Are There Big Problems At EquaShip?

Are there potential big problems at EquaShip in the USA? As we reported in January, EquaShip was launched in the fourth quarter of 2011 with the bold claim of aiming to become the “4th Parcel Carrier” (Behind US Postal Service, and Global parcel shipping giants FedEx and UPS). When it comes to buying and selling goods online it is actually shipping and logistics costs that are top of the list of concerns for online sellers, especially with the huge push to offer free shipping on all of the goods they sell in third party marketplaces such as Amazon. However a new service launched by EquaShip had big plans to help small merchants just like those described above to compete with large retailers has temporarily ceased trading.

Their aim was to cater specifically to small and medium sized online e-tailers, however they have just announced that they are temporarily suspending all customer deliveries and collections whilst they re-engineer their whole transportation network, in order to offer faster package delivery times, and enable a larger geographic coverage with more service offerings.

The company started its new low cost shipping service in a beta trial last October and immediately offered small online merchants much lower rates than those available from UPS and FedEx whilst not requiring any fees, contracts, or volume commitments. It was able to do this by aggregating small and medium sized parcel shippers.

The company said it could offer shipping carriers profitable additional volumes from retailers who would not otherwise have had any way of using their services. EquaShip was to handle all customer service, payment processing and the "first mile aggregation" of goods shipped.

Speaking on behalf of EquaShip, Ron Wiener, who is the CEO, said “Our customers clearly loved that fact that our prices beat FedEx and UPS by up to 80%, our real insurance coverage bundled with every parcel, and our outstanding customer service. However, in today’s ecommerce environment it’s not good enough for small and medium-sized merchants to offer Free Shipping. Shipping also has to be fast enough to compete with larger competitors like Amazon who ship from multiple distribution centers. What we heard loud and clear from our customers was that they needed faster transit times than we could deliver through our existing network of transportation partners.”

EquaShip took the decision to temporarily halt its service as they heard loud and clear from customers that they needed faster transit times than the current network of shipping partners could deliver. Thus they felt it would be better to stop the shipping service now and change its third party shipping providers, and re-launch with a service that is much faster, but still offer very low cost shipping rates.

EquaShip did not wish to limit their market share just because of partner shipping companies with transit time issues so felt it better to stop now, change its shipping network providers, and re-launch with the speedy service that online customers expect, yet still offer shipping rates at far below those offered by FedEx and UPS.

Given the scope of the systems integration work that will be involved EquaShip chose to suspend customer operations after delivering all remaining parcels in its shipping chain.

Image Courtesy of Garry Knight

Author: Richard Allen