Setting up an eCommerce business requires a lot of thought. One of the important areas is logistics and order fulfillment. International logistics and order fulfillment refer to how your customers will get their orders, i.e., all the processes in between your warehouse and the final delivery to your customer. When considering your logistic needs, a fulfillment center and a distribution center are two major choices for storing and shipping your products. While both terms are often used interchangeably, they mean different things. Your decision as to which one of the two options to choose will depend on your needs and goals. This article explores the difference between a fulfillment center and a distribution center.
What is a fulfillment center?
A fulfillment center is a third-party logistics warehouse that handles the receipt, warehousing, processing, and order fulfillment needs of customers on behalf of an eCommerce retailer. With such a setup, the eCommerce retailer saves money on most of the processes that happen after a customer’s order has been placed. The retailer can maintain quality by reviewing and verifying products or goods before they are dispatched to the customer.
Fulfillment centers are an important part of the supply chain. They ensure that eCommerce retailers can meet the needs of their customers. They also facilitate timely and convenient deliveries to keep both the retailer and customer happy.
What is a distribution center?
Distribution centers are facilities mainly used for receipt, temporary storage, and distribution of goods. These centers are an important part of the distribution chain and only receive goods or products that have been ordered. They serve as a bridge between the eCommerce retailer and the consumer after the order has been placed. For effectiveness, a supplier or retailer will usually ship out ordered products to a distribution center which then delivers the goods or products to the customer.
What sets a warehouse apart from a distribution center
The definition of a distribution center may appear conflicting, especially with that of a warehouse. However, both facilities offer different solutions in the supply chain. Some of the differences between a warehouse and a distribution center include:
- Warehouses are primarily used for goods/product storage. Distribution centers often offer added advantages and value-added services like product mixing, cross-docking, packaging, and order fulfillment.
- Warehouses are designed to serve both B2B and B2C customers, while distribution centers typically serve B2B customers.
- Warehouses store goods/products for long periods until they are needed, while a distribution center only offers short-term storage solutions to ordered goods/products.
Fulfillment center vs distribution center: which is better?
Having understood what a fulfillment center does and why it is different from a distribution center, making a choice should be easier. Below are the pros and cons of each option to further strengthen your resolve.
Pros and cons of a fulfillment center
- Fulfillment centers deliver goods/products directly to consumers/customers.
- They solve storage and warehousing problems for eCommerce retailers.
- Are close to eCommerce retailers for faster shipping.
- Workers are trained to receive, process, and handle eCommerce retailers’ store inventory.
- Offers pick-up and packing services to eCommerce retailers.
- Reduces fulfillment obligation on retailers and keeps their customers happy.
- Offers limited storage space. Retailers may have to incur extra fees on added storage space.
- Stores products for a short period.
- Unsold inventory costs more in storage fees.
- Does not offer bulk shipping services.
- More expensive compared to distribution centers.
Pros and cons of a distribution center
- Offers delivery services for a large inventory of products/goods.
- Large expanse to accommodate storage needs.
- Long-term storage services provided.
- Are generally cheaper compared to fulfillment centers.
- Fewer services are offered to businesses.
- Ships less frequently and only in bulk.
- No packaging services are offered; hence goods are delivered on pallets.
Making the right decision between a fulfillment center and a distribution center will significantly improve your business and bottom line. Contact a fulfillment expert today by visiting https://sfi.ca/ .
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