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Listen: COVID-19 Supply Chain Insights From Ware2Go CEO Steve Denton

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Ware2Go, a UPS company that provides businesses of all sizes with access to warehousing, logistics and fulfillment services, is shaping the supply chain of the future.

The company’s U.S. network of warehouses helps merchants ship products efficiently and affordably, powered by cloud-based technology that makes it easy to flex distribution and scale shipments based on volume.

Ware2Go CEO Steve Denton spoke recently with Vignesh Anandan, senior marketing manager in the UPS Global Customer Insights Group, about the Ware2Go model, how COVID-19 shopping trends are stretching supply chains and how businesses can pivot to succeed in this new economy.

Listen here:

Here are four things we learned from the conversation:

1) COVID-19 accelerated the path to B2E (business-to-everyone) and welcomed new players in new categories into the e-commerce space.

While the lines between B2B and B2C were blurring well before the pandemic, lockdown shopping trends expedited this shift.

“It’s the same with video conferencing and remote learning systems … we're all learning to work and excel and thrive and operate in these types of environments,” Denton says. “And I don't think we're going backward.”

A recent Ware2Go survey reveals that 87 percent of respondents are shopping online, and nearly two-thirds are buying from merchants they’ve never shopped with before.

While it’s no surprise that online sales of school, home office and tech supplies are booming, categories like pet food, cookware, exercise gear, vitamins and perishable groceries are also surging.

2) Contactless delivery is likely here to stay.

In fact, 68 percent of survey respondents said they’d only consider buying from retailers with touch-free options.

“That's the business we're in … where your customers want to be met in the channel they prefer, and they want delivery options at the destination or location they prefer,” Denton says. “We're going to continue to step forward and embrace that change.”

3) Delivery speed will continue to drive demand.

Consumer preference for one- and two-day delivery has never been stronger. While 64 percent of shoppers surveyed said they replaced trips to the store with online shopping during stay-at-home orders, this doesn’t mean shoppers are willing to wait longer to receive their goods.

Merchants of all sizes must offer speedy delivery to compete in the post-COVID economy. The most cost effective way to achieve a nationwide one- and two-day delivery footprint is through partnership with a distributed network of warehouses, allowing merchants to forward-stock inventory as close as possible to end customers.

4) Online retailers are looking to diversify vendor relationships.

Many merchants are questioning single-source agreements with suppliers.

“They’ve felt the pain from that,” Denton says. “That's been a big shift in looking at different ways to get goods into the country.”

SMBs are rewiring their supply chains to compress the order-to-delivery cycle and ultimately maintain a competitive edge.

“Our shared purpose at Ware2Go is to simplify the supply chain through technology and services to enable companies of all sizes to compete and win,” Denton explains. “Our on-demand model clearly supports this current environment, where there are so many shifting dynamics … and you have to be able to react and pivot quickly.”

Ware2Go links merchants, manufacturers, distributors and retailers to warehouses with the capabilities and space they need, enabling SMBs to compete with larger enterprises without investing in infrastructure or locking into long-term contracts or leases.

The flexible, pay-what-you-ship concept has resonated with merchants in these turbulent times.

“When business spikes … they can expand seamlessly and get into more warehouses,” Denton says. “Or if they're on the flip side of that and have seasonal downturns or other things that negatively impact their business, they pay less because they're using less.”

Listen: COVID-19 Supply Chain Insights From Ware2Go CEO Steve Denton

VIGNESH ANANDAN [00:00:17] Welcome, everybody, to the Megatrends Impacting Logistics podcast series, where we share some big ideas that can help you be creative and innovative. I’m your host, Vignesh Anandan. I work in the UPS Global Customer Insights Group. We are privileged to have as our guest today, Steve Denton, who recently joined Ware2Go, a UPS company, as CEO. He's a serial entrepreneur with a history of building great organizations. He has successfully led the acquisition and integration of 12 organizations in various industries. He previously served as a general manager and vice president of Marketing Solutions at eBay, where he was responsible for all of eBay’s enterprise digital and agency business units. Prior to joining Ware2Go, he was the president and CEO of Collective[i], a pioneer in AI and sales technology. Welcome, Steve.

