Tech

Shyp is reducing headcount and suspending all operations outside of SF

Shyp, the on-demand shipping service launched in 2013, has announced in a blog post that they are withdrawing from all but one city and “reducing headcount at headquarters” in an effort to “prove their business model and set Shyp up for long-term success.”

As of today, the company will suspend operations in Chicago, Los Angeles and New York, and only operate in San Francisco, where the company is based.

While Shyp will continue to offer its consumer service in San Francisco, they are focusing on high-volume shippers with new product features coming for businesses, and will also be tweaking consumer prices in the coming weeks.

The blog post didn’t specify how many employees will be let go, and Shyp declined to provide TechCrunch with an exact number, only saying that “many departments were effected.”

Shyp, initially, had a very ambitious expansion schedule. When the company made its original pitch for its $50 million financing round — which valued the company at around $250 million — it said it would be in more than a dozen cities, according to one of our sources. The company expected to be in cities like Boston, Seattle and Philadelphia in early 2016, but that seemingly did not pan out. Some of these cities are still listed in its “coming soon” section. Shyp wouldn’t confirm the exact number of cities when asked to confirm these original expansion plans.

Like most on-demand companies, Shyp faced an uphill battle from the start as they launched operating at a loss. In the post, CEO Kevin Gibbon explained that going back they would have instead “built profitability in from the beginning. And shifted to serve business customers sooner.”

“Knowing what we know now, there’s no question we’d do some things differently. We would have built profitability in from the beginning. And shifted to serve business customers sooner. In a business that requires significant investment to grow physical operations across multiple cities, we would have focused on achieving success in one market before expanding into others. And while there are many things we could have done differently, it’s also become clear that the market for venture financing has changed and there is now a higher bar for profitability—one that we might have met had we made different decisions early on.” Kevin Gibbon, CEO of Shyp

Over time the company had shifted its focus from consumer shipments to the business world, adding features like eBay integration and support for picking up bulk shipments. They also tweaked the consumer-facing service to improve profitability by doing things like adding a $5 fee for prepaid online returns and charging more for packaging.

While Shyp noted today that these changes increase revenue per transaction by 150 percent, it wasn’t enough to justify staying in those cities.

Featured Image: Mitchell Funk/Photographer’s Choice/Getty Images

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