AfterShip: International Market Not an After‐thought

With an eye on overseas clients from the beginning, Hong Kong start‐up AfterShip is a perfect example of a young international venture that bypassed the local market and established its foothold in the international market quickly and efficiently

By Louisa Wah Hansen

At first glance, AfterShip looks like a U.S.‐based website that caters for an international customer base. Its clean and slick look beguiles the fact that the business is completely homegrown in Hong Kong. Perhaps that was the idea. After all, when AfterShip was founded in November 2011 by Teddy Chan, CEO, and Andrew Chan, Chief Marketing Officer, their sole interest was to set up a business that would help online merchants manage their customer service after shipments have been sent out — no matter where the merchants are located.

Since the fateful day the two Chan’s met at an entrepreneurial competition held in Hong Kong called “Startup Weekend” in November 2011, their brainchild AfterShip sailed off and has helped thousands of online merchants to send out more than 1,000,000 notifications to customers, giving them peace of mind by informing them where their packages are and helping merchants retain customers with good “after‐ship” service.

“Most questions raised by customers are about the shipping status — how long it would take for their packages to arrive,” explains Andrew about the business concept. “We think online merchants should focus on that to generate return customers.”

The problem that online merchants face, he says, is that it often takes an exorbitant amount of time to answer customers’ email enquiries about shipments one by one. What AfterShip does is to automate that process. Instead of having customers visit couriers’ tracking sites themselves, AfterShip sends out notification emails to them on behalf of the merchants, so that they will perceive this as a convenient and caring service from the merchants.

At the same time, AfterShip helps online merchants integrate the tracking function into their own online shopping sites. To make it a truly international service, AfterShip has partnered with 113 couriers around the globe so that tracking information can be integrated seamlessly into the merchant sites in a one‐stop process. This is the unique feature that no other companies offer at the moment.

An added benefit for the clients is that the notification service emails can be customized, so that store logos, personalized messages and customer names can be included. This contrasts with the typical tracking notifications sent out by couriers on behalf of merchants, which contain only the tracking information. “This can be used as a marketing email and is quite effective,” says Andrew. “It serves as both customer service and a marketing channel.”

AfterShip charges a fee from merchants, which ranges from 1‐10 US cents per shipment, and 1‐2 US cents for merchants with high‐volume shipments. On average, each of its clients would register at least 20,000 shipments per month.

Eye on Overseas Market

The gem of the idea behind AfterShip came from the cofounder Teddy, who had previously sold remote‐control toys and MP3 players overseas through his own online store for more than 15 years.

He faced the typical problem of answering customer enquiries about where their shipments were. Subsequently, he introduced to his own store a system similar to what would become AfterShip, and as a result, reduced the number of customer enquiries by 40‐50 percent. When his friends saw how much time he managed to save, they also wanted the solution for their own shops.

Prior to partnering with Teddy on this new venture, Andrew had worked at Accenture, a U.S.‐based global IT consulting firm, and had accumulated many years of experience serving international clients.

Right from the start, the two had chosen to target mainly U.S. and European small‐ to medium‐size online merchants that do not have brick‐and‐mortar shops. These merchants use different online channels, such as eBay, and may use shopping carts systems such as Magento.

The reason why AfterShip decided not to focus their initial sales effort on the local Hong Kong or domestic Chinese market is because of the sheer volume of users overseas vs. locally.
“Hong Kong is small. The online merchants here actually use overseas shopping cart systems. So if we focus on the overseas market, we probably would get the Hong Kong market as well,” he explains. “The markets in the United States and Europe, on the other hand, are much bigger and very established. Small‐ and medium‐sized online merchants are very used to relying on the Internet to find new technologies and trying them out.”

Andrew further explains that small merchants in Hong Kong — many of whom are one‐man bands — tend to work from home. The volume of shipments is so limited that they often do not use tracking systems for their packages — many even deliver their goods in person. Some also like to build their own technologies rather than rely on third‐party solutions. However, AfterShip did come into contact with some local merchants who are open to testing the service.

“They tend to be more well‐established medium‐sized merchants looking for more tailor‐made solutions. But they prefer to talk in person first before going to the next step. In the West, by contrast, there are many merchants who are willing to try and just see what happens,” says Andrew.

The Next Stage

Since its launch in October 2012, AfterShip’s monthly revenue has been growing at about 40%. In terms of profit, it is now breakeven. “We need to keep up and think about how to grow faster,” says Andrew.

The company’s plan is to open a U.S. sales office to expand its client base. Since British e‐commerce sellers usually follow what their U.S. counterparts do, and to a certain degree, the same goes for
Chinese online merchants selling to international markets, it makes sense for AfterShip to focus on its expansion in the United States first.

As for mainland Chinese online merchants selling to the domestic market, has there been any demand from them? Andrew says that most merchants use TMall or Taobao, which already provide
good tracking services. While the company does have clients in China, it does not push its marketing efforts and will review the situation in half a year after its U.S. expansion.

Tips for Young International Start‐ups

What are some of the tips that AfterShip can share with startups?

First of all, Andrew suggests testing your product with a small group of customers or users before spending a lot of time trying to perfect it.

“We focused on tracking notification, and tested this function with one shopping cart company and 1‐2 carriers before reaching out to other channels,” he says.

Another advice is to find the right channel to reach out to the right users. “Once you’ve found them, put 100% effort in targeting that channel rather than using Google. For us, we don’t do any paid
marketing. We reply on PR and have some good technology blogs to write about us, so we can reach out to potential customers.”

AfterShip also sells its service through mobile phone application stores and invites reviews from users, who would get credits for future use if they leave a positive review.

He believes the following factors have contributed to AfterShip’s fast growth since its launch:

• It is an automatic and scalable business. It charges based on the number of shipments.
• It focuses on solving the problem of tracking. “Many start‐up companies are not trying to solve problems. Instead, they create problems,” observes Andrew. “If you have a better solution,
  fine. But sometimes companies try to find too many problems or develop something very expensive to solve a problem that doesn’t exist.”
• Keep the team small. “We have a team of four and we focus on serving the customers in an efficient way,” he says.