Business was good for Palouse Brand, a family farm in Washington state selling legumes and grains direct to consumer (DTC), especially post-2020. In fact, sales were so high that they broke Amazon’s daily order counter, stopping at 7,000 one day, says CEO and founder Sara Mader. The COVID-19 pandemic led to “huge steep growth patterns” for Palouse that the small retailer couldn’t keep up with. It was forced to shut down some ordering channels to keep up.
Palouse was operating with a hybrid shipping model, using Fulfillment by Amazon and fulfilling some orders itself. That system couldn’t scale up fast enough to meet demand, Mader says.
“We needed a solution that would allow us to ship semi loads to a distribution center and then have it go straight from that distribution center. … We could not keep up with order demand and stock them fast enough,” she says.
Then, Palouse’s long-standing relationship with USPS fell apart when the carrier changed package sizes, and Mader knew she needed another solution.
What is a 4PL?
3PLs, or third-party logistics companies, are logistics providers used by retailers to outsource aspects of fulfillment for their businesses. Fourth-party logistics companies (4PLs) take it one step further, and manage relationships between retailers and 3PLs.
“Historically, when you think about Fortune 500 companies, major brands, unless you’re one of those folks, you probably have to piecemeal [carriers] together,” Ware2Go CEO Steve Denton says. “What we do is we simplify that [relationship] both on the fulfillment and the logistics side, by connecting with warehouses. We’ve got 36 of them in our network right now. We connect them through one common technology platform,” he says.
Ware2Go is a UPS 4PL company that began working with Palouse Brand in 2022. The “sweet spot” for retailers that work with Ware2Go is between $5 million and $250 million in gross merchandise sales, Denton says.
The logistics vendor allows clients to upload a year of shipping history and where their warehouses are located, then runs an analysis with recommendations for them, Denton says. The analysis shows information including the average cost and transit time. Ware2Go recommends where the retailer should place another warehouse, for example, to reduce transit time and costs based on average orders.
Ware2Go has leverage as part of UPS to find lower rates for clients, Denton says.
“So as a UPS company, we got pretty good rates; we’re aggregating hundreds and hundreds of merchants. Typically, we are the largest client with any of these warehouse partners we’ve been working with,” he says.
That translates to an average savings of 20% to 30% on fulfillment costs, per Denton. Part of the savings comes from what he calls an “Uber model,” where retailers only pay for warehouses and workers when they’re actively using them, rather than owning the warehouse themselves.
Palouse shaved 20% off its fulfillment costs
Palouse was up and running with the 4PL just two weeks after starting the process, Mader says.
The retailer discontinued its use of Fulfillment by Amazon, and switched to the Seller Fulfilled Prime model, operated by Ware2Go.
“For us, protecting our Prime badge is key,” Mader says of the distinction placed on some Amazon products denoting that they come with free one- or two-day shipping to Prime Members. Palouse kept its Prime badge with Ware2Go, and offered free two-day delivery to orders made from PalouseBrand.com, too.
Ware2Go also set Palouse up with five warehouses across its sales area. The vendor has a 48-hour service-level agreement (SLA) with Palouse, Mader says, meaning that products are available for sale online within 48 hours of arrival at the warehouse. That’s a major change up to 90 days faster than at other warehouses Palouse used in the past, she says.
“There’s a huge lag from when it leaves your building to when the shipments close,” Mader says. Every additional day of transit and processing time costs Palouse more money. Ware2Go has changed Palouse’s whole business, Mader says, because “we aren’t having such huge inventory carrying costs because we can turn it so much faster.”
15 months after implementation, Ware2Go cut Palouse’s fulfillment costs by 20%, Mader says. Time in transit is down 40%, and 98% of customers are within a two-day shipping radius.
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