Enterprise & Warehouse Fulfillment

What is an API and How Does it Work?

By: Michelle McNamara | April 18, 2018

What is an API and how does it work? Our users can access Shippo either through an easy-to-use web app or integrating with our API. If you don’t have a tech background, you may be wondering: what is an API?

Our users can access Shippo either through an easy-to-use web app or integrating with our API. If you don’t have a tech background, you may be wondering: what is an API?

An API, or Application Programming Interface, is a software intermediary that allows two applications to talk to each other.

API vs Web App

API vs. web app

To shed light on APIs and what they make possible, our co-founder and CEO Laura Behrens-Wu recently joined a podcast with Sonal Chokshi, editorial partner at Andreessen Horowitz, alongside Cristina Cordova, partnerships lead for payment gateway Stripe, and Augusto Marietti, CEO and co-founder of API management company Kong.

Here are key highlights from the podcast.

How Does an API Work?

If you were to start a business a decade ago, you would need to have employees and processes in place to manually manage every aspect of your business, including customer support, accounting, payment processing, etc. Today, you can build a business simply by connecting different APIs together to support all of those same business needs with an integrated, automated approach.

Typically, a different API supports each business function. So, you would need a payment gateway API like Stripe and then a shipping API like Shippo. The reason for this is that the team that built the API can focus on making that small slice of your business exceptional, so when all added together, the business can operate like a much larger corporation without the necessary upkeep and overhead.

The API technology can integrate and talk to each other, so that all of the product and customer information are synced to provide a great customer and user experience.

“Maybe 10-15 years ago, you needed someone to focus on bookkeeping, payments, and shipping, but now you can focus purely on your core competencies: building your really great product. Then, think about how you can find these other things, either through an API or open source, etc. to really make up for the fact that you don’t have to be great at all those things,” shared Cristina.

What Do APIs Make Possible?

APIs make it easier than ever to start a business. “I think of what Henry Ford did—he wasn’t the first person to make a car, but he was the first person to mass produce cars. It’s the idea of democratizing that technology, which is how I think of APIs in the context of any size business,” described Sonal.

It also helps traditional companies stay up-to-date on tech advancements. “A lot of retailers that weren’t built as e-commerce stores are moving online, with brick-and-mortar stores declining. Traditional retailers are open-minded to figure out what kinds of new technologies they could use to get online, because that’s not their core competency that they had in the beginning,” shared Laura.

Why Don’t Companies Create Their Own Technology?

“We work with a company called Shopify. They power e-commerce for a non-technical business that doesn’t want to worry about managing a store—[Shopify does] that for you,” shared Cristina. “Similarly, a key part of an online, e-commerce store is payments. Shopify, rather than building their own payments infrastructure end-to-end, chooses to connect with Stripe.”

“If [Shopify] were to decide a year from now to bring [payments] in house, it’s definitely something they can do, but they would have to start at the bottom and do it from scratch instead of being where they want to be with Stripe.”

How Have People Embraced APIs?

We’re still at the tip of the iceberg when it comes to the impact APIs will have on the tech world, but we’re already seeing companies adopting this new technology in droves. “If you go back to electricity, everyone used to have their own power center next to their factories. Eventually, it became centralized which then distributed electricity across the world,” shared Augusto. “That’s what cloud computing is. Everyone had their own data centers, and now eventually going back to the IBM founder’s vision: there will only be three to five giant computers in the world.”

We see the same thing happening with APIs. “History does repeat itself, you just need to go back and put the knowledge in there,” said Augusto.

How Do You Make APIs Friendly for Non-technical Employees?

“The primary way to access [Shippo] is through an API. But, we also have a dashboard built on top of the API,” said Laura. “So, everyone that’s not a developer—because there are other stakeholders at the company that are important, as well, who need access to their shipping data—they’re able to make use of the API through our dashboard. And those are for analytics, for one-off transactions, whatever it is.”

Savvy business owners can use APIs to establish a foundation to build their business upon. Business owners can rest easy knowing these APIs have a full team behind them working to offer new features and help users provide the best experience for the end customer.

To find out more about APIs, check out the full Andreessen Horowitz podcast.


Shippo is a multi-carrier API and web app that helps retailers, marketplaces and platforms connect to a global network of carriers. Businesses use Shippo to get real-time rates, print labels, automate international paperwork, track packages and facilitate returns. Shippo provides the tools to help businesses succeed through shipping.

Michelle McNamara

Content Strategist at Shippo

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