STEVE DENTON [00:01:04] Hey, Vignesh, it's great to be here. Good to talk to you.

VIGNESH ANANDAN [00:01:08] Today we're going to talk about Ware2Go, its strategy and initiatives, and talk about some of the megatrends driving them. And we'll start by just getting a better understanding of Ware2Go. I was hoping, Steve, you can tell us a bit about Ware2Go. And also, what attracted you to this company?

STEVE DENTON [00:01:28] Sure, it’s a great question. I think when you think about Ware2Go, there are really three things that we do well for our clients. And where it resonates with them. Number one, we provide a technology that integrates their sales channels to their supply chain. So when you think about our target market being SMBs to mid-market companies who do anywhere between $5 million and, say, $200 million dollars a year in sales, the first thing we provide is a leading technology stack that connects their sales channels to their supply chain. The second thing that we do is we provide a network, a global network of warehouses. There are 35 of them right now in the United States that we allow our customers, and we recommend what SKUs to stage in those warehouses, so they can offer their customers overnight or second-day ground delivery. So we're forward-staging their highest-moving SKUs so that they can deliver an amazing customer experience for their customers. And then the third thing that we do that's very unique, and differentiates us from everyone else, is we do it on demand. So much like an on-demand model you would see with Uber or with Airbnb, we just do the same thing between warehouses that have capabilities and capacity with our merchants who have different needs. And we connect those through our technology and through our network. And when your business spikes up, like we've seen many businesses over the last quarter spike up, they can expand seamlessly and put them in more warehouses. Or if they're on the flip side of that and they have seasonality, downturns or other things that negatively impact their business, then they pay less because they're using less. So it's an on-demand model that we're providing in the market today that really resonates with customers in that SMB and mid-market footprint who want to compete at an enterprise level but don't have the resources or the infrastructure to do it. So that's what we do at Ware2Go.

The second part of your question, what attracted me to the company, you know, as a serial entrepreneur, there are four things that I look for in a business and Ware2Go checked all four of those boxes. First thing is, do you have the right investors? Well, certainly with UPS owning a majority of Ware2Go, I knew we had the right investors. Not only from a capital standpoint, but just from a branding standpoint. There's so much benefit and credibility that comes with the shield. So it checked the box on the right investors.

[00:04:19] The second box that I look to check is, is it the right team? Is this a team that you can build a billion-dollar business with, and does that exist? And as I investigated it, the team certainly met the mark I was looking for. The third thing that I was excited about with Ware2Go is, is it disruptive? Is it providing a service that is fundamentally changing an industry and making it better? Is it allowing a group of clients to participate in the economy at a level that they couldn't before? Like, could you be disruptive? Would it be game changing? And it checked all three boxes. I think it's a really special opportunity.

And then the fourth thing for me, personally, is does it align with the type of purpose-driven work that I want to do at this stage in my career? And if you think about my career, I spent 20 years literally building digital technology to level the playing field so that merchants of all sizes could compete. Because merchants have access to the same digital platforms to sell. They have different budgets, but they have access to the same platforms. But when I look at supply chain, that was still a part of the ecosystem where scale and size matter, and small and mid-sized companies just can't compete at the same level that enterprise can because they don't have the footprint. They don't have the resources. And for me, from a purpose standpoint, it really just allowed me to continue my journey of enabling small- to mid-sized companies compete and win, and level that playing field. And that's where it checked the fourth box. So it checked all four boxes. I think it's a special opportunity. We're doing amazing work. And not only did I do it, but I convinced my wife to move from Santa Barbara, California, to Atlanta, Georgia. And that was going to have to be something really special. So we're excited about the company and the things that we're doing at Ware2Go.

VIGNESH ANANDAN [00:06:17] Thank you for the introduction, and I hope Atlanta has been a good city so far?

STEVE DENTON We think Atlanta is going to be great. We moved here in the pandemic, so a lot of it's been shut down. But we think it's going to be amazing, and we're excited to be in Atlanta.

VIGNESH ANANDAN Well we’re very much excited to have you. I mean, when I look at your résumé, I was so impressed. And Ware2Go is a very innovative company, so I'm excited to have this conversation with you. What are the big emerging trends you've seen during this pandemic, and how do you think they will continue to progress?

