People often use the terms fulfillment company and warehouse interchangeably; however, it’s a misconception as both provide different services. A common thing among them is that they both hold inventories for e-commerce companies or other businesses that sell provides. However, they are both different in terms of the services they provide. An order fulfillment center provides warehousing, picking, packing, shipping, and even return services, whereas a warehouse only stores items for an extended time. It has a large storage space that is specially designed to store bulk inventory. E-commerce businesses should be aware of the differences and benefits of a fulfillment company so that they can find the best fulfillment solution.
Differences between Fulfillment Centers and Warehouses
Long-term vs. Short-term Storage
A warehouse is a part of a 3PL fulfillment center. It stores inventory of the e-commerce business. The main aim of a fulfillment center is quick inventory turnover. Ideally, inventory should only be present in a fulfillment center for not more than a month. A warehouse is only used for the storage of inventory. Whereas the fulfillment center is used for the order fulfillment process that involves storage, picking, packaging, and shipping.
Logistics company Melbourne states that fulfillment centers have complex operations, unlike warehouses that are only responsible for storing inventory. The warehouses are more inactive, whereas 3PLs provide a variety of services that range from receiving inventory to keeping it to picking products. The fulfillment companies also provide services such as kitting products, packing boxes, and shipping orders. Some companies also manage returns. A warehouse operation is only limited to adding or transferring inventory. There are no additional services provided.
A warehouse requires scheduled and less frequent pickups as it is more efficient and cost-effective to ship freight and have boxes wrapped together instead of generating individual shipping labels. On the other hand, freight companies pool inventory from different pickup locations, and therefore they can have a partnership with different multiple shipping carriers. Also, a fulfillment center has to deliver the customers’ orders as soon as they are placed. Therefore they need shipping carriers to collect the shipments daily.
Benefits of Using a Fulfillment Company
There are various benefits of using the services of a fulfillment company.
Eliminate Inventory Storage
A fulfillment company provides warehousing services. It provides benefits to the companies in the form of a reduction in warehouse expenses.
Focus on the Big Picture
The businesses can easily outsource the tasks of packing boxes and shipping customer orders to the 3PLs so that they can focus on achieving their goals.
Customer order fulfillment can be challenging as it involves advanced technology and expertise. It also has several processes that range from inventory management to order shipment. Therefore, the business should let the experts handle these tasks.
Managing your inventory efficiently is critical for e-commerce businesses. Though a warehouse and a fulfillment company are often used interchangeably, they provide different services. The fulfillment companies provide efficient fulfillment processes that provide several benefits to the e-commerce companies ranging from eliminating inventory storage to improved customer services.