Fulfillment Center vs Warehouse: Make the right choice for your business

Selling products online has become a major trend to elevate your business and introduce it to a wider audience. Perhaps, many businesses are starting as an online store itself. ECommerce websites like Amazon and Flipkart have made the transition to online stores easier.

But opening an online store isn’t a child’s play, there’s more to it. Selling products online requires stocking products in adequate quantity, proper packaging, and timely delivery. But do you have space to stock hundreds of products and facilitate proper packaging from your own storehouse?

No, you don’t need to have that space. Nobody starts an online business by buying a warehouse that can cost crores of bucks. Warehouse service providers and fulfillment centers will do the needful for you.

But are warehouses and fulfillment centers the same thing? Definitely not.

Before looking out for goods storage space, you need to understand the differences between a warehouse and a fulfillment center. By the end of this article, you’ll become better equipped in choosing the right storage space between the two.

What is a Warehouse?

Warehouses are large buildings or inventories where products are stored over a long time. They mostly cater to B2B needs of storing and delivering goods on a large scale. A typical example of its use is if your company sells seasonal products like jackets. The warehouse helps you stock your jackets throughout the year and deliver it back to you when you need it again.

Large scale businesses buy their own warehouses to house inventory in bulk while small and mid-sized traders lease the warehouses. They also facilitate stocking of inventories belonging to different retailers in a single warehouse. This provides a cost-effective solution for startups and mid-sized retailers looking to find a footing in the industry.

What is a fulfillment center?

Also referred to as a distribution center, a fulfillment center is a large storage space from which third party logistic services pick up and deliver goods to doorsteps on orders taken by the retailers. They fulfill the order completion process from the packaging of the product to timely delivery and cover everything in between.

Fulfillment centers place the products strategically and have a strong workforce employed to ensure proper packaging and labeling of products. They also ensure the safe delivery of products and are accountable for damaged shipments.

What is a warehouse fulfillment center?

It offers a complete order processing service for large scale businesses who deliver a high volume of products to chain retailers like Reliance Fresh, 24×7, Big Baazar and so on. The warehouse fulfillment service providers also negotiate shipping rates of courier services and shippers relieving the retailers of shipping responsibilities.

Key differences between warehouse and fulfillment center

Who do they cater?

• Warehouse- Mostly large scale businesses selling seasonal products that require stocking over a long period of time. Companies manufacturing raw materials or spare parts and equipment stock their goods in warehouses since their orders are large but far and few spread over the year.
• Fulfillment center- Online retailers who need to deliver small orders quickly to the customer’s doorsteps. To put into perspective, warehouses don’t package items individually so you would have to employ your own carriers and packagers to get items delivered from a warehouse. They also fulfill B2B orders by delivering a high volume of products to big-box or chain retailers.

Services offered

• Warehouse- These are static storage spaces which become active only when goods are added to or transferred from the inventory. You’ll get a safe location to stock inventories but don’t expect anything more than that. They provide pickup and delivery services only for large consignments in trucks. Don’t expect the warehouse to package individually and deliver singular items from your inventory.
• Fulfillment center- They have a separate department to complete each step of the order completion process. This includes the following services:

1. Packaging items including customized packaging service
2. Labeling
3. Maintaining records of sale and purchase
4. Tracking of orders
5. Negotiating courier rates
6. Kitting
7. Assembling orders
8. Performing quality checks
9. Customer interaction including an order confirmation, tracking, and follow-up emails

Outsourcing a warehouse fulfillment service will relieve you from all the shipment related responsibilities. They even provide customer support services as well as technicians that can help customers install products at their home. You can feed off their established infrastructure and manage your orders conveniently.

Delivery period

• Warehouse- They only provide scheduled deliveries and it can’t be fast-tracked based on customer’s demands. You’ll have to place a request for delivery much prior to the date when you need your consignment. Their pickup carriers pool inventories from different warehouses which makes the process lengthy and prone to delay.
• Fulfillment centers- They can deliver customized orders as quickly as inside 12 hours from the time of placing the order. Online retailers like Amazon use these services to complete 1-day deliveries by charging an extra delivery fee. They have connections to an array of shipping and logistic carriers which inflates the cost incurred in their services.

Which one should you choose?

Fulfillment centers offering a host of services look like an easy choice to make but the warehouses cost much less. You can stock your goods in a warehouse if you sell seasonal products and just need safe storage space. If you’re selling your products on online retail stores, Fulfilment centers will be your best bet. They would pack, ship, track and complete your orders in a flash and provide a reliable mode of delivery.