Is it a fulfillment center or warehouse? You be the judge… right? To our point, fulfillment centers and warehouses are often used to reference the same things. After all, both fulfillment centers and warehouses are used to stock inventory for companies that sell goods. Both of them are usually housed in large buildings, they do share similar purposes and traits. However, the services they offer can differ, the meanings can be different too.
To understand how the two are alike and different, we’re going to break down each one so you know what’s the best choice for your business.
What Is A Fulfillment Center?
A fulfillment center is the physical location from which a third-party logistics (3PL) provider (also known as a fulfillment provider) fulfills customer orders for ecommerce retailers. A fulfillment center exists to get online orders to customers in a timely fashion and relieve ecommerce companies of managing this crucial-yet-challenging process.
Fulfillment center operations involve helping get your online orders delivered to your customers, commonly referred to as the order fulfillment process. Most 3PL fulfillment centers are strategically placed to benefit your ecommerce businesses. 3PL fulfillment companies have multiple fulfillment centers to help you deliver products to your customers faster and often cheaper.
When an online seller outsources ecommerce fulfillment, the 3PL is fulfilling orders on the owner’s behalf. This includes a number of different things, such as;
- Carrier Shipping Rate Negotiations
- Inventory Management
- Customer Service
- Returns Management
What Is A Warehousing Solution?
Companies that store products for an extended length of time would be referred to as a warehousing solution. Warehouses are large storage centers, or known as a large industrial space where inventory is stored in bulk.
Warehouse providers usually focus on B2B and the wholesale industry, storing large quantities of products. Larger retailers usually have their own warehouse space, as well as larger ecommerce operations. They use their own warehouses to story extra inventory. For smaller and mid size retailers, it’s usually cheaper to lease warehouse space versus buying their own warehouse.
While some ecommerce sellers are still storing inventory from home, others will choose to rent out storage units to store inventory. For many ecommerce business owners in that scenario, this route is more cost-effective than any other option.
Short-Term Storage Versus Long-Term Storage
One of the first areas where fulfillment centers and warehouses differ is inventory turnover. Warehouses are usually not used for quick inventory turnover. Fulfillment centers are completely differ, the core of fulfillment operations are quick inventory turnover. That’s one of the first areas the two differ.
Another area where they differ is long-term and short-term storage. While fulfillment centers can store product, their goal is to quickly get orders picked and lacked, delivered to the end customer quickly. With warehouses, that’s not the case, they’re a long-term storage solution for companies that need to store inventory.
Looking at the roles of each, it’s clearly different. A fulfillment center is all about getting orders out to customers efficiently. As for warehouses, the role is storing products.
Fulfillment Operations
Unlike warehouse services, fulfillment center operations provide a wide range of different services for your business.
Let’s look at the some of the main core services that most fulfillment centers offer.
- Receiving Inventory
- Kitting Items
- Picking Products
- Packing Products
- Labeling Shipments
- Shipping Orders
- Managing Returns
How Shipping Carriers Play A Role
It’s quite common for fulfillment centers to have relationships with a number of different shipping carriers. Fulfillment centers fulfill direct-to-consumers orders as soon as they’re placed. They rely on shipping carriers to pick up shipments at least once a day. By doing so, it allows their customers to receive their orders quickly as possible.
While fulfillment companies can offer different services, some do provide same day shipping and next day shipping options. Due to this, shipping carrier relationships are vital to all parties involved. For many companies, shipping costs is one of their top expenses, so lowering that shipping costs is often a focused goal.
Now, most fulfillment centers have cutoff times on orders. For example, any orders that are place prior to 1PM will be fulfilled the same day while orders placed later will be fulfilled the following day.
For warehouses, most of them need to be scheduled in advance. However, it’s usually cost-effective this way versus a fulfillment center.
What Are The Benefits For Using A Fulfillment Center?
There’s a wide range of benefits a company gets using fulfillment centers in their business. We’ll discuss these below.
(1) Eliminating The Need For Space And A Fulfillment Team
Outsourcing your order fulfillment to a 3PL fulfillment center will immediately free up the resources you have invested in your fulfillment and warehousing. You’ll no longer have to worry about fulfilling your own orders or having a fulfillment team to operate.
(2) Faster Delivery Times
If you’re using multiple fulfillment centers, you can reach your customers faster. Fulfillment centers like Thill have locations throughout the United States to help you get your orders to your customers fast.
It also gives your company the opportunity to offer faster delivery services that can improve both customer service and sales.
(3) Improving Customer Service
If your customers are receiving their orders fast, they’re going to be happy customers. As we touched on just above, quicker delivery times create happy customers. If customers are happy to do business with you, that means they’re more likely to buy from you again.
Great custom service is what it’s all about and if you can deliver that over and over again, your company will thrive.
(4) Partnering With Experts
Fulfillment centers are masters of logistics. Fulfillment processes can be complex, but they know the best solutions for your unique scenario. From order processing and inventory management to preparations for holiday shopping seasons, fulfillment companies are specialty experts and have seen a little of everything.
Fulfillment center or warehouse for logistics? It’s not even close, you’re going to need a 3PL fulfillment partner for those types of services.
A single ecommerce fulfillment center can handle millions of orders a day without missing a beat. They make for a great partner.
Automated Fulfillment Centers
The majority of fulfillment centers today have technology and software to help you streamline your fulfillment. Here at Thill, our order management software (OMS) gives you real-time inventory management. You’ll have the ability to see how your inventory is moving at all times and how your sales channels are driving orders. Order tracking is important to both business owners and your customers.
Even better, here at Thill, our OMS integrates with most of the popular commerce platforms out there. Our order management software integrates with;
You must have the ability to see how your inventory is moving at all times in real-time. Equally, you need the ability to see how sales channels are performing, order processing and everything in between.
In Closing
Hopefully by now, you know the clear differences between a fulfillment center or warehouse. Both are important to supply chain management. Although they’re two of the same, they differ in a lot of wide range of ways.
If you want to learn more about our fulfillment and warehousing services, you can always reach us at 1-920-067-9201 or through this online form.
