People in eCommerce often use the following terms interchangeably: fulfillment center, warehouse, distribution center, and 3PL. While there is some overlap, they do have distinct meanings. Here’s what you need to know about the difference between the terms fulfillment center vs. warehouse.
Fulfillment center vs. warehouse: what is the difference?
A warehouse is simply a large building used to store products. There are many different types of warehouses, including eCommerce fulfillment warehouses and distribution centers. However, the term warehouse usually refers to a building with a very different function than a fulfillment center. Here’s the difference between fulfillment center vs. warehouse.
Warehouses store products
Warehouses are meant for storage. They can be used for long-term storage or as short-term places to store inventory. Some companies own and operate private warehouses; others rent space in a public warehouse. Bonded warehouses can be used to store imported goods before the importer pays the duty.
Warehouses are generally static spaces, with few employees and not much movement of goods in and out on most days.
Fulfillment centers move products
A fulfillment center is a place of high activity. While it does have shelves for storing goods, the purpose of a fulfillment center is movement, not storage. Fulfillment centers are bustling with workers who process inbound inventory, pick products to fill orders, package orders, and ship them to customers.
Fulfillment centers can also be called order fulfillment centers or 3PLs. Some large corporations have dedicated fulfillment centers; most eCommerce companies use the services of a third-party logistics company for their fulfillment.
The goal of a fulfillment center is to move products quickly in and out. Items that sit on the shelves are losing money for the company that owns them.
Distribution center vs. fulfillment center
A distribution center is a large warehouse that moves goods in and out like a fulfillment center. However, the distribution center has a different place in the supply chain and another purpose. A fulfillment center processes and ships orders to the end consumer. A distribution center is a way-station in the wholesale portion of the supply chain. Products are resorted and distributed to retailers in distribution centers.
Items that come into distribution centers spend even less time in the warehouse than inventory in a fulfillment center. Since these products already have another destination, most stock leaves distribution centers soon after it arrives.
What is a fulfillment warehouse?
A fulfillment warehouse is another term for a fulfillment center. Fulfillment warehouses are operated by third-party logistics companies or fulfillment companies. Not all warehouses are fulfillment centers, but all fulfillment centers can also be called fulfillment warehouses.
Fulfillment center services
Fulfillment centers can provide a wide range of services. Some fulfillment centers specialize in handling particular products, such as clothing, food products requiring cold storage, hazardous materials, or bulky items.
A fulfillment company can provide extra services that add value. Here are some of the services that Red Stag Fulfillment provides to our clients.
Pick, pack, and ship fulfillment
Pick, pack, and ship is the core service that all fulfillment centers provide. When a customer places an order on one of your eCommerce platforms, the 3PL generates a picklist for that order. A picker takes the list and collects the items for the order from the warehouse shelves. Pickers rarely pull one order at a time; for the sake of efficiency, most warehouse management software will generate a set of picklists centered in one region of the fulfillment warehouse. The picker will pull several orders at the same time.
The next step is the packing station. A packer double-checks the order before putting it into the correct sized box. They add infill to keep the order safe during shipping, tape the box, and place a label on top.
Packed boxes go to the shipping station. Most fulfillment centers have daily scheduled pickups by major carriers like FedEx, UPS, and USPS, so they can ship orders on a predictable schedule. The carrier takes the order from the fulfillment center to the end customer.
Some fulfillment centers can ship large orders for you via freight. Less than truckload (LTL) freight is a great way to send a large B2B or wholesale order. Freight delivery for quantity orders can save money on shipping.
At Red Stag Fulfillment, we have developed a cross-docking process to honor our commitment to getting our clients’ orders out quickly. When we receive a container of backordered products, we fill orders from the receiving dock. Items go directly to the shipping dock to ship orders without the extra steps of shelving and picking. This can save a day or more—crucial time when filling backorders.
Kitting and assembly
Kitting and assembly services allow you to provide just-in-time customization while still outsourcing your fulfillment. Kits are collections of items that your customers order together. We can pre-package kits, giving each group of products a new SKU. Kitting is a particularly vital service for subscription box businesses.
Light assembly comes in handy if you can save money by having your inventory shipped flat-packed. In addition to assembly, Red Stag Fulfillment can provide customization, such as painting a house number on a mailbox.
Your inventory management is one of the keys to profitability. Well-managed inventory keeps your money flowing and your items in stock. Work with your 3PL to develop a winning inventory replenishment plan.
What happens in an Amazon warehouse?
Amazon warehouses are fulfillment centers. If you sell on Amazon, you can use its service, Fulfillment by Amazon (FBA).
As one of the world’s biggest eCommerce retailers, Amazon knows a thing or two about logistics. Amazon’s innovations, including two-day delivery and now same-day delivery, have raised standards for the fulfillment industry as a whole.
There are several advantages to using Fulfillment by Amazon. FBA qualifies your products for Prime shipping, which can boost your sales. And you get to take advantage of Amazon’s advanced logistics operation and network of fulfillment centers.
FBA does have downsides, though. Amazon limits the amount of product you can ship to its warehouses during the holiday season, which can put a damper on your sales. Receiving can be slow, and sellers have complaints about Amazon’s customer service when they have issues.
Fortunately, you don’t have to use FBA to offer Prime shipping. You can use an independent 3PL for Amazon seller Prime fulfillment, as long as your fulfillment process meets Prime standards.
Advantages of outsourcing your fulfillment to a 3PL
Many eCommerce companies start with self-fulfillment and outsource when the operation gets too big to manage in-house. Working with a 3PL gives you significantly more logistics capacity. But that’s just where the benefits of working with a fulfillment center begin. Here are just a few of the other benefits of outsourcing your logistics.
Volume shipping discounts
Fulfillment centers are volume shippers. They ship thousands of packages with the major carriers, so they can get volume shipping discounts that your company might not qualify for on its own. At Red Stag Fulfillment, we pass those discounts on to our clients, so you save on shipping when you use our fulfillment services.
Location, location, location
Fulfillment centers are often sited in spots that can reach a wide geographic area quickly. For example, Red Stag Fulfillment’s warehouses in Knoxville, TN, and Salt Lake City, UT, can ship to 97% of U.S. addresses in two days or less.
You might want to work with one fulfillment warehouse or place your products in fulfillment centers around the country. In either case, outsourcing gives you the option to place your products in the optimal locations to reach your customers fast.
Flexible storage space
When you rent warehouse space, the overhead is a fixed cost. However, when you work with a 3PL, you can flex the shelf space you use. If your sales take off, you can expand in your 3PL warehouse. During your slow season, your storage area shrinks. You only pay for the warehousing that you need, and your capacity is much more flexible.
Add expertise to your business without adding employees
When you onboard with a new logistics company, it’s like adding a whole new team of fulfillment pros. You don’t have to deal with the administrative headaches and overhead of hiring and managing personnel—that’s a service your 3PL takes care of.
State-of-the-art order processing services
When you choose one of the best 3PLs, you get cutting-edge order processing. Your fulfillment center will use the latest equipment and procedures to ship your orders quickly and accurately. At Red Stag Fulfillment, we are constantly learning to offer our clients the best logistics services in the industry.
How can a fulfillment center help you grow your business?
What’s holding back your eCommerce business? If it’s fulfillment, then working with a professional fulfillment center could be the answer. Excellent order fulfillment is a crucial driver of customer satisfaction for every eCommerce business. When you’re ready for excellence, give Red Stag Fulfillment a call.