EquaShip Starts Challenging FedEx, UPS with Big Discounts for the Little Guy

10/18/11Follow @curtwoodward

When two million online merchants fire up their shipping software today, they’ll see a fourth option for package carriers: EquaShip, a Seattle startup aiming to take on FedEx and UPS by offering steep discounts for small and medium-sized businesses.

We first profiled EquaShip back in March, when it was known under a different name. Since then, EquaShip’s raised angel funding, added some board members, and recently relocated to a new office in Lower Queen Anne to make room for growth (including the most advanced set of treadmill-desks I’ve ever seen).

The startup says it’s also been “stealthily integrating” with popular software platforms used by small businesses that sell goods online, so that when they click through to ship orders to customers, they’ll have the ability to open an EquaShip account and possibly capture big savings on their shipping bills.

How can a little startup offer better prices than major carriers? EquaShip CEO Ron Wiener explains it this way: First of all, UPS and FedEx do battle over mega-customers by offering big discounts to their major accounts. The little guys don’t get those prices—and often might find a confusing thicket of pricing levels and charges that lead to high costs, Wiener says.

“We’re going after their totally unprotected flank,” Wiener says. “This is where they make all their profit.”

EquaShip, however, doesn’t own trucks or planes. Instead, it partners with a company called Blue Package Delivery, which consolidates orders and routes packages to the U.S. Postal Service to make final delivery.

In shipping-industry lingo, Blue Package handles the “first mile” and “middle mile” tasks of picking up packages from merchants or drop-off locations, consolidating them at a hub, and sending them on to a Post Office location near the final destination. The Post Office takes care of the “last mile” to the package recipient.

This model is known as a postal consolidator service. FedEx and UPS have their own, but Wiener says they’re typically only offered to big customers, like Amazon.com, which demand it because it saves the final-mile charges that a regular private carrier would add.

EquaShip flips that model by focusing only on small and medium-sized shippers, and eschewing enterprise customers, with a flat pricing structure.

“Roll back the clock 23 years prior to deregulation of the parcel business, when UPS charged Sears the same price that they charged you,” Wiener says. “What’s happened in the past 23 years, of course, is they’ve gotten in a race to the bottom with FedEx.”

More specifically, EquaShip is targeting shippers who send less than $100,000 a year on shipping. “But that’s millions of little guys—on eBay and Amazon, predominantly,” Wiener says. “These are the guys who do not have an account rep from FedEx or UPS.”

Even though it’s now officially available to shippers, EquaShip is treating sign-up as a beta phase, to make sure it has enough customer reps and pick-up reach to handle an influx of new customers. EquaShip is also planning to offer international shipping, which works slightly differently, early next year.

Even though it’s just rolling out the service during the busy fourth quarter, Wiener says he’s hoping to show a profit by year’s end (EquaShip makes a margin on each package shipped). We’ll be checking back to see how the upstart progresses.

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

By posting a comment, you agree to our terms and conditions.