Monday, April 6, 2015

Deliverance?


CEO of $400 million e-commerce site wants UPS and FedEx ‘out of business.’

Jennifer Hyman, the CEO of e-commerce company Rent the Runway, thinks that FedEx and UPS need to be completely disrupted.
Her company lets users rent and return designer dresses instead of buying them. The site is valued around $400 million and was projected to book about $48 million in yearly revenue in 2014, said Forbes. Hyman says her biggest operating cost, by far, is shipping, reported Business Insider, even though she gets great discounts for volume.

"The delivery network needs to be completely ripped up and re-created in order for any e-commerce business to have sustainable profit margins over time," said Hyman during a panel discussion at Austin tech conference South by Southwest (SXSW) in March. "Everyone always thinks shipping costs will go down every year, but in fact Fed-Ex and UPS raise their rates every year," even in the face of a nearly unprecedented drop in fuel prices.

Hyman then applauded several companies popping up in Silicon Valley that are offering delivery alternatives, primarily for residential customers, attempting to take on the Brown and Purple “duopoly.” The US Mail already has a nationwide network, and has been providing “last-mile” delivery services for FedEx and UPS. Big players like Google, Amazon, and Uber are also experimenting with their own small package business models, with Amazon in particular reportedly building its own delivery fleet to take on UPS. Already in much of India, if you order from Amazon, your shipment is delivered, not by FedEx, UPS or DHL, but by Amazon.

"Let's have them all be successful, because we need to put UPS and FedEx out of business," said Hyman at SXSW. "We really do. If you want to start a shipping business, I will support you. The only way for e-commerce growth to be economically viable is if the delivery network changes."

Hyman founded Rent the Runway in 2009 and it has since swelled to 5 million shoppers.

Kirk Shearer
President
TOTALogistix
www.totalogistix.com
1-800-989-0054 x103

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