Many people often get the terms warehouse and fulfillment center mixed up. It’s easy to see why. While they do serve similar purposes – holding physical products/goods – they have very different goals, uses and services.
So while they might be easy to confuse, you definitely don’t want to mix them up and use the wrong one for your needs.
Let’s dive in!
What is a Warehouse For?
Warehousing is pretty simple and straightforward. A warehouse is just a place to store inventory in bulk for ecommerce businesses. This could be B2B inventory or wholesale inventory waiting to be sold to another company. Warehousing can also be useful to large companies that have excess inventory and need a place to keep it.
Smaller or mid-sized businesses might also use a warehouse to hold inventory that they don’t have room to store. Then when they have room, they move the inventory into their own space again, optimizing their online store operations.
When you think of a warehouse what probably comes to mind is a massive industrial warehouse with racks and forklifts. This can either be owned by the company storing their goods there or a company renting their warehouse space. When it comes to small businesses, a storage unit can count as a warehouse, especially for shipping orders efficiently.
What is a Fulfillment Center For?
While warehouses are simply for storing your products/goods, a fulfillment center does that and more for ecommerce businesses. Also called third party logistics (3PL) or order fulfillment companies, a fulfillment center not only holds inventory; it takes care of customer order fulfillment too, playing a crucial role in enhancing customer satisfaction. Order fulfillment is one of the trickiest and most difficult to scale aspects of growing an ecommerce business.
Fulfillment centers specialize in order fulfillment, including customer service. For most ecommerce companies order fulfillment is simply a means to an end and could even be considered an afterthought.
While fulfillment centers have been around for many years ecommerce has significantly increased the need for order fulfillment. In the past, fulfillment centers were often used for B2B to get large orders of product to retailers. Now they cater to customer orders directly, showcasing their importance in the online store landscape.
Ecommerce companies of all sizes use order fulfillment centers because of the services they offer including access to more man power. A fulfillment center does everything that’s needed to complete an order including warehousing, picking and packing, and kitting to if needed. In doing this, the entire fulfillment process is streamlined.
Differences Between Warehouses and Fulfillment Centers
A fulfillment center acts as a warehouse but a warehouse doesn’t act like a fulfillment center.
Warehouses are simply for storing product – usually long term. No one at a warehouse is picking, packing and shipping products to fulfill customer orders. Fulfillment centers store product like a warehouse, but the product isn’t meant to sit around for long. It emphasizing the importance of efficient inventory management. They warehouse product simply to keep it on hand in order to fulfill customer orders and maintain store inventory.
Fulfillment centers are much more active and often buzzing with activity in order to complete their customers’ orders. Warehouses are by comparison slow and boring. Things get moved in to stay for a while instead of being constantly moved around or shipped out. This highlights the dynamic nature of the order processing step of the fulfillment process.
Conclusion
If you’re looking for a place to simply keep excess inventory that you don’t have room for, you’re looking for a warehouse. If you want a company that will store your products in order to fulfill customer orders, you’re looking for a fulfillment center. Consider working with a fulfillment center as a strategic move to optimize your ecommerce business, particularly in terms of order processing, shipping orders, and maintaining customer satisfaction. Outsourcing fulfillment to a reputable fulfillment company can be a game-changer for the distribution center dynamics of your online store, providing the necessary warehouse space and expertise for effective inventory management, order fulfillment, and overall supply chain efficiency.