UPS enters flexible warehousing field with launch of digital space-matching program

UPS Inc. said today it formally launched a digital platform to match merchants' warehousing needs with available capacity, becoming the latest and by far the biggest player in the nascent but high-potential field of flexible warehousing.

The platform, called "Ware2Go," is designed to provide small to mid-size e-commerce merchants with warehouse and DC space when they need it, and to give warehouse operators a channel to fill space that might otherwise sit vacant. According to virtually every data point, industrial vacancy levels are at or near all-time lows. But that data tracks space that has been leased, not space that is actually used. Flowspace, a recent entrant in the segment, said earlier this year that of the warehouses that have listed on its platform, about 20 percent of their space, on average, is vacant. UPS' research has found that many warehouse operators have difficulty leasing smaller amounts of space, and thus will let the space sit vacant.

Under the program, UPS will vet the warehouse operator's capabilities before allowing it to join. Merchants will sign one contract with the warehouse unit regardless of the number of warehouses they use.

UPS will manage all billing and payments between the merchants and the warehouse operators. The Atlanta-based shipping and logistics giant will negotiate lease terms with the warehouse operators. The platform will match demand with supply based on information provided by merchants about their products, space requirements, and regional delivery needs.

The merchants will retain ownership of their goods. UPS will handle all outbound shipping with guaranteed two-day deliveries, and its cloud platform will provide merchants with end-to-end visibility of the order fulfillment process. Merchants will be responsible for bringing their inventory to the warehouse location.

Ware2Go was actually launched in July after an incubation process with BCG Digital Ventures, an Atlanta-based corporate investment and incubation firm that owns a minority financial stake.