STEVE DENTON [00:06:55] Yeah, so the first one, right, I already talked about, which was this B2E. COVID just accelerated a path that we were already on as a society. As a society, the lines were already getting blurred between B to B and B to C. More and more was moving to online or e-commerce, which everyone just calls commerce now. And so it's just accelerated that. I mean, we were ultimately going to get there. It's the same thing with videoconferencing and remote learning systems. We're all learning to work and excel and thrive and operate in these type of environments. We were already on that path. COVID just accelerated it. And I don't think we're going backwards. But some other trends, and we did a study on this, because the way consumers shop is certainly going to dictate what's going to take place in the supply chain. We did a study. We commissioned a study where we did a survey of a couple thousand folks through a third party around changing shopping behaviors during COVID. And a couple of things jumped out that I thought were very interesting trends. One, you know, I think it's a “captain obvious” statement to say 87 percent or more of us are shopping online. It's not like we had any other choice. I think what is interesting is the fact that 64 percent of consumers state that they bought from an online retailer or from an online merchant … they bought from a new one that they never bought from before. So COVID is not only driving more online sales, but it's introducing consumers to new merchants or retailers. So when 64 percent say I've bought from a site I never bought from before, I think that's telling. Because it’s introducing new players to the market. When you think about the categories that have done really well, the categories we saw in the survey that did really well, we obviously know school supplies and technology supplies. But then you see things like pet supplies are way up online because people have got to take care of their furry friends. Cooking supplies are way up. Home gym equipment or exercise equipment supplies are way up. And then this other emerging trend around consumables. Vitamins and nutraceuticals, but the last one is this adoption of consumers who are buying perishable items and not just sticking with nonperishable type of pantry items. And that's driving a big shift and a huge demand for cold chain types of supply chains where people are getting more comfortable now buying perishable items online. So those shifts are driving a lot of shifts in supply chain.

And then a couple of fun facts for you there from the survey. They're splurging on cheese and chocolate. So that's fascinating. And then contactless delivery. You know, I think it was 68 percent of consumers surveyed said that if the merchant did not offer contactless delivery, then they wouldn't even have been in the consideration set. So a lot of emerging trends in shopping, which is driving this whole B2E movement. And that's the business we're in, where your customers want to be met in the channel they prefer. And they want delivery options at the destination or location that they prefer. So we’re in the B2E model, which is driving this huge shift. And what's going on. And those are the things that we see. And then the last one is just the access of cash. The ability to invest in long-term leases or buy real estate is just not something that SMBs want to put their money to work on right now. But they still want to have that large footprint. So leveraging an on-demand model that flexes up and flexes down based on how their business is shifting is really resonating today. So those are three areas that we see a lot of change or trends that I don't think are going to go backwards. We're not going backwards. We're going to continue to step forward and embrace that change. And it's a fascinating time.

VIGNESH ANANDAN [00:11:44] Absolutely. So a cold chain, contactless delivery, B2E and access to cash looking a lot different.

STEVE DENTON Good summary! I actually should have just done that.

VIGNESH ANANDAN What are some of the big changes you've seen during COVID in terms of your customers and their needs?

STEVE DENTON [00:12:12] What we saw was, you've got, I like to call them comers and goers. You've got some folks that early on, a lot of the customers who relied on traditional sales channels like sales reps and distributors, and what I like to call a lot of that hand-to-hand combat, they struggled early on. They just didn't have fully optimized digital channels. So it took them a while to make that shift. Those that had really fully optimized digital channels were able to make that shift quicker. And so, coming out of the gate you definitely saw a big delta. The SMBs who source a lot from China certainly were challenged with inventory issues and continue to be challenged with inventory issues. Whereas, you know, they weren't able to get inventory in for a long time. And now that it's open, they're still having trouble getting it in just because of capacity. So inventory issues have been challenging for many of our merchants. So they've really had to focus on promotions and merchandising and pricing on the SKUs and inventory they have. So we've seen a lot of that. And the other thing we're seeing with a lot of our merchants is short-shipping. We do kitting for a lot of our customers. And a lot of our orders are not just one SKU. It's multiple SKUs. So we've certainly seen this increase in short shipping, whereas they had these six items, and they don't have the other three, so they'll ship it short and then wait for it. So there's been a lot of that. So we've spent a lot of time with our clients helping them. We have a digital series. We’ve partnered with the folks over in UPS marketing. And we've been doing a digital series around helping SMBs figure out how to market digitally. We've been doing a lot of inbounding and working through that. And then, at the same time, really working with our merchant suppliers to be able to take direct truckloads into our warehouses and streamline that as much as we can. Because they've really been challenged with inventory issues. That's been some of the biggest stuff. They made the transition to the digital channels. It's the inventory that's the biggest challenge for them right now.

