An Austin company that operates a Web site connecting people with professional movers has made quite a move of its own.
UShip Inc. has reached profitability and topped $125 million worth of transactions during its first five years of operation. This year, the company doubled its revenue compared with 2008 and now plans to expand its business in Europe, Canada and Australia, CEO Matt Chasen said.
UShip, which was founded in 2003 and launched its Web site in 2004, reached profitability during 2008 and has met or exceeded all its projected milestones from when it was founded. For example, the average shipment brokered through uShip’s Web site has reached $700 versus the initial estimate of $70.
Because uShip’s revenue is based on the size of shipments, the difference has been a welcome underestimation.
“We’ve been kind of blown away by the opportunity,” Chasen said. “We sort of stumbled upon a larger opportunity than anyone envisioned.”
UShip, which employs 50 workers, doesn’t disclose its annual revenue.
During two financing rounds in 2005 and 2006, the company received $5 million to $10 million from Benchmark Capital, a California-based venture capital firm. But uShip hasn’t needed to use all the capital, Chasen said.
Here’s how it works: Transporters and users post their listings on the uShip Web site for free. Transporters bid to move a user’s goods, and the user then selects a transporter.
The transporters ship nearly every type of freight imaginable, including cars, household goods, horses, boats, pets and heavy equipment.
UShip generates revenue by taking a tiered-based share of the moving fee. That share can range from 0.9 percent to 12.9 percent, depending on the price, Chasen said.
Also, users may post reviews of the transporters to generate ratings for subsequent customers to check.
Norita Taylor, spokeswoman for the Missouri-based Owner-Operator Independent Drivers Association, said Web-based businesses such as uShip are providing a small segment of the trucking industry with another option at a time when regular customers are cutting costs. Transporters and users, however, need to be careful about the quality of people they’re doing business with, she said.
UShip’s service has managed 900,000 shipments since launching in 2004. At any given time, $8 million to $10 million worth of shipping jobs are available to transporters on the Web site.
In October 2008, metrologist Jerry Eldred needed to move his household goods and two vehicles from New Hampshire to Austin on a $5,000 budget.
Through uShip, he received five to 10 bids and found a trucker who would move everything for $4,000 within three days.
Eldred attributed the price and quality of the work to the transporter he selected by reading the reviews from previous customers. “You’ve got to do your homework,” he said.
Chasen said uShip’s system automatically flags negative reviews, which could lead to the suspension of posting privileges on the Web site. Fewer than 50 of the 160,000 listed transporters have been suspended, he said. Those have been mostly for double postings, which are prohibited.
The Web site recently listed 737 transporters in the Austin area.
Business from eBay, which has generated $30 million in shipments for uShip transporters, has been a major part of uShip’s revenue, Chasen said.
One potential competitor, Connecticut-based RedRoller Inc., launched last year after two years of beta testing and a reverse merger. But it subsequently filed for bankruptcy reorganization and sold its assets to uShip.
UShip board member Bob Kagle, a general partner at Benchmark Capital, said the company needs to raise its profile to generate more business.
“It’s a very efficient marketplace for these types of transactions,” he said. “But it’s just not a household name.”
Meanwhile, Chasen said non-U.S. shipments using uShip increased 500 percent this year compared with 2008. He’s been looking at more specialized versions of the Web site, focusing on specific industries and languages. Although such initiatives would provide the company with growth opportunities, they would also delay the prospect of an initial public offering, Chasen said.
“We’re far from where we would like to be to even consider that,” he said.
Read the story in the Austin Business Journal.
