Q&A: Steve Denton, Ware2Go CEO

Logistics Management Group News Editor Jeff Berman recently caught up with Steve Denton, CEO of Ware2Go, a UPS-backed company comprised of a nationwide network of certified warehouses, technology to streamline fulfillment across sales channels, and a flexible business model that eliminates long-term contracts and order minimums. Denton provided an overview of Ware2Go's service offerings and how his company is working with different companies amid the COVID-19 pandemic.   

Logistics Management (LM): Can you please provide a brief overview of Ware2Go?

Steve Denton: UPS has an ownership share in Ware2Go, but we are a separate entity. The best way to think about us is the same as how you think about Uber or Airbnb. We pair up merchants, manufacturers, distributors, and retailers with warehouses who have capabilities and space and we provide our technology and services.

LM: What are the company’s key technology and services?

Denton: We do it with a technology platform that is similar to something like an Uber-type of technology…and the range of capabilities are really important, as some warehouses are temperature-controlled and some are more e-commerce focused.

There are a few different outcomes we like to talk about, in this regard. The first one we call prime-enabled, because everyone knows what that means. We essentially allow you to prime-enable your inventory, because when we forward-stage your inventory in warehouses, it is not just for the sake of doing it, it is for the sake of giving you 98 percent coverage, second-day ground on your SKUs. Our sweet spots there are SMBs and the middle market companies that don’t have the infrastructure of a large enterprise or lack that type of supply chain to help them compete. We forward-stage their inventory in warehouses and use our technology to manage that and allow them to offer their customers overnight or second-day delivery over ground, which is a much cheaper value proposition.

It is a supply and demand function and that has really resonated in this timeframe. You pay as you go. You are not signing a three-year contract or warehouse lease. If you ship 200 packages today, you pay for 200 packages today. It is like Uber, in that if you take a ride, you pay for it.  

In this environment, we are seeing some clients going from shipping 50-100 items a day to 1,000 per day, because they have inventory and their product resonates and we can seal them up and have them in three warehouses in a matter of days. And that supply chain is helping them and they are able to react to changes in shipment levels…the flip side is the clients that are not doing so well and maybe they sell to schools, but schools are closed and are now shipping 15 items a day, down from 100. But they are not laying off warehouse managers and staff and are not paying for warehouse leases that they are not using

LM: Given all of the current uncertainty from COVID-19, as it relates to logistics and business operations on multiple fronts, one thing happening is that there is tight capacity for items coming out of China, due to pent-up demand and things taking longer to get into the U.S., which has been apparent in longer lead times for consumer e-commerce orders. What is your take on that?

Denton: It can be broken up into a few different buckets. One thing is the capacity coming out of China. China was shut down for four-to-six weeks and is now back online. A lot of stuff that would be coming out of China would be coming on commercial aircraft and that is now not happening…so all the belly [cargo] stuff in commercial aircraft is not available, due to decreased flights and reduced capacity so carriers are picking that up. But there is only so much equipment that is available.

Another factor is stuff coming over on boats as well. You have got this situation going on right now where nothing was coming out of China for essentially six weeks and now they are back online. That has led to a few different dynamics happening right now that we see. One is a first world problem of pre-sold inventory, with people waiting for it and now everything is delayed. So the stressful thing there is things are now not moving through a typical supply chain, where it would come in, it would go through inventory and Q/A and be part of orders shipping over the next three months. Now, they are literally cutting into the corpse….and going right to the distribution warehouse and being broken down into a single shipment or one or two lightweight packages being shipped out. That has shifted the supply chain dramatically. It might be LTL shipments or they might be stuck in inventory for three-to-five months. Things have turned really fast and, for us, the shift we had to make and where we got flexible with our clients across our 30 warehouses, is that shift in the supply chain, with things coming in and these pieces are getting broken down and getting shipped out overnight. These are lighter weights; we are not shipping full cases, as people are ordering smaller amounts.