VIGNESH ANANDAN [00:15:02] Are these changes something that are very specific to this crisis? Or do you see these challenges continuing over the next one year, two years or even three or four years?

STEVE DENTON [00:15:17] What I see with our merchants is they're really questioning … they've single sourced with a good amount of their vendors and suppliers. And they’ve felt the pain from that. So what I see a lot of them doing is diversifying and not sole-sourcing with just one provider in terms of where they buy the goods or where they get the goods manufactured, they’re really looking to diversify that. That's been a big shift because they've felt it. And so looking at different ways to get their goods not only into the country, but where they get manufactured. I don't think that's going to go away. And then obviously, you know, speed if you're an SMB or mid-market, is such a competitive differentiator for you. And how do you continue to find ways to cut cycle times and shorten that time to revenue and shorten that time from when the product is ordered to when it's actually in the hands of your customer and you get paid for it.

VIGNESH ANANDAN [00:16:24] So the need to create more a resilient supply chain is probably a key trend we’re going to see. And you mentioned speed, Steve, and you also mentioned a shift to digital and the fact that we have a digital series to help SMBs to be more digital. I would definitely think all are long-term trends. How do you see Ware2Go adapting to some of the trends that you've talked about so far?

STEVE DENTON [00:17:00] Well, I think we were fortunate that we were there. We were fortunate that we were there before. I mean, our on-demand model has always been. I mean, that has been our model for the entire history of our company. And you know, our purpose, our shared purpose here at Ware2Go is to simplify the supply chain through technology and services to enable companies of all sizes to compete and win. That is our shared purpose. And we live that. And, you know, our on-demand model clearly supports this current environment where there's so much shifting in dynamics in that landscape that you have to be able to react and pivot quickly, and shrink here and grow there. Staff this up and reduce the staff. Invest here, de-invest there. Our model is built on that. It's hard to operate that. You can only imagine like you've got a warehouse that, you know, you're staffing warehouses that are, you know, all certified warehouses. And you've got, you know, one day you're going to have five trucks show up, and someone's going to drop 4,000 orders on you. And then you staff for that. And then, you know, three days later, you've got 70 orders. So certainly it's not without its challenges to be able to manage that, which is why we invest a lot in forecast planning tools, inventory replenishment tools, leveraging AI to get to get better insight into that, to help our warehouses plan better. But, you know, it's first what can we do or how will we be prepared for that. The good news is we were there. What I will tell you as an organization, you know, we're headquartered in Buckhead. We've got 115 Ware2Goers in Buckhead. And we were all in Buckhead and, you know, on March 12, we all went remote. And working remote for the last quarter, it’s really, it's got its challenges. There's no denying that. But it's also forced us to get better. It's forced us to learn how to communicate better. It's forced us how to be more efficient in our communications. It's forced us to be more deliberate in how we how we invest our time, you know, in our meeting cadence and things like that. And as you're growing, we're not always all going to be in Buckhead. You have to start developing that muscle so that you can be a global company and all the things that UPS has, and people all over the globe. And we've got to build that muscle. And COVID has forced us to build that muscle. And the challenging part of that is, you know, as a company that's a little over two years old, our average employee has been with us for 14 months. And if you think about a 14-month tenure at a company, and you've spent four of those remote, you start to think a lot about the social connections to the company and the culture. And we've got to spend a lot of time on that. In fact, we've hired 17 people, or 17 percent of our workforce has joined us while we've been working remote. And that in itself is amazing. So when you're a digital-first company, it makes it a little bit easier to not have to be onsite, but it's not lost on me or the rest of the team here that it requires a lot of work to continue to build culture and those connections that you have with an organization. So kind of two answers there. I think we're already there from a business model standpoint, and we just need to get better at it and scale. And then on the management side, how we deal with the employees, the staff, and how we deal with our own social connections in our own culture at Ware2Go.

