Shipbeat

What did it do?

Shipbeat was a Copenhagen-based platform that aimed to cut online shops' shipping costs and simplify their logistics. Billing itself as the Klarna of logistics, the company set out to resell carriers' services and offer them to e-commerce sites on better terms.

Why did it shut down?

The company, entered in the Danish business register in January 2014, was founded by Kenneth Svenningsen and Joachim Rørbøl; according to Svenningsen, logistics swallowed between 8 and 15 per cent of online retailers' revenue. But striking a deal with PostNord, the country's largest carrier, took more than a year, and according to the founders PostNord tried to prevent its services from being resold despite its legal obligations. The company also struggled to hire entrepreneurial people with logistics experience and relationships with carriers. Having used a little over one million euros in investment and loans, Shipbeat filed for bankruptcy in August 2016 when talks on a strategic partnership with a shipping intermediary or a buyer came to nothing. According to the Danish business register, the company's registration was closed in August 2017 at the end of the bankruptcy proceedings.

The story

Shipbeat was a logistics start-up founded in Copenhagen by Kenneth Svenningsen and Joachim Rørbøl; the company was entered in the Danish business register in January 2014. The founders' starting point was the share of revenue online shops spent on shipping. According to Svenningsen, logistics swallowed between 8 and 15 per cent of e-commerce companies' revenue.

Shipbeat billed itself as the Klarna of logistics. The company aimed to resell carriers' services and give e-commerce sites a cheaper and simpler shipping experience. The model depended on being able to buy services from the big carriers and resell them.

That is exactly where the problem arose. As the founders told it, striking a deal with PostNord, Denmark's largest carrier, took more than a year, and PostNord tried to prevent its services from being resold despite its legal obligations. The company also struggled to hire people who combined logistics experience with an entrepreneurial streak and had relationships with carriers. In total, a little over one million euros in investment and loans was used.

In the final stage, the team tried to form a strategic partnership with a shipping intermediary or a buyer. Although the talks were meaningful, no deal was in sight within a reasonable time. The founders, the board and the investors decided they could not justify putting more money into the company, and Shipbeat filed for bankruptcy in August 2016. According to the Danish business register, the company's registration was closed in August 2017 at the end of the bankruptcy proceedings.

Shipbeat became a small but instructive example of how fragile an intermediary model dependent on an incumbent's infrastructure is when that incumbent will not co-operate.

Lessons for founders

• A model that resells a dominant player's service stalls when that player resists co-operation; secure critical supply agreements before you scale the product.
• In markets where industry relationships are decisive, bringing an experienced insider onto the team early can cut a year of negotiations short.
• When seeking a strategic partner, set your cash-out date and your walk-away criteria in advance; with no result in sight, Shipbeat's management chose not to put in new money.

Sources

1. Shipbeat files for bankruptcy (Oresund Startups, 2016-08-09)
2. SHIPBEAT ApS, CVR 35642234 (Det Centrale Virksomhedsregister (Erhvervsstyrelsen))

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