What is the difference between a fulfillment center and a warehouse?

Different businesses, like manufacturers, importers, exporters, and e-commerce businesses, require a space where they can store their inventory. Keeping this problem in mind, many warehouses and fulfillment centers are present in various areas. Businesses must choose between these two as per their needs and requirements. Selecting one that fits best for your business can be a tough choice to make. By the end of this article, you will be able to differentiate between a warehouse and a fulfillment center and also determine which suits you best.

What is a warehouse? 

It is a building used to store various goods and products. It acts as a central location for manufacturers, importers, wholesalers, transport businesses, and exporters before they are sent to retail stores or another distribution network. You’ll find machines like cranes and forklifts to facilitate the movement of the goods. Warehouses offer a space to store goods and also help in organizing them. They play a very important role in managing inventory and making sure the warehouse works effectively. In places like the USA, warehouses can also be referred to as godowns. People sometimes either own a warehouse or rent it to store their goods.

What is a fulfillment center?

It is a crucial part of the distribution network. That acts as a central location for the transportation of goods. It is needed for sending a product to the customer.  A fulfillment center will take care of everything from picking up to delivering orders.  It acts as a third party that provides logistics. It does not keep products for an extended period of time before shipping. They work with different businesses and help with the logistics and storing of goods. As soon as the order is placed fulfillment center processes the order and delivers it to the customer. Fulfillment centers do not store inventory for too long like a warehouse. It aims at providing timely delivery to the customers. 

What is a Fulfillment Warehouse?

Sometimes fulfillment centers are called fulfillment warehouses, but the main thing that differentiates both warehouses and fulfillment centers is how they function are what values are provided by both. 

Difference Between a Warehouse and a Fulfillment Center 

They both are different due to some of the processes and functions. So let’s look at the things that separate them.

The Period of Storage 

We use the warehouse to store products or raw materials for long periods. Sometimes even months, but on the other hand, fulfillment centers should not keep your inventory for more than a month; otherwise, you might be charged high prices. With fulfillment centers, we have to make sure that enough products are provided to them so that they can fulfill orders as soon as possible.

Operation

Warehouses are usually inactive, with just cranes transferring inventory from one place to another. Whereas a fulfillment center is usually active most of the time with continuous picking, handling, packing, and shipping. It has a larger number of employees than a warehouse and various operations

Pick-up Frequency

A warehouse will pick products up only a few times. It will focus on picking them up in larger quantities so that they can save some money on transportation. Whereas fulfillment centers do not care about the quantity they will deliver any number of products if they are already ordered.

Advantages of Warehouses 

You can use the warehouse to store your goods and raw materials. So now you can buy raw materials in huge quantities at lower prices without having to worry about storing them. You can also manage your inventory effectively by reaching an optimal stock level that most fits your business. You can take many orders and deliver products seamlessly, without a very long time gap between order and delivery, which can sometimes cause dissatisfaction among your customers. Shipping goods directly from manufacturers can be expensive sometimes, so storing them in warehouses before shipping can save a lot of shipping charges on each order. Some businesses at early levels can even buy shipping containers, or they can just rent them as warehouses for their inventory.

Advantages of Fulfillment Centers

A fulfillment center is usually called a quick and more effective shipping center. This is possible because of their specialized infrastructure and geographical location. They are strategically located in those parts of the city where they can serve as many people as possible and return greater profits. As a lot of functions are done under the same roof, it provides a cost-effective method of storing inventory. You don’t have to go from one place to another to get multiple things done, so it saves a lot of time and money that you can invest in other useful areas of your business. They are more adaptable to the needs and demands of their customers. So if you need a specific type of packing or something else, you can provide them with the information, and your product will be shipped in the same manner as you described it before.

Types of Warehouses

Public Warehouse

The public warehouse is owned by the government and made available to rent for private companies. These warehouses can be rented out for business or personal purposes. Because of their lower cost in comparison to private warehouses, public warehouses are preferred among new businesses, such as e-commerce companies and startups.

Private Warehouse

These warehouses are owned by private proprietors. A public warehouse is managed by the government or a third party, whereas private warehouses are managed by a company division. If a company wants to rent a private warehouse, they have to pay an essential initial cost to secure the space and perform basic maintenance. These warehouses are generally more expensive than public warehouses, but they provide more control over the inventory.

Cold Storage Warehouse 

It is generally used to store raw materials and products that require a specific temperature for them. They are generally used to store fruits, cosmetics, and medical items. Cold storage warehousing can include a full-capacity warehouse or perhaps a small section of a warehouse that can hold these products. Cold storage facilities have controlled conditions that help to keep inventory safe and prevent damage before items are delivered.

Distribution Centre 

Distribution centers are designed to receive huge quantities of products and move them quickly to retailers and merchants. A distribution center moves more products than a regular warehouse. Distribution centers are different from fulfillment centers, which are often utilized by third-party logistics organizations rather than enterprises or companies. Products kept in a distribution center are moved quickly along the supply chain. Distribution centers are important for the relationship between sellers and consumers because they do more than just store goods; they also distribute and prepare shipments.

Shipping Containers as Warehouse 

Some businesses that are in the early stages also rent or buy shipping containers to use as warehouses. They keep their inventory in them, as these shipping containers cost 50% less than what you would pay for a building of the same size. You can buy shipping containers easily with a simple Google search like “shipping containers for sale.” In the USA, ContainersX is one of the trusted container suppliers. These are excellent ways to transport goods, but you are not getting assistance like a normal public or private warehouse service.

Types of Fulfillment Centers 

Logistics Distribution 

These fulfillment centers are usually set up in places where they can easily access the city and ship goods directly to the customer. They are usually somewhere inside the city in a central location, so they have a larger area to cover and a much smaller distance from the fulfillment center and the customer.

Customs Clearance Center 

These fulfillment centers are usually located on borders. These are used for imported and exported goods so that they can clear customs inspections for a large quantity of goods. This part of shipping and inspection is also managed by these fulfillment centers.

Agricultural Center 

They are designed especially for agricultural and farming-related goods. They have specialized storage for these crops and grains. These goods are not usually stored for a very long periods of time.

Frequently Asked Questions [FAQs]

• What is a warehouse?

It is designed to store various items and products. It acts as a hub for manufacturers, importers, wholesalers, transportation companies, and exporters before they are sent to retail stores or other distribution channels.

Cranes and forklifts are tools used to help move things. The warehouse provides a place where your goods can be easily organized.

• What is a fulfillment center?

In the supply chain, a fulfillment center acts as the central location for all logistics tasks. Everything, from order picking and handling to packing and delivery, is covered. It has a wide range of applications. Products usually stay for a brief amount of time at a fulfillment center, commonly referred to as a third-party logistics provider, before being shipped.

• Do fulfillment centers use advanced technology?

Yes, the everyday tasks of fulfillment centers make it a necessity for them to use advanced technology.

• What’s the average size of warehouses?

Warehouses in America are generally around 25,000 square feet.

• Which one should my business choose?

This is a subjective choice. Analyze the needs and requirements of your business. Whether you need it for the long term or the short term,? Which types of goods will you be storing? By answering such questions, you will be able to choose the one that will be best for your business.

• Are fulfillment centers a part of e-commerce?

Yes, fulfillment centers are used by a lot of e-commerce businesses, as they are responsible for everything.

Author Profile:

James A
Vice President Of Business Development, ContainersX LLC
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James A is the Vice President of Business Development at ContainersX LLC. He specializes in driving strategic growth and expanding market presence. With a strong background in the shipping container industry, James focuses on innovative solutions to meet evolving business needs. Connect with James on LinkedIn for more insights.