In the logistics business, the terms “warehouse”, “distribution center”, and “fulfillment center” are often used interchangeably to refer to the storage of goods for a business. As a result, many people mistakenly believe that they have the same meaning. However, warehouses, distribution centers, and fulfillment centers actually have major differences which every e-commerce business owner needs to know. Let’s discuss their differences in this article.
What is a Warehouse?
Essentially, a warehouse is a building or a place for mass storage of goods for a certain period until the distribution is carried out.
The main function of a warehouse is typically focused on storing inventory on a large scale, without involving other complex activities. Usually, warehouses are used by large-scale businesses, such as wholesale companies and B2B businesses.
Some large-scale companies may have their own warehouses to store excess goods or inventory. However, for small to medium-sized businesses, renting a warehouse can be a more efficient and convenient alternative.
What is a Distribution Center?
A distribution center, also known as “Pusat Distribusi” in Bahasa Indonesia, is a facility used by factories or retail companies to store their goods and products before they are shipped to sellers or wholesale entrepreneurs. Therefore, distribution centers are primarily intended for B2B (business to business) purposes.
The goods stored in a distribution center tend to have shorter shelf life hence the need for faster delivery. Generally, retail companies or factories have their own distribution centers for shipment to their business partners or sellers before reaching the hands of consumers.
What is a Fulfillment Center?
Unlike a warehouse or a distribution center, a fulfillment center is a place for storing inventory that also helps with distributing the products to consumers. Fulfillment centers are usually managed by third-party logistics providers (3PL).
Compared to warehouses and distribution centers, the storage and movement of inventory in fulfillment centers rotate more rapidly according to real-time customer demands.
The main focus of a fulfillment center is not only managing the inventory storage but also carrying out logistics activities such as packing, shipping, and tracking. Additionally, fulfillment centers handle product return requests and reshipment to ensure customers satisfaction.
The high demand for custom-designed solutions for these specific business needs has driven Flexofast to provide fulfillment centers with flexible services. We make it easier for businesses to manage complex and dynamic supply chains, starting from inbound activities, inventory management, outbound processes, shipping, and packaging with our advanced Warehouse Management System (WMS).
Differences Between Warehouse, Distribution Center, and Fulfillment Center
In general, warehouses, distribution centers, and fulfillment centers are all storage facilities, but they have significant functional differences. Based on the above descriptions, there are at least three main differences between them. What are they?
First- the end users. Warehouses serve the B2B market, while distribution centers distribute the products to other wholesale entrepreneurs or other sellers. Fulfillment centers, on the other hand, offer various features beyond warehousing to meet the needs of e-commerce and B2C market.
Second – the operational activities. Warehouses are associated with massive storage and heavy equipment, such as forklifts, for storage and movement. Distribution centers’ activities tend to be faster where they sort the product into smaller amounts before distributing them.
Meanwhile, fulfillment centers not only store goods with heavy equipment but also ensure that the size of the goods complies with standard packaging when delivering them to customers.
Last- the purpose. Warehouses are mainly to provide storage for a specific period, while distribution centers only serve as temporary storage or stopover for goods before they are distributed. Fulfillment centers are not intended for long-term storage. Instead, they focus on distributing products to consumers in real-time.
Those are the main differences between warehouses, distribution centers, and fulfillment centers. If you are in the line of e-commerce or sales, it is important to be well-informed of their differences and choose the best logistics service that suits your business and customers’ needs. Want to learn more about fulfillment centers? Please check out other articles on the Flexofast blog.