Warehouse VS Fulfillment Center. Aren’t They the Same?

Posted August 20, 2021

In eCommerce, Fulfillment, Inventory Management, Warehousing

Do the terms warehouse and fulfillment center mean the same? Do they refer to the same industrial storage unit? Well, in simple terms, yes, both are designed as inventory storage, but their services are different. Let’s unravel the differences between an eCommerce fulfillment center and a warehouse.

What’s the Confusion?

A warehouse refers to a company that stores goods in bulk for a long period. It can house equipment like forklifts and containers. There are warehousing providers that provide dedicated services for businesses that take up bulk wholesale or B2B eCommerce orders. While some retailers have their own warehouse, others choose to rent a warehouse, which is believed to be a more cost-effective alternative for small retailers.

Some small eCommerce retailers often rent more cost-effective space to store their inventory. The idea is to keep some inventory handy. This way they can retrieve more when they have a product shortage.

On the other hand, an eCommerce fulfillment center is a storage unit that fulfills customer orders on behalf of retailers. The third-party logistics provider is responsible for fulfilling online orders on behalf of eCommerce retailers, relieving them of the burden of managing the crucial process.

The order fulfillment process depends on the storage of eCommerce business inventory in a 3PL’s fulfillment center. When a shopper places an order with an eCommerce store, the fulfillment center picks the inventory and packs the boxes for shipment.

An eCommerce fulfillment center is responsible for processing both business-to-business and business-to-consumer orders.
A 3PL completes the order fulfillment process on the behalf of the eCommerce store. This includes inventory management, shipment, and negotiating shipping charges.

Order Fulfillment Center vs. Warehouse

As opposed to a warehouse that is responsible for inventory storage, a fulfillment center goes a step further and takes the charge of fulfilling orders on behalf of the online store. Outsourcing order fulfillment processes makes the whole task of order processing easier. This includes inventory management and customer service, thus saving the seller time to focus on core competencies without worrying about order fulfillment.

Storage vs Fulfillment

Like a warehouse, a 3PL’s fulfillment center stores inventory in its designated space. But it’s main task is to turn inventory over quickly. The longer the inventory sits in a warehouse, the higher the charges a merchant has to pay.
But simultaneously, sellers should make sure that there is always enough inventory at the fulfillment centers so there is no shortage of products, and orders can be fulfilled without delay. The eCommerce fulfillment center is responsible for meeting customer expectations. But to cut down on shipping cost, fulfillment centers should be located close to the eCommerce store’s audience. This helps reduce not only cost but also time in transit.

Active vs Static

While a warehouse is static, an order fulfillment center is active. The working of a fulfillment center involves continuous movement, from receiving inventory and orders, assembling items, packing, labeling, shipping, and managing returns. An order fulfillment company depends on shipping carriers to fulfill customer orders.

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