Freightos' Story: It's Not Luck, Finding Product/ Market Fit Takes Vision

June 15, 2017

 

 

The stories behind how tech companies become who they are can be great opportunities to learn. This is especially true for logistics technology products, since the marketplace is changing so fast and their relative importance in making the global economy work.

 

Building a successful technology company (from this logistics marketer’s perspective at least) is always an interesting mix of providing a useful product, effective marketing, and creating the right user experience. The good ones are always changing and evolving, which is something I’ve observed with Freightos over the past few years.

 

To learn more about their story, I spoke to Eytan Buchman Director of Marketing for Freightos. 

For context, we first discussed the initial pain that led to founder Dr. Zvi Schreiber’s idea to create Freightos. This was, not surprisingly, rooted in his frustration scheduling what should have been run of the mill international shipments while running a company he’d previously owned. His experience working with freight forwarders in that era shaped his vision to create a more efficient global marketplace for transportation. A simple concept, but one that is massive in scale.

 

Eytan draws an interesting contrast between how global logistics and the passenger airline industry have traditionally used technology over the past several decades. “Airlines, who are the capacity sellers, have been automated in many ways since the 70’s, including legacy GDS systems that went online as early as 1958. This makes it possible to balance supply and demand digitally. The passenger travel revolution in the mid-‘90s tapped into the automated supply and connected the customers with sites like Expedia and Travelocity, to efficiently aggregating demand and automating the sell side.”

 

This is the same evolution he saw being necessary for international shipping, but knew it needed to happen one step at a time.

 

Eytan further explains, “Early on Freightos found a clear beachhead in the freight forwarder market. Just a few years ago, that market was where the airlines were decades ago - lacking automation and standardization. This initial period for Freightos was in many ways laying the groundwork and a period we knew we needed to work through. This was the origin of our first product, Freightos Accelerate, a multimodal freight rate management and quoting tool.”

 

“With that, we quickly grew to the point that multiple top 10 forwarders are now using it globally – companies like Hellmann Worldwide Logistics and Nippon Express. For them, a specific challenge was silos of both operations and data. There are stakeholders all over the world that use Freightos as an internal tool. This is a big part of the standardization and automation piece we knew needed to be in place.”

 

“It’s here where the industry got on par with the airlines from two decades ago. It’s interesting to think about how the seats for people on the top deck of a plane were so far ahead of the cargo in the belly below. There was no reason for that. Catching up in this way fulfilled the vision for our next product, the Freightos Marketplace, which allows shippers to easily search for rates, book international shipments and manage them in one place.”

 

A big recent step, one that has rounded out Freightos products was the acquisition of WebCargoNet which is technology that better connects carriers and forwarders.

 

Finding Product Market Fit

 

Freightos’ target audiences and products have taken shape in parallel – both as tech tools for forwarders and a marketplace for shippers.

 

How did your product and market focus evolve?

 

“Audiences will always evolve and are never static. Technology in general is never at a standstill either. Our value proposition is different for customers depending on the sizes and types of the company. The industry can move slow, but we now as a technology company we have to stay agile. For example, our marketplace went to market targeting smaller shippers but we’ve steadily been improving from both a feature and pricing perspective to accommodate larger companies”

 

Clearly right now, the “freight marketplace” is a popular concept but hard to do right.

 

“The marketplace concept doesn’t work when its small because margins are by nature much smaller than forwarder margins. Initially, this makes it useless for big shippers. But as more demand reaches the marketplace, the pricing dynamics slowly drive down the prices, creating a more compelling value prop. More importantly, aggregating supply and demand enables the Freightos support team to really shine, providing round-the-clock support to shippers while generating business (and ensuring payment) to freight forwarders. Differentiation on service really does matter; no one will switch providers to save $100 on $250,000 worth of goods.”

 

Through that, scale grows and one helps the other. ​With all that said, there is still a lot of competition in the marketplace space, what makes Freightos unique?

 

“First, is the scale of data we have available – which is over 350 million data points. Our belief is that what customers want is really about resilience in their supply chain, more than price. It’s never really only about price.”

 

“We knew success would come down to service from day one. Our focus on being multi-model from the start has helped as well. We’ve invested in a strong support team -  keeping ourselves neutral and providing value with guidance on things like transit times and service. We never push specific carriers or providers unless they have a specific expertise for a particular shipment.”

 

“Another example is how we work to provide additional value is something that was strongly debated. This was creating and sharing, for free, the Freightos Freight Index. A reason we chose to do this was a belief that the industry is not transparent enough and that hold companies back. No industry can survive by relying on opacity – whether it’s a bank, insurance company or travel agent, service and price shine through. People mistakenly feel transparency means commoditization but that’s wrong. Transparency is not a buzzword for the cheapest price. It’s an indicator of empowered consumers with more information, as well as the ability for providers to really show their worth.“

 

I also asked Eytan for his perspective on two other logistics technology questions.

 

What’s your advice for startup founders in a program like Dynamo who are looking to find the right product/ market fit?

 

“Be humble about how much you know, even if you have experience. You need to discover the pain points your customers are talking about. Understand what it takes to make change which requires you to be both qualitative and quantitative. Lastly, don’t just follow the industry either, be a leader.”

 

Are shippers the problem with tech adoption?

 

“Maybe, but I think it’s more a lack of standards. Rates come in so many formats so how are shippers really supposed to manage that without really good tool? Another factor is that leadership in big companies today come from supply chain backgrounds. They are tough negotiators and incredibly educated but not necessarily forward-thinking tech leaders – this is where external actors can really drive change. Shifting this mindset is hard but it’s inevitable as younger people, who are more used to technology, grow into these decision-making roles.”

 

Every technology product evolves in response to the market -  Freightos will continue to do the same. Logistics technology is always changing, mostly because the industry is still figuring out what it needs and wants. The tech companies that are strategic in their approach and listen to the market will be the ones who succeed.

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