Jennifer Hyman, the CEO of ecommerce company Rent the Runway, thinks that FedEx and UPS need to be completely disrupted.
Her company lets users rent and return designer dresses instead of buying them. The site is valued around $US400 million and was projected to book about $US48 million in yearly revenue in 2014.
But Hyman says her biggest operating cost, by far, was shipping, even though she gets great discounts for volume.
“The delivery network needs to be completely ripped up and re-created in order for any ecommerce business to have sustainable profit margins over time,” she said at a panel at Austin tech conference South by Southwest last weekend. “Everyone always thinks shipping costs will go down every year, but in fact Fed-Ex and UPS raise their rates every year.”
Hyman then applauded several companies popping up in Silicon Valley that are trying to “disrupt delivery,” like Shyp, Postmates, and Parcel. There’s also DoorDash, a startup that delivers food but is ultimately focused on its logistical delivery infrastructure, the New York-based WunWun, which delivers small orders of local goods for free, and Instacart, which is also trying to make fast, cheap deliveries viable. Big players like Google, Amazon, Uber are also experimenting with their own delivery models. Amazon in particular has reportedly been building its own delivery fleet to take on UPS.
“Let’s have them all be successful, because we need to put UPS and FedEx out of business,” she says. “We really do. If you want to start a shipping business, I will support you. The only way for ecommerce growth to be economically viable is if the delivery network changes.”
Hyman founded Rent the Runway in 2009 and it has since swelled to 5 million shoppers. It has raised about $US114 million in funding total, including a $US60 million Series D round at a valuation between $US400 – $US600 million, according to Forbes.
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