I’m always fascinated by firms that capitalize upon practical inefficiencies and piggyback on existing products or services. In both public and private realms, middleman firms pop up to smooth out the rough edges of transactions.
Two recent examples: Tax prep software and parcel shipping apps.
The recent kerfuffle over TurboTax’s price increase highlighted its dominant position in the market: according to the WSJ, TurboTax was used to file 29 million returns last year. Theoretically, TurboTax should not need to exist, since, ostensibly, a form required by the Federal government should be easy enough to fill out the filers should not need to use a paid third-party platform to fulfill their obligation. Even Donald Rumsfeld agrees that the tax code’s complexity is absurd.
Shyp was created to exploit the frustration of packing items, printing shipping labels, waiting on line, and mailing boxes. And on the receiving end, package delivery has long-been a frustration, particularly for city-dwellers like myself. I’ve often had packages not delivered, or waited at home for three hours to receive a delivery, since the parcel delivery person could not leave it at my apartment door. Along comes Parcel, which basically narrows the five-hour delivery window provided by UPS My Choice to one hour of my choosing, a significant and critical offering. What makes Parcel interesting is that it relies upon the logistical inefficiency of FedEx and UPS: if either firm were to offer more flexibility in delivery times, Parcel’s business model would face significant challenges.
