero’s cofounders, in which we talk retailer use cases, how the company plans to use that funding, and why it turned down a Shopify acquisition in 2018.

What kind of retailers use your product?

Aaron Rubin: We help two kinds of customers: First, DTC brands that are growing and just have outgrown their current technology. They might like their current technology, but they’re too big, and need something a little more powerful. Usually that happens around $10 million in annual revenue when they need more processes and more systems.

The other place we help is larger companies that are trying to expand their DTC. They might be like a Nestlé. They’re a huge brand; they’re great on logistics, but when it comes to shipping individual orders to individual customers, that’s not something they typically do. We can help them with that part of the business.

What is the biggest challenge for brands when it comes to fulfillment?

Nicholas Daniel-Richards: I think the biggest challenge that a brand would have if they're trying to ship in the US is “Where do you put your product?”

Where you put your product is going to affect the shipping speed, and it's also going to have a massive impact on cost. We have this network of warehouses—you send your inventory in and you won’t need to worry about where it’s at because we’re automatically moving it around. So that means no shipping zones and things like that, which make it easier, but it also means we need to continue to build that infrastructure.

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Why did ShipHero turn down the Shopify acquisition in 2018?

NDR: We have aspirations to basically solve the problem all the way from sourcing to the last mile. Amazon, for us, is our inspiration and is the way to go. It's not just putting things in boxes and putting them onto the shipping carriers. It's how you make it really efficient for product to move around in a network, to be closer to where your customers are, and then when your customer orders a product—because it's all our technology and all our infrastructure—we’re auto balancing and auto moving stuff around. And that last mile, eventually we want to be doing that.

What effect did the pandemic have on business?

AR: We didn’t actually sign that many new customers relative to the previous years. A lot of it was our existing customers grew a lot. We do a lot of buy online, pick up in store, and that really accelerated.

Canadian Tire was doing some buy online, pick up in store, and when the pandemic hit, they had all these facilities but couldn't really use them for retail. So they started using them for a lot more buy online, pick up in store and buy online, ship from store. It just expanded our revenue and expanded their revenue because they went from a lot of retail revenue, which we don’t see, to online revenue. We had a bunch of big brands like that who went through the same thing. They were doing it, but when the pandemic hit, it went from, “Let’s experiment with 10% of our stores” to “We need it at 100% of our stores immediately.”

How do you plan on using the new capital?

NDR: I think our challenge is, how do we rise to meet the demand in enterprise? We obviously need to build out a sales team. We're very product focused and we have one salesperson, and I sometimes jump on calls to help. On the fulfillment side of the house, there is a sales team there but we definitely want to accelerate the services that we offer, the capacity that we have in the network, and the number of fulfillment centers that we have.

Those things require money, so we need to keep expanding there. We want to get to the point where the movement of product between those warehouses is our own infrastructure.

This interview was lightly edited and condensed for clarity.

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