Flexible Fulfillment for Small Retailers: This UPS Subsidiary Says It Has Figured It Out

How did the idea for Ware2Go come about?

Ware2Go was started by UPS and Boston Consulting Group. They found this need for flexible warehousing, specifically for smaller businesses who weren’t looking for a typical warehouse relationship where [they] have to sign a long-term agreement and know exactly how much they’re going to sell. These clients needed more flexibility. That’s how Ware2Go was born.

What problem does Ware2Go solve for small business owners?

I like to say that e-commerce is really the great equalizer. You really can’t tell when you’re shopping at neimanmarcus.com or tinasshoes.com. The seller can be operating from a beautiful brick-and-mortar facility or from their basement. But whether or not that consumer decides to shop with you again is all about how they interact with that experience you create virtually, and a lot of that has to do with speed of delivery. We have technology that allows any merchant to connect to a world-class fulfillment network. We have data scientists that help clients figure out where you should store your products so that they’re closest to your end consumers. That way, when somebody buys something from you, it doesn’t have to travel across the country to get there. It’s cheaper for your client because they don’t have to pay additional shipping costs to ship things from farther away, and it helps to reduce your carbon footprint. We allow any business to really think about and position themselves with the big guys and provide that world-class delivery and fulfillment experience for their customers.

Larger companies often rely on third-party logistics, or 3PL, warehouses to handle fulfillment and distribution. How does the Ware2Go model differ and what makes it better for small and midsize businesses?

We offer a more flexible approach that allows small businesses access to higher-quality, vetted partners that would normally either only accept large clients or would require term commitments. Ware2Go partners with multiple 3PLs across the country and ties them together into a single network with our technology. Our model also differs in that we aggregate the inventory and order volume of multiple merchants, which gives them access to rates, labor and service level agreements they normally could not negotiate on their own. A top-tier 3PL may not see the value in taking on a merchant that’s shipping below a certain order threshold, but when Ware2Go aggregates the volume of multiple SMBs, 3PLs are happy to take them on. We are often the largest client in the warehouses we partner with, so our merchants get the very best service.

Can you walk us through how the service works?

We’ll talk to our clients and ask them to tell us a little bit about their customers: What kind of consumers do you have? What do they normally buy? Where do they live? From there, we will help them build a network of fulfillment centers that will be positioned as close to their end consumers as possible. We have clients, for instance, that are looking for opportunities to get closer to customers in the New York area or closer to customers in Florida based on what they’re shipping. We will position them in facilities that are located near their customers. Then we build a plan for them to get their inventory to us.

[Once that happens], we have a technology solution that connects their Shopify profile or whatever tool they’re using to get sales orders into our network, and we do the rest for them. When an order comes in, we’ll find the best place for it to go out. We have workers on the warehouse floor who will pack up the item and ship it out. When an order comes in by 3 p.m., it goes out that same day, which is great for the customer experience. Within the UPS network, we’re usually able to get orders delivered within a two-day time period.

All the client really has to do is give us their product and connect their systems to ours. They have a portal where they can see what’s happening: They can monitor their inventory, see which orders have gone out, which orders are in process and even cancel orders — all the things they need to see to manage their business. With these logistics taken care of, they can focus on growing business and sales and not worry about packing a package and making sure there’s enough filler in it.

What size companies can use Ware2Go? Would it be beneficial for a mom and pop, for instance?

If you’ve outgrown your ability to do it yourself, that’s when we come in. One of our clients is a farm organization producing items that were getting sold on Amazon and directly through their website. They were getting to a point where they had their own warehouse but they weren’t able to keep up with their orders, so they were having to shut down different channels and stop sales because they just couldn’t handle the volume anymore. We did an analysis and found five facilities that made sense for them to go into across the country. One of my favorite things that their CEO told us was: “I haven’t been able to take a vacation in years, and now I feel like I can finally actually take some time off. That’s such a relief for our business: to know that we don’t have to hold back on our growth because we now have operational support.”

