It can be hard to figure out whether you need a fulfillment center vs. distribution center when you’re setting up your e-commerce site. This guide should help!
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 customer lives abroad. How will you get your products to them? The answer is one of 2 choices, fulfillment and distribution centers.
Choosing between a fulfillment center vs distribution center can be difficult, but we are here to 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 known as third-party logistics 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 aboard. They are also the more popular choice as of today, only because it is what big brands often make sure for themselves.
Amazon, for example, has their own fulfillment program. Its popularity helped it become more successful in later years as more people opted into buying products online.
Pros of Fulfillment Order Centers
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 worldwide.
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. More research goes into making them more efficient. Soon enough, there will more 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.
Cons of Fulfillment Order Centers
While it has a lot of benefits, fulfillment services have the potential of costing you a lot as well.
There’s a large amount of trust needed when you outsource to fulfillment centers. Because once you’ve done that, you have little to no control over your product.
It’s all in the hands of the warehouse handlers and the company employing them. Often, any damages onto your product won’t get acknowledged by the handlers.
Also, you should expect that you will lose any personal touch on your product.
A fulfillment warehouse gets a lot of shipments every day. Your product will not receive any special treatment because of this. It will receive the same treatment as all the other products they are holding.
Speaking of holding products, these services often have a large holding price. While the standard rates apply during the first month, you will get charged an increasing price for the next months your product remains in holding.
You have to be sure your customers buy your products if you want to avoid a hefty holding fee.
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.
Pros of Distribution Centers
Distribution centers give sellers more control over the treatment their products receive. Distribution centers also tend to treat the products as their own. They even go as far as make marketing campaigns for some of them. This lets you take your mind off of thinking of ways to sell your product.
They often have top-quality staff, too. So, even if you and their other clients have a large order to take care of, there will be little chance that mix-ups and mishandlings occur.
Also, distribution centers often improve the scalability of your business. They tend to have systems that allow accurate tracking of orders. This makes it so there will be no customers missing their orders.
Cons of Distribution Centers
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.
Know the Difference Between Fulfillment Center vs Distribution Center
Choosing between a fulfillment center vs distribution center should be easier than before. Use this guide to lead our business to success now!
Do you have any questions? If so, don’t hesitate to contact us here.