New York-based e-commerce software and fulfillment provider ShipHero announced Tuesday morning it is splitting off its fulfillment business into a 3PL subsidiary, named LVK, to better serve customers.
As the freight recession continues, companies across numerous sectors of the industry, including fulfillment, trucking, tech providers and more, are shutting down or experiencing massive layoffs. Launching LVK as a separate entity while retaining the experience it has earned in the almost five years ShipHero’s fulfillment service has been in operation could allow for better future-proofing and more personalized customer service.
“We needed to provide our customers with sharper clarity and market differentiation,” says LVK CEO Maggie Barnett. “ShipHero CEO Aaron Rubin and I made the strategic decision to uncouple LVK from the parent company because great fulfillment takes more than just great technology. LVK’s 3PL network runs on ShipHero’s WMS platform, but the tech alone is not what compels brands to choose and stick with our fulfillment team for years. It is our reliability and our ability to provide complex, creative fulfillment for our merchants that makes us indispensable partners.”
ShipHero is one of numerous companies in the shipping space looking to separate or at times even completely offload their fulfillment business. Recently, Pitney Bowes sold its e-commerce fulfillment service to Stord. This trend is likely to continue.
Fulfillment experience
LVK begins with seven locations across the U.S. and Canada and has more than 80 engineers. It will continue to use ShipHero’s warehouse management system for its operations. The 3PL services include direct-to-consumer pick and pack, e-commerce fulfillment, fulfilled by merchant, B2B fulfillment, and special project management.
ShipHero launched in 2013, after founder and CEO Aaron Rubin was dissatisfied with the warehouse management systems that were available for his own e-commerce brand and was inspired to create his own. In 2019, the WMS provider expanded to fulfillment services and in 2021 raised $50 million to expand it. Now the fulfillment division takes off on its own.
Maggie Barnett joined Rubin on his journey to expand ShipHero into a fulfillment provider right at the beginning and has been working to drive the business forward. Now as LVK spreads away from the founding company, Barnett moves from COO of ShipHero to CEO of LVK.
The name LVK was chosen as the name of the fulfillment business as LV is the roman numeral for the number 55, which represents the company’s first fulfillment center on 55 Railroad West in Garnerville, New York. K stands for the Japanese word Kaizen, which means “continuous improvement.”
(Photo: LVK)
In an on-site tour with FreightWaves at a warehouse in Allentown, Pennsylvania, the CEO explained that in growing the fulfillment business, the team discovered many strengths and weaknesses in operations. Learning from mistakes, the team was able to come up with what they believe is an extremely efficient and optimized system and performance. Many personnel responsible for launching LVK have been with ShipHero fulfillment throughout this learning curve.
Culinary brand Momofuku is a prominent client of LVK and features an interesting use case. As it boasts some of the highest number of SKUs for the warehousing operation, it became difficult to accurately handle shipments. Barnett and workers at former ShipHero Fulfillment worked with Momofuku executives to determine the brand’s most popular SKUs and formulate an efficient system to prioritize those items at a workstation devoted only to Momofuku. It’s this type of collaboration that Barnett plans to focus on with LVK.
In addition to zeroing in on collaboration, diversity within its business is a core value for LVK. Barnett, the female CEO of the new company, plans to lead by example with 53% of LVK’s workforce being women.
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