Profile: Tom Allason of Shutl

Lack of convenience with delivery is often cited as one of the reasons that online shoppers abandon their carts before sale. When entrepreneur Tom Allason realised this he decided to do something about it and one of London’s most successful new start-ups was born – Shutl.

The super-speedy courier platform allows online shoppers to get their purchases within the hour or at a time chosen by them. It has raised some $9m investment from the likes of logistics heavy weights UBS and is on the verge of branching into the US.

I caught up with Allason to see how it all works, what the opportunities are for online retailers and how that Stateside invasion is going.

So Tom, tell me how it all started

I actually had a business before this which was called eCourier which is still around, a courier business dealing with point-to-point deliveries. It was vertically integrated so we owned everything, the couriers were our employees. I started it with Jay Bregman the Hailo CEO, we built that up in five years and sold it to TNT.

While I was building that I saw that really the opportunity was not the one we were going after, the challenge, even though the business grew quickly, was the market was changing. People were sending less and less by same-day courier. Each customer we won, mainly banks and law firms, would spend less and less each because they were sending more by email.

We made a big effort building the amazing technology platform but the problem we were solving wasn’t really big enough. After the sale I looked at how I could use what I had learned to serve a bigger faster growing market with a big problem to solve. The problem was ecommerce delivery.

Cart abandonment is high in ecommerce and one of the reasons always cited is cost and inconvenience of delivery and on social networks, comments about delivery are always negative. Delivery is the last interaction an online retailer has with its customers – it can effect whether or not someone will be a return customer. Unless they own their own supply chain, delivery is out of retailers’ control.

Shutl solves the delivery problem, allowing shoppers to get items when they want them, immediately (within 90 minutes) or within a one hour window the the shoppers choice, at a standard delivery rate. For example if you spend over £70 at Oasis, you can chose Shutl as a free option. It creates happier customers and they have a great lifetime value.

When did you launch?

We launched the first delivery almost three years ago but we’ve been working on it for four and a half years. It took a long time to take off despite getting our first customer before we started. We initially went to Argos and sold them on the idea of what it could do to their business, they saw that we could give them greater competitive advantage over Amazon.

We require the delivery distance to be quite short, because Argos has lots of stores this worked well. There was lots of risk associated with us at the time, we didn’t have a product, could we really do what we said we were going to do? Would customers want to use us? Assuming they did, would they like it?

It was hard to get off the ground initially because we had to make changes to the backend of their website and as such a big retailer, we had to coordinate their various siloes, marketing, online, logistics – everyone had to work together. Other retailers were not willing to take that same risk and said they would wait until they saw Argos raving about Shutl – that took 18 months.

Has it been a different story signing up retailers in the States?

When we started in the UK, no matter who we were talking to we would get pushed down the chain and end up dealing with the logistics teams whose only real concern was cost, not the customer experience. It was hard to get to talk to the right people.

In the States, we’ve gone straight to the top. At the time of launch in the UK no-one was doing anything like us anywhere in the world so there was a lot of risk. However in America, Amazon had just announced that it was going to give up its sales tax advantage – which is how it undercuts everyone else – to put in local distribution across the US. In other words, same-day delivery.

They tested it and when they advertised this option for an extra $3.99, there was a 25% increase in conversions – regardless of whether people actually opted for the same-day option or not!

It scared the crap out of retailers but Shutl blows Amazon away with the offering. Amazon works in a 7 hour delivery window which isn’t fast or convenient. Shutl delivers in minutes or at a time of your choice so US retailers have been very excited about us.

For example one major retailer flew its entire operations board over the meet us in two separate Falcon jets because for insurance purposes they can’t all fly in the same jet. A different story to our start in the UK.

So how does Shutl work?

We are not a logistics business, we are a technology platform and software business. There are two types of couriers today, the guys that deliver ecommerce products tend to be less flexible, even when it is more cost and time effective to go straight from collection to drop-off, they don’t. The guys that do, are the point-to-point same day couriers with no big brand but they aren’t big enough to serve ecommerce.

Our platforms uses these smaller, more flexible couriers, aggregates their capacity and availability and ties that into the retailers’ ecommerce platform. We give them the tools to make it extremely transparent. When a consumer buys something we are able to send out a courier straight away.

With GPS we are able to track them so we and the customer can watch the delivery in real-time. If a courier doesn’t perform well, their quality weighting goes down and we will use them less. Quality of performance is the most important factor. We don’t want our brand associated with bad service.

How to you brand the experience if you are using fleets of different courier companies?

We don’t brand the courier but we brand every part of the digital experience. Actual delivery is only one small part of the journey. When a customer orders with Shutl they receive a Shutl branded email with the tracking link for their purchase.

The delivery people introduce themselves as being from Shutl and as soon as they walk away, the customer gets an email from Shutl confirming the delivery. Putting a uniform on all of our couriers just isn’t cost effective and I’m pretty sure they wouldn’t like it given most of their deliveries aren’t through us.

Do you ever work with smaller ecommerce retailers?

We work with retailers of all size. Argos is second in size only to Amazon in the UK true but we work with smaller clients. We recently partnered with The Entertainer, a toy store with 60 stores in the UK and we also work with a company called Start which has only one shop in East London.

We can work with ecommerce sites without a store but only if their warehouse is close to where their customers are – London for example. For Shutl to work the delivery distance must be short.

You’ve had investment from UBS, do they not see you as competition?

We have had $9m from a mix of top European VC s and strategic investment from the larger logistics businesses like UPS. They see what we are doing is something that they can’t do, they can also see that in many ways it is inevitable. Consumers measure their expectations on their best past experiences.

Most people haven’t yet had same-hour delivery but you can bet once they do, their expectations will change and once they’ve changed that’s it. UBS would rather be on the inside. We’re not appropriate for every delivery anyway, the ecomerce delivery market is growing rapidly we are all taking slice of that, UBS is worried about FedEx not us.

Other than imminent expansion into the US, how do you intend to grow this year?

We have about 75% geographic coverage in the UK now and we should be able to get that up to 85% but not much more. We are tied into urban and semi-urban distances. The growth here is about increasing distribution with the number of retailers we work with. It will be a crazy year for us.

We are also going to be working hard on keeping our pricing low. We don’t want to become the premium option. We want people to think “why wouldn’t I opt for Shutl if I can get it now or whenever I like.”