Most people think that a warehouse and a fulfillment center are the same things and they use these terms interchangeably. However, in reality, they mean very different things. Even though both of them refer to large buildings where businesses store their inventory which they will later sell, that’s where their similarities end.
Warehouse and fulfillment centers provide different services and the cases where each of them is used vary widely. Their applications depend upon the needs of the companies using them. In this post, we’re going to learn the functions of each so you get a better understanding of their differences and are able to make the right choice for your business.
What’s a Warehouse?
A warehouse is a building that serves as a large storage center or industrial space created to accommodate inventory in bulk. At a warehouse, you will normally get to see shelves stacked high and stocked with large quantities of product containers along with forklifts moving here and there to bring in and take out stuff.
Daily happenings at a warehouse are pretty static. New inventory is added, moved to various locations, and, when necessary, it’s also transferred out of the warehouse.
Warehousing providers usually target those businesses that mainly do wholesale or B2B orders in mass quantities. There can be some large retailers that maintain their own warehouses in which they store inventory, whereas others rent a space in a warehouse together with other eCommerce businesses.
Renting warehouse space is a much more cost-effective option than buying one especially if you’re a small to the mid-sized retailer.
What’s a Fulfillment Center?
A fulfillment center is also often referred to as a distribution center. It’s similar to a warehouse in the sense that it’s also a building in which businesses store their inventory until it’s time to distribute the goods to customers.
Unlike a warehouse, an eCommerce fulfillment center, like Aero Fulfillment, is owned and operated by a third party logistics provider (3PL). They are responsible for inventory storage and hosting other functions such as freight transportation, managing cross-docking, and, most importantly, customer order fulfillment.
Warehouse vs. Fulfillment Center
Let’s take a look at how a conventional warehouse differs from a fulfillment center.
Long-Term vs. Short-Term Storage
Even though eCommerce fulfillment centers have a warehousing component too, the primary goal of a fulfillment center is to turn over inventory much more quickly and efficiently to meet customer expectations related to shipping. In ideal cases, the inventory shouldn’t sit in a fulfillment center for more than a month. On the other hand, the main role of a warehouse is to store products.