While warehouses and fulfillment centres share some similarities and are sometimes referred to interchangeably, the differences can often be important for industries that rely heavily on efficient logistics. The ecommerce industry is growing and key attributes like fast delivery and inventory management help businesses stay ahead of the competition.
At its core, both are operated out of large buildings that can store big volumes of inventory for businesses. However, fulfillment centres also take on additional roles in helping clients with logistical services such as shipping, management, and data collection.
Here we will look at the uses of both warehouses and fulfillment centres so that you can better understand the right option for you and your business.
What is a warehouse?
Warehouses often refer to a building that businesses can lease for inventory. They are usually places that are specifically designed to maximize volume capacity and inventory efficiency. This is especially useful for businesses that work with large objects like furniture.
To cater to different types of inventory, there are usually six distinct types of warehouses available, which are:
Warehouses that are owned by a single organization and are used primarily for internal operations.
These are typically commercially leased to retailers and other businesses that need extra storage.
A type of warehouse that utilizes technology and robotics to automate operational processes and minimize human error.
Designed to house inventory that is temperature-sensitive such as fresh produce.
Predominantly used by businesses that need short-term inventory storage. It can also be used as a pit stop for longer journeys between bigger warehouses.
A type of warehouse that also offers additional logical services such as fulfilling shipping and helping collect data on inventory. These are especially useful for small and medium-sized eCommerce businesses.
Warehouses are pretty straightforward with their uses and apart from storing inventory, they don’t offer any additional services.
What is a fulfillment center?
Fulfillment centers, or third-party logistics providers (3PL), help businesses handle their order fulfillment operations. They are especially popular amongst eCommerce companies who sell large or oddly shaped products direct-to-consumer, and/or business-to-retail.
Their services can also include shipping and returns, storing and managing inventory, and collecting data to help forecast sales and projections. Furthermore, these agencies incorporate advanced technology in their operations to help improve efficiency.
The fulfillment strategies and processes can be competitive and complex for small and medium-sized businesses to exploit. Alternatively, finding the right employees can be time-consuming and expensive. This can make these centers a good option for your business.
Click here to read more about fulfillment services, and why you might need them if you are looking to sell in international markets.
What are the key differences between warehousing and fulfillment centers?
Long-term vs short-term storage
Fulfillment services offer low shipping time and costs, and usually, experiences more benefits when inventory is turned over quickly such as in the eCommerce space.
On the other hand, businesses that need products stored for extended periods of time, or who sell extremely seasonal products, might find warehouses a better option.
Warehouses, while efficient in maximizing storage, don’t offer much else. In comparison, a fulfillment center offers cost-effective services that help streamline and reduce operational risk and time. These include:
- Receiving and shipping orders
- Packaging and labeling shipments
- Managing customer service and returns
- Generating pick-lists
- Optimizing order-to-shipping procedures
Frequency of shipping carrier pickups
Fulfillment providers always have relationships with a range of international shipping carriers. How this benefits businesses is by ensuring that products are shipped as soon as orders come in and are fulfilled as fast and accurately as possible.
Fulfillment companies usually have frequent shipping schedules in place. This allows eCommerce clients to list faster and smaller delivery ranges online which can be important to increase sales and beat the competition.
On the other hand, pickups and delivery for warehouses need to be scheduled and managed according to shipping, labeling, and packaging rules. This can be tedious and expensive for businesses in the long run and leave the process open to errors and time delays.
Benefits of fulfillment centers
Here are 5 benefits for businesses who partner with a fulfillment center.
1. Eliminate inventory and management operations
Having a cost-effective and efficient operational process can mean finding the right warehouse, implementing advanced technology, and managing packaging, labeling, and shipping procedures. At a certain stage, this can become very complex, time-consuming, and expensive.
Fulfillment providers help to alleviate this stress by giving access to their already advanced in-built procedures.
2. Low shipping times and costs
Shipping overseas can be expensive, and stringent. This can unexpectedly increase delivery times and reduce customer satisfaction.
Using a fulfillment provider enables businesses to benefit from established shipping relationships to lower shipping costs and times.
3. Leverage expertise and specialization
The export process can become complicated as businesses grow. Finding the best technology and employees can be risky, will take time, and cost money.
Fulfillment services already have the best technology and procedures in place, and partnering with an end to end provider can help improve your business immediately.
4. Automate warehouse and fulfillment processes
Fulfillment centers like MultiB2B invests in advanced software and technology to help track, manage, and collect data on inventory. This not only improves the order-to-delivery procedure, it also allows clients to analyze sales and other logistical information.
5. More time to focus on other business aspects
By outsourcing difficult and tedious tasks like fulfillment, clients are able to better allocate resources towards other business aspects such as marketing and product management.
These services aim to remove operational risk and costs in a business procedure.
Any business owner, especially those in the eCommerce industry, will no doubt need to manage inventory at some point. Delivering products to customers quickly and accurately is imperative in order to stay competitive in today’s eCommerce space.
As a result, most companies will need more than just warehousing capabilities – which is where fulfillment centers come in. Offering functionality in an efficient and cost-effective manner, there is no better way than to outsource tedious and complex operational tasks.
If you are in need of fulfillment services, contact us to learn more.
The article is a part of our comprehensive series on “ Order Fulfillment Process in USA: Steps Involved”.