The Case For B2B Delivery: Why We Like Shippr — 6Degrees

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The growth in consumer ecommerce has been one of the dominant trends of the internet age, spawning behemoth companies such as Amazon and Shopify. But consumers aren’t the only ones who are buying goods online, businesses are too. In fact, the B2B e-commerce market is already four times larger than B2C, with annual revenues of $15tn.

This creates the need for new infrastructure. As businesses visit fewer locations to purchase and collect goods, the demand for reliable deliveries increases. The same-day delivery industry has been growing at a steady 8% per year, with no sign of slowing down.

Shippr is building on this trend

Shippr operates a platform connecting businesses with professional B2B couriers. Its focus is on last-mile delivery — delivering goods to their final destination, rather than a warehouse.

It specializes in markets that require recurring deliveries and a high level of service. Take for example sushi deliveries to supermarkets, which happen daily and require refrigerated trucks to comply with food safety regulations. Serving these customers requires specialized couriers, and Shippr can supply them. In fact, 40% of its fleet is refrigerated.

The existing market is extremely fragmented. Today, last-mile B2B deliveries are often done through small local players — who rely on email and spreadsheets to coordinate schedules — or the larger industry players — who require customers to fit into their schedule, rather than the other way around.

Shippr provides a technology platform that allows businesses to select pick-up or delivery slots, the required method of transport and any additional services required. Jobs can be booked last-minute or scheduled in advance. The platform uses sophisticated matching algorithms, provides granular, real time data insights and helps to optimize routes, reducing costs and carbon emissions.

Its approach has led to incredible growth. Shippr generates millions in revenue, with its operations in Brussels and Paris each generating seven figures in sales. The growth rate is high and has been achieved with an extremely lean team — the Paris operation reached seven figures in revenue with a sales team of just one person.

The growth shows no signs of slowing down, but there are plenty of things Shippr can do to accelerate from here, from growing its sales team and expanding in its existing markets, to establishing operations in other European cities. The company recently announced a funding round of €10m, which it will use to expand its operations across Europe.

Why B2B delivery is different from B2C

Shippr’s take rate is high compared with the B2C delivery platforms, so it’s important to highlight how the two markets differ.

Consumers primarily want low-value orders delivered as quickly and cheaply as possible, but the B2B market benefits from different dynamics:

• Businesses often have specialized needs (such as refrigerated delivery) and are willing to pay for the right services.
• The value of B2B orders is far higher, making the cost of delivery a much smaller part of the total. It’s much easier for delivery companies to charge a fair fee when delivering thousands of units vs when they are delivering a takeaway dinner for two.
• Businesses need new deliveries regularly, so order visibility is higher. Some businesses receive dozens of deliveries per day, which makes it easier to build long-term, recurring contracts.
• The specialized needs of the customers mean there’s a barrier to entry on the supply side. It’s relatively easy to become a bicycle courier, but not many people own a refrigerated truck.

Shippr’s business model is asset-light, it does not own the trucks, and drivers range from independent contractors to logistics companies. This allows it to operate with a lean team, the company is already EBITDA break-even in both of its geographies.

With the recent fundraising, the team has the firepower to accelerate growth in its existing geographies while also expanding into new European cities

Originally published at https://6degrees.vc on April 25, 2023.