Shyp is now charging a $5 handling fee for its online returns, in addition to its regular pickup fee and postage costs.
Shyp’s big play has been that it’ll charge a simple $5 fee, plus postage, for a quick pickup and delivery. It expanded into online returns in March last year after noticing an increasing percentage of its user base began returning items through the service. That service extended to retailers like Amazon, and at the time constituted around 15% of the company’s business.
All this isn’t too surprising. Shyp has recently said that it is tweaking its business model to make it more modular and make more sense as it faces the challenge of being an on-demand shipping company. A Shyp representative said the company said earlier this year it would be making operational changes to its pricing model as it guns for profitability.
Many returns come with a prepaid label so there is no shipping cost, which is likely the point of the handling fee. Of course — especially in the on-demand space — pricing and business models are a constant work in progress.
The company appears to have rolled this out quietly — there’s a note on it in its support page, but we didn’t see a formal announcement in a blog post or anything like that. The fee appears to have been instituted in the past month or so, as Wayback machine archive for March 16 does not show the handling fee on its pricing site. The note on the site says that it clearly notifies users about the handling fee in the app.
Like other on-demand companies, Shyp’s business model has proven to be a a tough one to master. Recently when the company decided to pull out of Miami as it shifted its focus to more appetizing markets. The company now operates in four cities: Chicago, New York, Los Angeles and San Francisco. Shyp previously told Fast Company that it’s growing at around 20% month-over-month.
Shyp has also established a number of large-scale business-to-business deals, like one with eBay that helps sellers ship their products through Shyp. All this, taken together, shows that Shyp has found itself becoming more and more flexible as it continues to work on its business model and experiment with new ways to generate volume and revenue.
And so, the company continues its search for profitability with tweaks like this. That’s a common trend we’re seeing in startups in 2016 as venture capital money begins to dry up a bit. Shyp last raised $50 million in a financing round that valued the company at $250 million from Kleiner Perkins — and they’re likely feeling the pressure to burn less of that big pile of money.