The fulfillment center, Warehouses, 3PL, and Distribution centers are widely used terms in the eCommerce industry. Although they may have some similar characteristics, they are slightly different.
Since fulfillment centers and warehouses, both are essential to order fulfillment and share similar functions, they are often used interchangeably. But, they differ drastically in terms of their utilization and operational goals.
What is a Warehouse?
A warehouse is a large building used by manufacturers, importers, exporters, wholesalers, transportation companies, customs, and others to hold produced goods until they are delivered to the consignee.
The kind of inventory that a warehouse is meant to contain influences the shape, size, and purpose of the facility. Generally, it can range in size from 10,000 to 100,000 square feet and is an essential part of supply chain management. They usually have loading docks where trucks may load and unload their goods.
Types of Warehouses:
Warehouses are used to store inventory. They can be used for both long-term and short-term inventory storage. Some businesses own and run private warehouses, while others rent space in a public warehouse. Here are some common types of warehouses.
Public Warehouses: A warehouse that is owned by the government and semi-government bodies, typically, subleased to retailers in need of more inventory space. Private Warehouses: Private warehouse is owned by one company and used to support that company’s supply chain. Smart Warehouses: The warehouse in which the storage and fulfillment procedures are automated using AI to process and reduce the number of full-time workers involved in completing operations Cold Storage Warehouses: A Warehouse designed for the storage of temperature-sensitive inventory. On-demand Warehouses: A warehouse provided to sellers to keep their inventory and temporarily fulfill orders with warehouses that have spare space. Distribution Center: Distribution centers are designed to accept huge quantities of products and move them out to retailers and merchants as quickly as possible. Bonded Warehouse: A bonded warehouse is a type of warehouse that stores imported items until customs taxes are finished and paid. Consolidated Warehouse: Consolidated warehouses are warehouses that collect small shipments from several suppliers and combine them into a larger, thus more inexpensive, shipping load to one place. Cooperative Warehouses: A cooperative warehouse is one that is held by several groups or businesses. These companies typically collaborate closely, and access to the cooperative warehouse can save money for both companies.
If you’re simply looking to store excess products for your business until they’re needed and smaller storage options aren’t working, a warehouse may be what you need.
How Does a Fulfillment Center Operate?
Fulfillment centers work best as the logistical center for eCommerce businesses when they are located close to clients. They can serve as overflow storage for clients who have scheduled in-store pickups, as well as a site to send directly to a customer’s front door. Seller inventory is temporarily housed at fulfillment centers and is ready to be chosen, packaged, and dispatched as soon as an order is placed. To create a smooth experience from online orders to front-door delivery, this automated process requires connectivity with a seller’s sales system.
Because of the increasing amount of online purchases, sellers can scale their operations more efficiently and profitably by outsourcing major operational responsibilities to third-party fulfillment centers. Outsourcing fulfillment services also allows sellers to save money on shipping and the costs of keeping a physical facility for their inventory. Outsourcing reduces order fulfillment time and allows items to reach customers faster.
Difference between Warehouse and Fulfillment Center:
Warehouses are used for long-term storage, whereas fulfillment centers are used for short-term storage of products that will soon be delivered to customers. Warehouses exclusively handle customer goods storage; fulfillment centers handle all steps of order fulfillment, including negotiating courier prices. A warehouse is often utilized by a single corporation or business; a fulfillment center might provide its services to a number of merchants who need to fulfill consumer orders. Warehouse operations are typically static, whereas fulfillment center activities are more complicated and in constant motion.
Fulfillment centers provide services that warehouses do not, such as:
Product pickup for individual customer orders, inventory gathering, order packing, labeling of shipments, etc.
A fulfillment center is an active place. While it has shelves for storage, the goal of a fulfillment center is a movement rather than storage. Workers in fulfillment centers process inbound inventory, pick products to fill orders, package orders, and send them to customers. Warehouse operations usually serve B2B clients. Fulfillment centers, on the other hand, are meant to serve direct-to-customer and online orders, often known as eCommerce and B2C.
Rather than a warehouse, retail orders are frequently dispatched from a fulfillment center. Even if you keep excess inventory at a warehouse, it can be sent from the warehouse to a fulfillment center and finally to the customer’s final destination.
Fulfillment center vs. Warehouse, which is right for you?
As a businessman, choosing between a fulfillment center and a regular warehouse boils down to the ability to reach a larger network with full operational integration to preserve customer satisfaction.
If you are a small or medium-sized business or retailer, you should consider your storage and shipping requirements before making this decision. If you find yourself spending a lot of time packaging boxes and sending orders, it may be time to explore outsourcing your fulfillment process.
Furthermore, depending on your facilities, you may be running out of storage space (especially if you conduct your business from home). Storage units might be a cheap and effective alternative if you simply need more space to keep your products. A warehouse may make sense as your business expands and requires more room, but in today’s age of internet buying, a fulfillment center has much more versatility and can handle multiple duties in one location.
To fulfill today’s shifting customer satisfaction expectations, the ability to pivot fast and go where the people are has become increasingly vital. Customers demand the convenience of quick shipping at no extra expense. A warehouse just lacks the capabilities to provide speedy, flexible fulfillment sustainably.
