Team,
Thank you for the hard-work, courage and optimism over the last few weeks. It has been fabulous to see so many different teams virtually come and band together to keep building and keep moving forward - the virus be damned.
We are living through unprecedented times. There is no one playbook on how to feel or on how to respond during these times. It very much feels like the early ShipBob days - when everything was new and we were encountering situations for the very first time. What anchors me during these times - is our commitment to our mission and the essential service we perform on behalf of our merchants who represent the backbone of the US economy - the thousands of small to mid sized businesses across the country and maybe even the globe. That is a proud feeling - to be a part of a select group of services deemed as essential to the functioning of the economy and required to continue operating for the good of the society. Not a lot of companies can claim to have that honor and privilege.
However that privilege comes with immense responsibility. Not all the work we do can be performed remotely. Our Fulfillment center employees are coming in every day to pack and ship orders on behalf of our merchants. Their health and safety is top of mind and we are working through the clock making changes and responding to the evolving situation to make sure we come out on the other side with our heads held high and our employees proud of the company they work for. Our giving fund is one example of an initiative that I think we will look back on as something positive which came out of this bleak time. It will be announced more broadly later today. You can read some of our other FC initiatives here. I surely am surely proud of our work here.
I wanted to re-iterate my message from the Town Hall. I hate to say it so bluntly but its important for us to realize this - The next 6-9 months are going to be tough and extremely challenging for us as a company and for the broader global economy.
Why will the next 6-9 months be tough for the global economy?
For the United States, consumer spending accounts for 70% of our GDP. Retail and Services industry are the two major buckets of consumer spending. Why is that important? I drew out a basic chart for what the inputs for a growing economy are : Low unemployment and rising wages.
With the (almost) nation wide shut down of restaurants, hotels, travel and non essential services, a large number of businesses revenues have fallen by almost 100%. Open Table published its data here . This will force the economy into a recession as businesses shut down and un-employment grows.
Recessionary times are tough on people and the government will do everything to break the above cycle (especially in an election year) by injecting a lot of capital into the economy to prop up consumer spending. However by most estimates it will require at-least 6-9 months to get the economy back on track.
So what can we do for the next 6-9 months to weather the storm?
I mentioned a few things on the Town-hall but I will repeat as they are so critical -
Build deep intimate relationships with our customers - They pay our salaries and bills. It has never been more important for us to make sure our merchants are happy and engaged with our services. Some of our work here around :
Quarterly Business Reviews
NPS,
90in30 - virtually meeting the top 90 merchants in the next 30 days is extremely relevant.
Find ways to get involved with the merchants ( and the merchant experience team) and add value. As our merchants face similar headwinds ( reduced consumer spending on their websites), it is our job to find ways to help them. We need to be creative in finding ways of demonstrating value and keep making sure we are doing the basics right(why they hired us in the first place) .
An example here ( which our marketing and analytics team built over the weekend) and here . These are great examples of being creative and adding value to our merchant base and the broader ecosystem.
Get sharper on our product , value proposition and on our customer base - The time for easy sales and half baked product features are over. New merchants will be extremely skeptical of making changes to their supply chain - especially if the current solution is working for them right now . If we are unable to articulate our value proposition clearly on why they should make a change to us - they will not. If we are building a product feature and we are not articulate on how it helps our merchants - we should stop, refine and re-start. Finally we will need to get even more focused on who we service and why. Working with limited resources, we need to make sure our time and effort is spent on merchants who recognize our value proposition and that it aligns with their business objectives.
The work being done on revenue team to create talk tracks around first time merchants looking to outsource fulfillment is a good example. Creating a forward looking product roadmap and reviewing this under the lens of adding near term value for our merchants is very relevant.
A quick story of how Apple took it to the extreme under Jobs -
Be patient and ride the wave through its ups and downs - For the very first time in our five year journey - we will learn a new skill of slowing down as a company. This is hard as we have been sprinting for the last five years and the desire to keep building something new is innate in us. However we cannot outpace the market as it slows down. Another Apple story to illustrate this point -
In summer of 1998 - Jobs had come back to Apple and the company had survived but only had 4% share of the personal computer market. Macintosh was only a niche product. A journalist asks Jobs : “Steve everything you have done is super amazing. But everything we know about the PC business tells us that Apple cannot push beyond a small niche position against the Windows- Intel monopoly. So what are you going to do in the long term ?”
Jobs said -“I am going to wait for the next big thing” .
Jobs did not pretend that pushing on various levers or some excel modeling would magically make Apple the new leader on personal computing. Instead he was internally focused on execution and recognizing the next window of opportunity - that he could harness to his advantage. It would be **two years** before the opportunity opened again - with the iPod and the online music and with the iPhone.
We got to be willing to wait and be ready to pounce when the window of opportunity and the market opens up again. The fundamental assumptions around why ShipBob exists remain the same and ever true :
E-commerce will continue to grow and take share away from the brick and mortar retail. This should help the entire online eco-system including us.
Customers will continue to demand a better online shopping experience -a fast, reliable delivery experience is key to this.
As we prepare for the un-certain times ahead, we have done a lot of things right. We have :
built an amazing company with a great product (which people need) alongside a great team.
we have capital ( cash in the bank) and positive contribution margins to weather the storm. I walked you all through the P/L to all of you in the town-hall.
I am confident we will be able to come out on the other side stronger and and an even better company. Our ambitions to build a big public company right here in Chicago which stands the test of time haven’t changed the slightest. It will just take us 6-9 months longer than planned- Let’s get back to executing !