Difference Between Warehouses and Fulfillment Centers?
What’s the difference between warehouses and fulfillment centers? After all, they look very similar and provide closely related services. A lot of people even seem to use the terms interchangeably.
However, as an entrepreneur, you need to know that the two are vastly different. Your livelihood depends largely on shipping and logistics. Thus, warehouses and fulfillment centers each have a quite different impact on your business.
That’s why, today, we want to clear up this confusion once and for all. Below is a comprehensive comparison of warehouses vs. fulfillment centers to help you understand. Read on to learn more.
What Is a Warehouse?
A warehouse is exactly what you think it is. It’s a very large space for storing products.
As an illustration, think of it like a public storage unit but on a much larger scale. Usually, this is a long-term storage solution for items that won’t be shipping back out anytime soon.
The important thing to know is that, when you buy/rent a warehouse, all you are paying for is the space. As with public storage, warehouses do not come equipped with a staff or any extra services. You’ll have to come up with your own means of loading, unloading, organizing, and shipping warehoused items.
Types of Warehouses
That’s not to say that there are no unique variations of warehouses to choose from. Types of warehouses include:
- Private (owned) warehouses
- Public (rented/shared) warehouses
- Climate-controlled warehouses for goods that need to stay within a certain temperature range
- Automation-enhanced warehouses, usually assisted by robotics and AI
- Fulfillment centers
Yes, fulfillment centers are a type of warehouse, as described below.
What Is a Fulfillment Center?
A fulfillment center or distribution center is basically a warehouse with benefits. These are staffed by third-party logistics companies to provide any/all of the services we mentioned above, and then some.
These are often used as a short-term warehouse/shipping hub, especially for online orders. The logistics company works on the seller’s behalf to “fulfill” customer orders as quickly as possible.
For example, let’s say a customer orders a book from your website. Your fulfillment center immediately receives the order, removes the item from storage, and prepares to ship it. This generally requires no input or involvement from you at all.
Obviously, fulfillment centers are more convenient. Just as obviously, their added benefits come at a higher price than simply renting a warehouse.
Warehouses vs Fulfillment Centers: Which Do You Need?
The convenience of fulfillment centers is worth the price if it means increasing customer orders. More orders mean more profit. Thus, these are ideally suited for companies that sell primarily online.
Small companies and local businesses are probably better off getting a warehouse. This is more cost-effective if you simply have a backroom that’s not quite sufficient for all your backstock and seasonal items.
Choose Your Logistics Solution Wisely
So, based on the comparison above, are warehouses or fulfillment centers better suited for your needs? If you need more time to decide, that’s okay.
Just keep this guide bookmarked so that you don’t forget this vital information. Then, use this comparison to choose the ideal logistics solution for your enterprise.
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