Six months ago I wrote about a new business idea — WeShip. I’ve now fully explored the business, tested assumptions, and talked with potential customers & partners. I wrapped-up this process in early August and decided this wasn’t a business I would pursue. In this post I’ll provide my final steps and why I decided to shelve the business.

What was WeShip?

Before I explain, here are three shipping terms:

• First mile - The logistics of bringing a package from the origin (home or business) to a local distribution center.
• Middle miles - Everything in-between the first & last mile.
• Last mile - Going from a local distribution center to the package’s final destination (home or business).

WeShip was a shipping company competing with USPS, FedEx & UPS. We would use the excess space in people’s cars to ship packages.

To begin, WeShip would focus on the middle miles (SF to LA). We would partner with existing companies on the first & last mile.

Big Progress

After talking with numerous industry experts and potential customers & partners, my primary challenge was finding a partner for the last mile. I wanted my first route to be SF to LA. The least expensive last mile partner I found in LA was $8. I was trying to do the entire route for $5 – that definitely wasn’t going to work.

I decided to swap things and search for a last mile partner in SF. Through a friend, I met the founder of Doorman. Their standard price was $4 per package and if I was bringing them volume, I would be able to get an even lower rate. Success! I had my last-mile partner.

The next step was to start talking with potential customers in LA with the goal of finding packages to ship. Small eCommerce companies were my target initial customers.

I started reaching out to friends and asking for intros through my network. I made progress, but quickly realized that I needed to be in LA to really make progress.

I took a “vacation” from my day-job, started setting meetings and made the 6-hour drive. Over two days I met with a couple potential customers and a few industry folks that would lead to additional potential customers.

The End of WeShip

As I drove back to the Bay Area, I was proud of my progress, but I also realized I had a long way to go. I needed to finalize agreements between initial customers, get a pilot running, talk with more customers and build out the customer base. All of this required me to be in LA.

While I like LA, the Bay Area is where I want to be – and more importantly where my wife wants to be! Having to spend significant time in LA wasn’t practical for me personally. So, that was the end of WeShip.

Key Learnings & Takeaways

I truly believe there is a business here. UPS, FedEx & the Post Office are big, big businesses that feel ripe for disruption. No one I spoke with loved being a customer of any of them (particularly the Post Office). However, I think it’s too soon for a business like this.

The way I set up the business required partners for the last and first mile. Outside of SF (and maybe NYC), there aren’t many businesses focusing these parts of the chain. This will come though. In SF there are multiple startups in the first and last mile space. It’s only a matter of time before these exist across all major cities. When that happens it will be time to revisit the business.

Keys To Success:

1. I looked for multiple ways to differentiate WeShip from UPS & FedEx, but it always came back to price. Superior customer service would be helpful, but WeShip would have to match or beat UPS/FedEx prices to be considered. The good news: from all of the math I ran, I think this is very doable.
2. Shipping through WeShip needs to be as easy for shipping managers as UPS & FedEx. Boxes provided, address book integration, labelers provided, convenient pickup times, insurance, and tracking info.

Finally, the big unaddressed challenge I had was as WeShip started taking volume, this would reduce the FedEx/UPS/USPS discounts our customers received. How would these economics play-out?

What’s Next?

My last day at LAUNCH was September 15. The past few weeks I’ve been working to build a new business. More on that in a future post…

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PS - If you enjoy reading/learning about the process of starting a business, I highly recommend Alex Blumberg’s new podcast, Startup. He records conversations between potential investors, cofounders, and is honest about the emotional roller-coaster that is starting a business. I’m a huge fan.

Filed under: Entrepreneurship