VIGNESH ANANDAN [00:21:11] Got it. Those were so interesting. And I want to address both of them. I think we have a little bit more time. On the business model end of it, as you mentioned, operating an on-demand model is a tough problem, and that's why it's such a meaningful and purposeful company. But how do you address some of the customer concerns that on-demand models, which, as you know, you've run out of warehousing space, are you going to lose control of your operations, or you're paying too much for flexibility? How do you address those customer concerns?

STEVE DENTON [00:21:42] All very legitimate, real questions. I mean, we had some warehouses and continue to have warehouses that had an employee in that warehouse test positive for COVID, then they have to send the staff home. And they're not your employees. So you're leveraging third-party relationships here. So there's a couple of ways that you do it. Number one, it's a very high threshold of a vetting process that warehouses have to go through before they become part of the Ware2Go network. It’s a very high threshold for vetting, from security capabilities and all of those things. And also our technology sits in their warehouse. So it's not a situation where we're using their technology. It's our technology. So it's very akin to, if I'm an Uber driver, I’ve got to use the Uber technology. So these warehouses, you're using our technology. There's an investment on both sides there. So it's a very high level of certification. And then it also comes with very high SLAs. So if you're going to be a warehouse partner in the Ware2Go network, you have to live up … is if the order is in the system by 3 p.m. in your time zone, it must go out the same day. And that's really important for us because many of our clients, you know, they sell on Amazon, or they sell in other marketplaces. And if they want to keep that Prime badge or any other recognition in the other marketplaces, there is a level of competency and quality you’ve got to have. And there's certainly delivery commitments. And for us, if it's in the system by 3 p.m., it has to go out the same day. And that's a service deliverable we manage every day, every hour, because it's an important one. So we've got the SLAs in the contract. So they're highly vetted. There’s a partnership there. We have an entire business development team, services team and technology partners that solely just work with our warehouses. And we treat our warehouses just like we treat our biggest clients because they're just as important as a network business. So how you overcome that with clients is you've got the contractual levers, you've got the economic levers. But at the end of the day, it comes down to your “say/do” ratio. And we’ve got good recommendations. We've got high ratings, and we deliver on our commitments. So that's how we get those customers over it. But keep in mind, too, it's on demand. So if we don't earn … if we have a bad day, then you can decide tomorrow that you don't want to do business with us anymore. Like we earn that every day. There's no long-term contracts. We’ve still got to get your inventory to the warehouse. But like, what drives that quality is we have to earn your business every single day. There is no contractual commitment that you're going to do business with us tomorrow. So that in itself is a dynamic that drives that. So that's how we overcome those concerns.

VIGNESH ANANDAN [00:25:00] Also, the business model, it’s with a high-level competency and quality. And there's a huge commitment to meeting customers’ needs. That's great to hear. This question is a little more of a fun question, so I wanted to add it in there. Scott Price, in a recent interview, talked about how Ware2Go is the Airnbnb of warehousing. And you've mentioned Uber a few times. When you think of Ware2Go, is it a logistics business, a digital platform or a technology business?

STEVE DENTON [00:25:31] Yes, yes and yes. Yes to all three. So we at our core … we are a technology company. We've got to have the technology that connects sales channels and supply chains. And there's warehouse-facing technology. There's merchant- facing technology. Our system is all-inclusive with a warehouse management system and order management system, a transportation management system, a billing management system, and it’s soon to be a brand-new system. We are actually introducing into market over the summer and have the rollout complete by the end of summer, a brand-new platform that is more scalable, has increased functionality, allows easier use. So we've got a brand-new platform coming out this summer that I'm really excited about. That will just take the whole thing to the next level. Market-leading supply chain technology. So we are a technology company first. We are a network second. If you're going to have an on-demand model, you need to have a network. And when you're building a network, people always ask what comes first. And the answer is you’ve got to do both. So you've got the merchants who have products to sell and you've got to have warehouses to put those products in. And those warehouses want to know that they're going to have products in those warehouses so they can make money. So you're building the network out simultaneously. And then, you know, we are a services company third. We put expert professional supply chain services and account services on top of that technology and that network. Ultimately, we’re just driving a great experience for our clients, their customers and our warehouse partners. So yes, yes, yes.