The other side of it is inventory is coming in. And if you are a retailer, you have some big problems right now. A lot of inventory typically goes into retail stores, and they are closed. So anything that was ordered for retail stores is now going into a warehouse. But the challenge is that warehouse operations are set up for different types [of inventory]. E-commerce warehouses are full. Stores are closed or their distribution partners are closed, and the e-commerce warehouse is jammed up. There is a lot of short-term demand right now on warehouse capacity. There is stuff coming in right now and there is nowhere to put it and a short-term storage solution is needed. That requires a partner that has flexibility and capacity and capabilities to bring that stuff in and put it in a warehouse that has capacity and also has capabilities to be able to ship product out when those sales come in.

Those are the two dynamics. In a way, it is function of haves and have not’s. Either I have pre-sold it all and my supply chain needs to be able to break it down and ship it overnight and not go through its typical process when things come in and they are shipped out over the next couple of weeks or month or I absolutely have no place to put this inventory, and I have short-term supply chain storage needs

LM: Where does that leave things now, given the current difficult and unpredictable environment?

Denton: One way to look at it is by noting that while COVID-19 is terrible, it really has accelerated where we would have gotten to as a society in two-to-three years anyway. The biggest [change] I have seen around supply chain and distribution and sales is you are not a B2C seller anymore or a B2B seller anymore, you are a B2E (business-to- everyone) seller and as such your selling platforms have got to pivot, and we see people that are thriving there and have re-tooled. If you are in traditional B2B place, things like resellers and distribution partners, sales reps and customer service agents are not working for you, so you re-tool on your distribution and sales side digitally, and that requires a re-tooling of your supply chain, because now you are not shipping 30-pound boxes of skids for LTL or TL, you are shipping ‘ones and two’s,’ so once you get that you are in the B2E business, things start getting a lot clearer strategically. That B2E approach requires flexibility and most of these companies are tooled for one type of supply chain or another, and it is not just supply, it has also been the chaos that goes on because you are not tooled for what you need right now. Closing the China loop, a lot of the hold up is your orders are coming in but is missing one or two parts, so the whole order is getting held up because things are coming in incomplete. What is next is you are in the B2E business and the sooner you realize that and control your sales channels and get your supply chains to compensate for that…. that is what you are preparing for next and that is what we are seeing with our clients

LM: What type of companies are the ones that are seeing success with this approach?

Denton: The ones that are thriving are not the ones just selling things like consumer packaged goods, exercise equipment pet supplies, and stuff like that. It is also the companies that have made the pivot to pure digital sales channels to compensate for the B2B closing and retooling of supply chains.

LM: Can you please provide an example of that?

Denton: We have a client that shut down around 230 retail stores. It was doing truckload and less-than-truckload to retail stores and all of a sudden retail stores closed [due to COVID-19], and everything is now just e-commerce and with that come the subsequent supply chain shifts overnight. With the average weight of a shipment going from 28 pounds to two pounds, coupled with international shipments increasing because people still want these goods, you need to re-tool the whole supply chain to contemplate that.

LM: How specifically does Ware2Go approach that?

Denton: In our model, they did not miss a beat, because they were in warehouses that had the flexibility to do that and the capabilities to make that happen. Those are the shifts that people are challenged by right now, which is a re-tooling for one thing, and it is not happening fast enough to embrace this new B2E reality. And along the lines of diversifying the supplier base, we are absolutely seeing that with clients, including American and European, and Chinese manufacturers. They are not getting single-threaded i.e. buying from just one place—they are absolutely diversifying that –the single threaded nature of that has been challenged. Wendy’s is a good example of that, in that it was running out of burgers because they single-sourced and it is created challenges.

LM: With things that were once considered normal changing quickly, how do you view things looking forward?

Denton: The shift in the reduction in shipping from full pallets to ‘ones and two’s’ is pretty permanent right now. Obviously, retail locations will open up and people will still continue to shop at retail locations but I think consumers over the last 8-10 weeks are buying much more online and embracing that for CPG products, for example. And that big shift from non-perishables to perishables, which is driving demand for cold chain, is another example.