Your business is booming, but you're hitting some roadblocks in getting orders out fast enough. To keep up with demand, you're thinking about opening a new place to ship and store your stuff. Turns out, there are two types of facilities: distribution centers and fulfillment centers. What's the difference? Which one will help you grow best? Let's figure that out.
Fulfillment centers focus on quickly delivering goods to individual customers and offer an array of services to help with this goal. They typically receive, pick, pack, kit, and label your products and may also offer custom packaging. They may also have a dedicated customer service team that can handle interface with customers for you, allowing you to focus on more strategic goals. They can also help you save on overall shipping costs as they typically service many clients at the same time.
However, there are some trade-offs you’ll want to keep in mind when looking at fulfillment centers. As they are focused on speedy, efficient delivery, they may hold less of your inventory at any given time. That means you’ll need to continually replenish your stock, and you may be charged extra for any that isn’t sold after a specific time, typically one month.
Most third-party logistics companies (3PLs) offer a relatively limited menu of services that focus on getting lower shipping prices for their clients. They won’t offer the kind of bespoke services that small businesses need to reach their customers or for specialized orders that have a limited run. However, third-party fulfillment (3PF) companies do offer these services, along with 3PLs that operate their fulfillment centers. Working with one of these 3PLs allows you to save on shipping costs while getting granular control over your fulfillment process.
Does your company need a reliable logistics partner?
A distribution center combines some of the capabilities of traditional logistic warehouses with those of newer fulfillment centers, offering long-term storage options that can be synchronized to an extent with your delivery needs. They are often located close enough to major markets to make shipping to them fairly easy but far enough away to help you save on costs. They will also typically have the ability to ship them in bulk to other locations, especially other retailers who may sell your products.
Distribution centers tend to ship from business to business or fulfillment centers, which means you will have a limited ability to ship directly to your customers. In addition, they offer less frequent shipping times and are dependent on certain volumes being shipped at once rather than individual orders. They are also typically located away from major markets, which can further increase shipping times. However, if your primary concern is moving more of your inventory closer to shipping points, then a distribution center could be right for your needs.
Warehouses were once the critical node in supply chains and served as places where a large number of goods could be stored before they could be sold. However, as newer technology that could monitor supply flows made the just-in-time logistics system possible, warehouses became increasingly obsolete. While they’re still in use, modern logistics chains need separate warehousing and distribution facilities.
Distribution centers facilitate the flow of goods from suppliers to retailers. Their primary role is to add value to a product through packaging, order fulfillment, cross-docking, or other services that set a product in motion. Rather than trying to optimize the use of storage space, distribution centers optimize the customer experience and attempt to minimize shipping times.
Related Reading: 10 Types of Storage Warehouses for Your Storage Needs
Fulfillment centers and distribution have different but complementary capabilities, so you should carefully consider what each has to offer in light of your business needs before choosing one (or both).
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Fulfillment and distribution centers are critical components of today’s e-commerce logistical infrastructure, but each serves a specific set of business needs.
In general, if your business is relatively small, doesn’t have a customer service division, and relies on delivering goods directly to customers, you may need the services a fulfillment center offers. On the other hand, larger businesses that need to ship items in bulk between locations may want to opt for a distribution center.
Regardless of what you decide, it’s important to choose a logistics partner you can trust to ship your goods on time, maintain your reputation with customers, and grow your business.
Related Reading: How to Pick the Location of Your Fulfillment Center
Outsourcing warehouse management and fulfillment to a 3PL offers several advantages. It lets you focus on what you're best at, like making great products or connecting with customers, while experts handle the complexities of storing and shipping. Plus, 3PLs have advanced technology and systems that make everything run smoother and faster. You'll save money, be more flexible to changes, and keep your customers happy.
The 3PL you work with is responsible for delivering every one of your packages on time and without mistakes. They also need to be able to handle any questions or concerns that your customers might have if there is a shipping problem. Ship My Orders has a dedicated customer service team on-site at our warehouse, ready to field calls. We’re accurate, quick, and responsive and can act in real-time to give the best customer experience possible, a critical requirement in today’s competitive eCommerce environment. Visit our website to learn more about our order fulfillment services. Request a free quote today!