VIGNESH ANANDAN [00:27:26] I kind of knew there was yes, yes. But still wanted to ask the question. Thank you for that. And you’ve mentioned and you talked about two challenges: business model and then you started talking about people. I want to get back to that. You talked about how we've hired people who have never been in a Ware2Go office, and I can only imagine what that is. So my question is, and this goes to Jeff Bezos, he likes to say that it's always day one at Amazon, and the idea that companies must behave like feisty startups by innovating aggressively. The question is, how do you build a culture around innovation, Steve, in an environment that we're in right now?

STEVE DENTON [00:28:09] You’ve got to start with your leadership team and make sure you’ve got the right leaders that are driving the right behaviors. Especially in a company where you've got 117 people, there's not a lot of levels here. I mean, we don't have five levels in the organization. I think there's like three levels between myself as CEO and, you know, our interns. So that's great. I love that because you can have a huge impact on people, and it allows you to move fast. But you’ve got to make sure that your staff is ready to move fast. And you know, when you're at this stage, it's about scale. When you've got five, six competitors all in a space and you're all about the same size, you know, the first one that could get to a couple hundred million dollars or achieve scale first is going to dictate the market. It's going to dictate pricing. It’s going to dictate the lexicon. You're going to dictate a lot. So you've got to get there fast. And it's around the balance of “we don't need to be perfect to make a decision.” So when you're growing that fast and you’re growing seven x year over year. Like, I'll give you a number. Yesterday, you know, we shipped a little over 6,000 packages. The same day last year, we shipped 200.

[00:29:48] Right. Growing fast. We're going to grow seven X this year, right? And we're going to keep growing seven x, three X. And you can't be perfect. So what are the five or six things that are really important to get right? Make sure everyone in the company understands what those five or six things are. People have to understand that we've got to make a million decisions. We're not going to get them... we've got to find a way to make 20. And we understand that four of them are going to be wrong. But we aren't trying to be perfect. So you've got to get a culture of speed. You've got to have that culture of it’s okay to fail. And what we're going to learn from that, and you've got to have this culture of, you know, every day people are waking up trying to figure out how to put us out of business. And in an on-demand model, I don't have a contract to fall back on. I don't get to say, well, I'll have them under contract for the next nine months, we'll figure it out. We’ve got to figure it out now. We’ve got to figure it out today. So you recruit for those type of folks who want to operate in that type of environment. And that doesn't fit for everybody. And that's okay. So you look for that. And then it's just, you know, it's just being really clear about … we’ve all got to make a lot of decisions.

[00:31:08] And we've got to be really clear on, these are the five or six things that we got to get. And we recognize that there are some other things we're not going to get right. And that's OK. We'll manage it. But these are the six most critical things we're going to do. And really over-communicate it, really align around it and reward it.

VIGNESH ANANDAN [00:31:29] And so don't let the perfect be the enemy of the good.

STEVE DENTON [00:31:35] Right. Right. We don't have time to be perfect.

VIGNESH ANANDAN [00:31:42] Yeah, as you know, when you start talking about growth and you stop talking about percentages and you start talking about seven x and three X, that’s just an exciting business to be in. That's awesome. Well, I think that's all the time we have. Thank you, Steve, for taking the time to talk to us about various trends and Ware2Go. We're very excited for the value, the efficiencies Ware2Go can bring to merchants and to industry. I want to thank the audience for taking the time today to learn more about various trends and Ware2Go. That's all from us at the Megatrends Impacting Logistics podcast series. We share big ideas that can help you be more creative and innovative. Thanks for listening, and have a great day.

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