When it comes to logistics and the supply chain, the terms distribution center and fulfillment center are often used interchangeably. Both involve storing goods, then receiving orders, picking, packing and shipping those items. There are a few key differences; however, that businesses should consider when deciding how to best meet business and customer needs.
What is a Fulfillment Center?
A fulfillment center is typically a third-party warehouse that stores inventory and then processes and fulfills customer orders. Fulfillment centers ship merchandise directly to customers on behalf of retailers. Amazon, Overstock and Wayfair are familiar examples of fulfillment centers.
One of the primary roles of a fulfillment center is to get goods into the customer’s hands as quickly as possible. Cutting-edge technology and round-the-clock staffing allow for processing, kitting, packing and shipping orders quickly and efficiently. Fulfillment centers often provide additional customer service functions as well, such as processing returns.
What is a Distribution Center?
A distribution center stores and distributes retail goods—typically in larger quantities for B2B customers. Distribution centers are large enough to store enormous amounts of inventory and have systems in place to manage, process and ship inventories and bulk orders.
Distribution centers and fulfillment centers should not be confused with warehouses, which are mainly used for storage. Both distribution centers and fulfillment centers provide value-added services in addition to shorter-term storage, with the goal of continually moving product through the supply chain.
Does Your Business Need a Distribution or Fulfillment Center?
Here are some key points to remember when deciding between a distribution center and a fulfillment center: