A big resource for entrepreneurs and startup owners, in which we have collected and analyzed why +100 big companies have failed. Learn from mistakes, and avoid being part of the 90% of businesses that fail.
SaaS software for transportation companies
ShipItWise started out as a way of giving an instant, dynamic quote, or shipping price to anyone, anywhere in the world, using a complex algorithm that their engineers wrote. The idea was that instead of calling and sending emails, thus going back and forth, all you had to do was to use their SaaS solution and you’d get an immediate quote - right there on the spot.
Furthermore, ShipItWise signed contracts with large European freight forwarders and engaged smaller, local businesses to handle the shipping. The idea was that these smaller businesses could outsource their logistics departments to ShipItWise.
There are more than one reason why this startup failed. There are many ways to make money in the world, and one of the best ways to make money is to impose high-profit margins on your customers.
This is what ShipItWise learned “the hard way” when they pitched their services to the big, global freight companies. A staggering 80% of these companies’ customers are smaller businesses. These smaller businesses are charged with way higher profit margins than the big corporate clients. By offering their solution, a “fair price” to these smaller companies, the companies would instantly see how they had to pay way more than the big corporate clients.
Naturally, the big freight companies weren’t too keen on doing that. “You’re too customer focused” was the standard answer given to ShipItWise. Nobody wants to lose out on a profitable business model, even it might be entering the borders of ethics and morale.
Not only that, but the culture in which these freight companies and the overall logistics culture in the world was simply a little too old fashioned. ShipItWise built an API that would digitalize and analyze analog price lists. By doing that, freight companies could easily connect with retailers and e-commerce platforms.
However, the transportation companies involved weren’t eager on jumping on this new technology and would rather prefer to use the old written form that was manually operated. In addition to that, the transportation companies didn’t see and profits from this technology. They only saw ways in which they could lose money.
Basically, ShipItWise is the story of a brilliant technological solution that would cut down a lot of costs and money, but where the big companies involved didn’t understand how they would profit from it.
Several big names in the industry also reached out to ShipItWise and said that they were, to the very least, 2-5 years too early out on the market with their solution. The demand simply wasn’t there yet.
Maybe during the next decade the demand for an instant, dynamic shipping price will surface. For the time being, it doesn’t look like that.
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