Crunchbase News has covered delivery companies repeatedly over the past year. With Instacart ramping up for grocery delivery in its competition with Amazon and Softbank betting $535 million on food delivery company DoorDash. However, the delivery world, as some have found, is not as lucrative as it might seem. Shyp is the latest victim in the sphere. As CEO Kevin Gibbon wrote in an announcement today, the company is shutting down operations, effective immediately.
Shyp was founded in 2013 by Kevin Gibbon, Jack Smith, and Joshua Scott with the goal of solving everyone’s dislike of shipping things by building an app that would do it for them. Customers would download the app, take a photo of the items they wanted to send out, and type in the address details. Shyp would pick up the items, pack them, and send them through the most cost effective carrier. The service costed a $5 fee for pickup and the price of postage.
Investors liked the idea, too. In September of 2013, the company raised a $2.1 million Seed round from more than 20 angel investors along with XG Ventures, Homebrew, and Sherpa Capital. That seed round was followed by a $10 million Series A by Shervin Pishevar with Sherpa Ventures in July 2014.
After only a few months of operation in San Francisco, the company looked outward to new markets. Its efforts to expand were furthered by its $50 million Series B led by Kleiner Perkins, which brought its total funding to $62.1 million. The company expanded, launching its beta service in Los Angeles that year, but the company’s push for market growth was unsustainable.
“People close to me and the business began to warn that chasing consumers was the wrong strategy… I didn’t listen,” CEO Kevin Gibbon wrote in his post announcing the shutdown. He went on to say that he had mistakenly led the team toward advancing the app’s features to attract more individual consumers.
The startup looked for other avenues to bring in continuous revenue, and it ended up integrating with eBay in 2015, allowing sellers to use the app for shipments. Later in 2016, the company began partnering with small businesses. While building out those partnerships, Gibbon explained that the company took on too much.
“We decided to keep the popular-but-unprofitable parts of our business running, with small teams of their own behind them. This was a mistake—my mistake.”
During the summer of 2016, Shyp scaled back its focus and ended efforts outside of San Francisco, but that wasn’t enough to keep the company afloat.
This latest casualty in the delivery service space begs the question about whether or not consumer delivery is viable. Investments in Instacart and DoorDash point to the competitive nature and heavy interest in the sector. However, heated competition has made it difficult to realize a profitable business model.
If anyone does crack the code, bully for them. In the meantime, no one has yet to fully staunch their red ink.
Illustration Credit: Li Anne Dias