EquaShip has suspended its package shipping service, a move that comes just four months after the Seattle upstart launched with claims of rates that were up to 80 percent cheaper than FedEx, UPS and DHL. The venture-backed company has laid off its customer service and inside sales teams as it plans to reengineer its transportation network, a process that CEO Ron Wiener said could take up to a year.
“We didn’t have a problem with demand generation,” Wiener said. “We had a problem with our transportation partner, which was an exclusive relationship, and they simply were unable to meet our published transit times.”
EquaShip’s shipping was handled by postal consolidator Blue Package Delivery, with Wiener saying that missed delivery times became “very worrisome for our customers, and therefore us.”
Only a minority of shipments could be delivered in the time frames with the promised cost savings.
Ron Wiener
“We were facing the choice of a much narrower market opportunity or stop and replace the transportation partner with a mix of partners that could do a better job…. And we decided to take the time out, and do that,” said Wiener, the former CEO of Earth Class Mail, in an interview with GeekWire.
Missed delivery times are especially excruciating for e-commerce sellers and retailers — especially those using platforms such as eBay — who rely on positive reviews to drive additional sales. When negative reviews started to appear for sellers, Wiener said that they realized they had a problem.
In retrospect, Wiener said that he wished they would have more thoroughly tested the shipping system before launching.
“You have to test the throughput of packages to make sure that, you know, we took their word for it,” said Wiener. “But what we we should have done before we launched with live customers was actually move a lot of test parcels through the system, and measure it ourselves. But next time around you can be assured that we will be thoroughly tracking real-world package delivery times with sample packages before we turn it on with customers.”
In order to move in the new direction, Wiener said that the company will have to raise additional financing. He said they’d likely launch the new service just before the fourth quarter or right after the 2012 holiday season. At this point, he said the board plans to meet Tuesday to discuss future plans to reduce the company’s burn rate.
EquaShip raised $600,000 in December, bringing total cash in the company to more than $1.5 million. Backers include the consumer products giant Newell-Rubbermaid and others.
“We know that this is solvable, but we need to use different partners to do it,” said Wiener.
[Hat tip to Xconomy]
