“We’re in a unique, extremely unsexy industry,” explained James Steinberg, who founded Shotput with fellow Northeastern University graduate Praful Mathur around 18 months ago. Part of Y Combinator’s summer 2015 class, Shotput provides an end-to-end product delivery and fulfillment suite to customers. Started as a response to the frustration the cofounders experienced with warehousing inefficiencies, the company aims to provide lightweight and scalable logistics solutions to customers.
“[Entrepreneurs] will put all their money into manufacturing and hardware, but put no thought into what happens after that,” said Steinberg.
Shotput aims to provide end-to-end fulfillment solutions for companies, negotiating freight pricing, warehousing, quality control, and parcel rates down to lower prices than what can be achieved by a single small business. The secret? Volume, hopefully. Operating at scale, the company can turn the discrete and different shipping needs of individual companies into a set of large volume deals with which they have more leverage to negotiate.
Supply chain management and warehousing are among the largest hurdles for any company seeking to ship and deliver tangible products to customers. With its high overhead costs and heavy human involvement, effective distribution at the early stage can make or break a company’s future.
Historically, companies in need of logistics support at an early stage would outsource part of their fulfillment system to a third-party logistics provider, but are tied into a long-term contract. Oftentimes, setting up a complete system requires weeks of work and an intense effort to integrate the fulfillment system’s date software.
“Fulfilment is a huge issue,” explained Aaron Gerry, who also graduated from Northeastern and is Shotput’s head of sales. “It’s time-intensive, and you don’t really know what you should be looking for or how your partner is going to be until you start working with them.”
More than just cost
Warehouse vetting is critical to ensure consistent and high-quality fulfillment, Steinberg explained to me. “We pay attention to something called ‘dock-to-stock’, which is how long it takes [a warehouse] to receive the product and move it to storage,” he said.
Steinberg cautioned companies looking only to find the cheapest fulfilment services. “Something is suffering if you are taking the cheapest warehouse,” he said, explaining that companies don’t always fully understand the costs they are paying. In an effort to educate companies, the Shotput team developed what they call the ‘Warehouse Equation’, which describes tradeoffs associated with lower shipping costs.
Focusing their business has allowed Shotput to grow rapidly in the right areas. “We don’t make any margin at all on shipping,” said Steinberg, instead explaining that Shotput relies on partners to provide quick shipping rates. Shotput combines these external pricing services with proprietary information, and exposes it to companies via their Warehouse API to provide customers instant pricing information for the complete logistics package.
What makes Shotput so attractive to small businesses is the scalability the system offers. Allowing users to pay as they grow, the absence of a long-term contract allows organizations to dynamically adjust fulfillment programs as their customers base shifts.
Speed, at a price
Focusing on specific problems has made Shotput’s system efficient. The company estimates that setting up a fulfillment solution using their service is a thousand times faster than using what they call ‘traditional’ methods.
While it took me longer than the advertised 24 minutes when I tried it (though I was making up product information as I went along), customers with information on existing products might just be able to set up their logistics as fast as the company claims.
This speed does come at the cost of a constrained solution. “It’s really just a pick-and-pack operation,” explained Steinberg. “You can’t do something really fine-tuned.”
“Say if you wanted a product that you wanted put together at the warehouse – we can’t offer that,” he added.
Gerry said that the company plans on increasing its range of services in the future. “As we start to learn our operation, we will be going for more implicated things,” he said.
“Longer-term, we have more flexibility when we can scale,” he added. “Going forward, it’s just a matter of finding quality partners to work with throughout the United States, and eventually through Europe and Asia.”
Despite being one of the few players in a nascent space, Shotput is certain to face a competitive market, both from incumbent enterprise logistics providers and legacy systems. Palo Alto-based Shipwire, acquired by wholesale technology distributor Ingram Micro in 2013, also provides enterprise warehousing and shipping solutions, with a larger footprint that spans across 5 countries. While warehousing is a more niche aspect of the fulfillment industry, competition for shipping will be stiff, both from logistics giants like UPS and FedEx and new entrants.
With a similar software suite and instant pricing system to its clearest competitor, we will have to wait and see if Shotput’s Warehouse API and low margins will tip the scales in its favor. In the meantime, though the future certainly holds interesting news for Shotput. “The sky’s the limit,” predicts Gerry.