Traditional warehouse, fulfillment center, distribution center, to name a few, our essential aspects for a business from inventory management to shipping. But fulfillment and distribution centers are the main two that hold significance for businesses. If you aren’t quite sure of the differences between a fulfillment center vs. distribution center, you aren’t alone. There are a lot of similarities that can make it difficult to distinguish between the two.
For example, they’re both integral parts of the e-commerce supply chain, performing vital functions with the ultimate goal of getting products into the hands of consumers. Retailers worldwide rely on them to serve customers, streamline workflow, and boost profits.
That said, the specific jobs these important centers perform are very different. Keep reading for everything you need to know about how fulfillment and distribution centers are alike and how they’re different.
What Is a Fulfillment Center?
A fulfillment center is a third-party center that works with retailers to process and ship online orders to customers.1 They are entirely staffed, managed, and operated by third-party employees.
Fulfillment centers complete nearly every aspect of the order fulfillment process, including:
- Picking products
- Packing orders
- Labeling and shipping packages
To do so with the least process friction and shortest turnarounds, their partners typically maintain an inventory at the fulfillment center. Some centers may hold an exclusive contract with one retailer, but most manage fulfillment for numerous partners simultaneously.
Outsourcing Fulfillment Service
Fulfillment centers are incredibly beneficial to retail operations. This is because, without them, many businesses would be unable to manage the workload of filling online orders and sending them out to customers around the globe. By outsourcing a fulfillment service, businesses are able to focus on improving their products, providing better customer service, and fine-tuning other aspects of their operations.
But fulfillment centers pose a range of other benefits for businesses. For example, partnering with one allows businesses to:
- Save money – A fulfillment center can lower overhead costs, alleviating the need for hiring, purchasing or renting real estate, and other costs associated with shipping orders. Because they ship high volumes so frequently, fulfillment centers generally provide their partners with much better transportation rates.
- Increase productivity – Fulfillment centers can fill and ship orders at a rate that far exceeds what businesses can do on their own. This allows them to assign employee bandwidth toward other impactful tasks—like selling more products—without the strain of processing orders.
- Scale – Because they combine storage space with optimized order processing, fulfillment centers make businesses’ growth easy. Retailers can keep larger and more diverse inventories at centers than they could in-store and process more orders per day.
What Is a Distribution Center?
Regarding fulfillment center vs. distribution center, the terms are often conflated. But the truth is distribution centers perform a very different function for the supply chain than fulfillment centers.
There are several key ways that distribution centers differ from fulfillment centers. The first distinction is that distribution centers serve retailers directly, not the customers who shop in stores. Whereas fulfillment centers work to fill customer orders on behalf of retailers, distribution centers work to make sure brick-and-mortar stores have products on their shelves.
Distribution centers receive large shipments of products that are temporarily stored at the center, repackaged, and sent off to stores according to inventory needs.2 These shipments generally arrive as either full truckload (FTL) or less than full truckload (FTL) deliveries. Frequently, distribution centers unpack these deliveries and combine them with other products that stores have ordered before shipping.
Although it may sound like a simple endeavor, managing a distribution center is complicated work. Coordinating with stores to effectively manage inventory requires a range of technologies and technological devices. Likewise, receiving, storing, and redistributing products requires planning, strategy, and precise logistic protocols. How all of this is accomplished varies depending on the distribution center.
People who work in distribution centers perform an array of tasks, which include responsibilities like:
- Unloading trucks
- Transporting products around the center
- Wrapping pallets
Another important distribution vs. fulfillment center distinction is the length of time that products are stored at each location. Because fulfillment centers are continuously picking products and shipping them to customers in smaller quantities, retail inventory is always on-hand. But products only spend a limited amount of time at distribution centers before they’re shipped off to stores, typically in bulk.
Shipware—Your Shipping Experts
When it comes to successfully managing your eCommerce business, it helps to have an expert in your corner. From eCommerce fulfillment to retail store distribution, it’s important to have an understanding of what works for your business in regards to supply chain management. At Shipware, our team combines years of experience with first-hand knowledge to provide businesses with innovative distribution solutions that optimize workflow, boost profits, and increase savings.
Whether you’re the head of a small online retailer or a huge corporation, if you’re engaged in volume parcel and LTL shipping, Shipware has the solutions for you. We start with a state-of-the-art audit, then consult with you to develop strategies that are guaranteed to save you money—in some cases, up to 30%.
Are you looking for ways to streamline your parcel and LTL shipping? Let Shipware find where your savings are hiding. Find out more today.