How many distribution centers do you have?

We have over 30 and are constantly expanding. We tend to be the primary user of those facilities, and then we partner with a lot of different organizations. One recent partnership was with The Gap. Gap has fully automated, world-class, amazing facilities and robotic automation. Most small businesses can only dream of being able to be as quick as The Gap in processing an order, but we can now provide access to our customers to that sort of high-end warehousing space. From a client perspective, you don’t have to put forth this huge investment to get a warehouse automated. All you do is plug your orders in to us, and we plug you into The Gap.

It’s interesting that you have access to all this available warehouse space when so many businesses have been struggling to find space.

It’s tough, and I think a lot of the issue, too, is finding what you need and where you need it. The beauty of the Ware2go network is: We can piece that together for you. The Gap, for instance, is obviously using their fulfillment centers, but they’ve got extra space. We’re taking advantage of that space that maybe historically was just sitting empty. When they can utilize what they’ve invested and can also provide access to that to other small businesses, it’s really a nice synergy.

Do clients that come to you need already to understand the psychodemographics of their clients? Or do you help them figure it out?

We will help them out. Usually, we will ask them to send us an extract from [their] carrier data. We’ve got data scientists and analysts that will run through those files. Then they’ll say that: “Based on what we’ve seen in your orders, these are some facilities we’d recommend.” They can look at what we’re proposing and decide if that makes sense to them.

Are there any areas you don’t cover or provide services for?

There are things like refrigerated storage that we really don’t do. We do work with clients who have temperature-control requirements for items like vitamins that you don’t want to be sitting in a steamy hot facility. Our sweet spot is really on working with clients who have a lot of direct-to-consumer volumes.

Can you talk a little about pricing?

Fulfillment and shipping rates are based on product size, weight and order profile. Through Ware2Go, they also have access to our preferred UPS rates. Depending on how much product you have sitting in a facility, you pay for the storage of that product.

What is this trend showing you?

Clients definitely need flexibility, and they definitely need help. One of the things that is also very hard to navigate for small businesses is the global supply chain. We started to expand into that area last year. We were really able to help clients with their shipments coming in from overseas. [Small businesses that] are trying to navigate working with a manufacturer in China, for instance, have questions like: How are they going to get [the products] on the right carrier? How do they figure out the duties and taxes for international shipping? There’s so much there to navigate, but Ware2Go is able to work with UPS, [which has] the expertise to just make this a simple process. Clients don’t have to piece together their supply chain and handle everything separately. We take care of that for them. We take it from where the product is manufactured all the way to the end consumer’s front porch.

Are there other success stories?

ECR4Kids was a great story where they were enhancing their own website. They really wanted to drive more direct-to-consumer sales and get on Amazon and Wayfair and other channels. They worked with us to figure out: How do we move from an organization that typically sells more wholesale orders into an opportunity where we can sell directly to the end consumer? We worked with them to build a multichannel, multiwarehouse fulfillment network where their consumers are getting one- to two-day deliveries. It’s been a great experience that really drove their business growth.

O2 primarily sold [its water] through gyms. You can imagine when the pandemic hit, they were like: “Oh, gosh, all of our sales channels just shut down.” They had to pivot and rethink their strategy. We shifted their entire strategy from going B2B to going direct to consumer. They were able to get warehouses up and running quickly and grow their business by bounds through that process.

Anything else that small companies looking for support to grow and run their business should know?

One thing that’s actually kind of neat is our partnership with The Russell Innovation Center for Entrepreneurs in Atlanta. We work with Black entrepreneurs who are just starting their businesses. We provide them with a pathway to have access to fulfillment centers and technology that they probably wouldn’t normally have access to. We have several merchants that are now shipping through that program. We have people assigned to be their “logistics mentors,” helping them find their way and creating opportunities to spark commerce and entrepreneurship. That’s one of the great things we get to do as an organization: Look for opportunities to give back to the community.