I doubt there is an entrepreneur out there who doesn’t feel as though the big guys—the Fortune 1,000 companies—get all the benefits some days. Banks, suppliers, potential employees, all have to be convinced that a small business can and will be around long enough to pay the bills. So, when I meet an entrepreneur whose mission is to save small business owners money, they have my attention.
Jose Li spent years managing shipping as an executive for the Jamba Juice retail chain. His time at Jamba Juice was followed by a six-year stint with FedEx, where he was hired as Principal of Retail and eCommerce. In 2010 he left to launch a technology company designed to save small businesses shipping expenses.
At Jamba Juice there were 2½ people handling logistics for 450 stores. Jose had a number of ideas for cost savings, but no resources. One such idea was to track late shipments by FedEx and UPS and request refunds. Based on guarantees offered by both shipping giants , the4-7% of overnight shipments and 2-4% of ground shipments that do not arrive on time qualify for a full refund.
While at FedEx, Li noticed that large corporations were getting refunds for late shipments because they had the staff and resources to devote to such matters and new companies were launching to help them execute it. He also noticed that fewer small businesses were able to do the same. What was missing for these small businesses was effective software that made it easy for them to track their refund opportunities.
This was the inspiration behind 71lbs.com—create a fast, easy, and automatic way for small businesses to realize those refunds.
Shipping is a big expense for eCommerce companies. According to Li, Founder and CEO of 71lbs.com, shipping expenses for small businesses average 10% of sales. In 45 seconds, he can lower those costs by 5%, by tracking late shipments by FedEx and UPS and sharing the refund with the business. That’s a pretty good return on time!
To get this far, Li has used personal funds and raised additional capital through friends and family. He also completed the highly selective TechStars Chicago Accelerator program, enabling him to obtain additional financing from New World Ventures and a few other angel groups.
For those aspiring entrepreneurs who think they have to create a breakthrough product, 71lbs is instructive. Competition already existed (e.g., Shipwire, PackageFox) and the industry faces certain death if FedEx and UPS discontinue the shipping guarantees that begun 10 years ago, which create the refund opportunities. Li’s experience in shipping with both a shipper and a carrier gave him the credibility to convince TechStars and investors that he knew what he was doing.
Today he focuses on the small business segment, creating superior software to meet their needs. Sales are strong thanks to his telesales, direct and partner marketing. We hope they continue that way. One aspect of the company’s mission to help “democratize shipping for the small business guy.” It’s nice to see someone worrying about the little guy and cutting us a break!
If you enjoyed reading about 71lbs, this small business is delivering packages of a different kind.