Fulfillment Center vs. Distribution Center: What’s the Difference?

May 21, 2022 | Article

Are you thinking about starting up an e-commerce site? E-commerce is the best way to sell your products nowadays. Your customers will be able to shop at their own convenience, there is no time pressure like the closing time of a physical outlet, and they can do that all in the comfort of their own home.

However, your problem then comes when your customers are scattered across a vast country like Indonesia. How will you get your products to them? The answer is one of two choices, fulfillment and distribution centers.

Many people still confuse fulfilment center with distribution center. It can be hard to figure out whether you need a fulfillment center vs. distribution center when you’re setting up your online business. We hope this guide can help.

Below, we talk about how they’re different, how they can be of benefit to your business, and by the end, you’ll know which one is better suited for you.

What is a Fulfillment Center?

Fulfillment and distribution centers are, in essence, specialized buildings which house different products from different sellers. What makes fulfillment order centers different are the services they provide.

Many fulfillment services often finish up a product should it need finishing. An operating individual or company often takes charge of one. They’re also known as third-party logistics (3PL) providers. They are responsible for customer engagement. They are also the ones who get the customers’ orders when they order a certain product.

Providers use a process called the order fulfillment process. This makes sure the customers don’t need to wait too long to get their item. Businesses often opt for fulfillment services because of how effective they are at providing business for customers living far away. They are also the more popular choice as of today as more people opted into buying products online.

What is a Distribution Center?

Distribution centers are a more business-focused alternative. These don’t depend much on locations, unlike fulfillment order centers. Like their fulfillment counterparts, distribution centers handle everything from shipping to selling. However, what makes them different is that they don’t ship to retailers. Instead, they become the retailers themselves.

This approach has them becoming popular to sellers who prefer that their products are better cared for. Handling shipments and deliveries themselves gives them bigger responsibilities, but better client relations.

Make the right choice

The main disadvantage of having distribution centers is their prices. They often charge a much higher fee for their services. With a more hands-on approach, this is understandable. It may be a small price to pay to get your products across with little to no damage.

However, because they’re more hands-on, it also takes longer for them to make deliveries. While attention to detail is not a bad thing, a customer’s impatience may be what makes them cancel orders. It’s a big risk to take for an online business. Also, with a limited inventory space, they only take in a small pallet of products at a time.

On the other hand, your business can get a lot of benefits if you opt for a fulfillment center.
Fulfillment services allow you to keep your products in their warehouses for a long period of time. This means you can have your product in stock for a long time. This removes the need to worry about late shipments in future scenarios.

Speaking of shipments, fulfillment services allow you to ship in bulk. This alone makes it the better choice if you ship items by batches of orders. This also helps you save up on shipping fees.
Not only that, but they also lower the shipping fees that your customers have to pay. Sometimes, they don’t charge for a shipping fee at all. They can do this because they have many outlets available.

They also place their physical locations in a strategic way. Doing so makes sure they don’t need to travel far for a delivery. Since they are the more popular choice, you can also expect more incoming benefits for them. Fulfilment centers are also known for their efficiency. Many even use sophisticated technologies like warehouse robots to manage their warehouses. With those on the way, you can be sure that your business will flourish for a long time to come.

Now, we hope that choosing between a fulfillment center vs distribution center should be easier than before.

If you are thinking about working with a fulfilment partner to level up your online business, 8Commerce is at your service. We are specialists in fulfilment services, from start to finish. Our operations ensure quick and easy integration with your e-Commerce platform. Your dedicated merchant portal will then put all the business-critical data you need, real-time at your fingertips.

Have you made up your mind? Contact us here.

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