Fulfillment center and warehouse are two terms that are used interchangeably, but technically, they have very different connotations. Both are big physical locations that store inventory for businesses, but the use cases and services supplied are frequently quite different. Let’s take a closer look at each choice so you can figure out what the ideal eCommerce shipping solution is for your company.

What is a fulfillment center?

A fulfillment center is a physical location where a fulfillment service provider or a third-party logistics fulfill customers’ orders placed through eCommerce stores. A fulfillment center is standard practice for big operations that may use fulfillment centers across countries to cut down costs as well as speed up delivery time and for many eCommerce stores that don’t have their warehouses.

It is usually bigger in scale and size than a typical warehouse that companies might rent or own. Its main function is to manage inventory, fulfill customers’ orders and place the orders to customers on time to relieve eCommerce store owners of managing this cumbersome fulfillment process.

What is a warehouse?

A warehouse is usually interchanged with the term “fulfillment center” when discussing supply chain and logistics management. In reality thought, fulfillment centers can also act as warehouses, but warehouses do not double as fulfillment centers. A warehouse often refers to a planned space where goods and materials are stored in bulk for long-term inventory and managed outbound and inbound products. 

Multiple service providers may perform distinct warehouse-related jobs, depending on a company’s needs or preferences. There are different types of warehouses for different businesses, but every warehouse helps manufacturers, distributors, and retailers monitor inventory and provides secure storage for products.

Fulfillment Center vs. Warehouse: The Differences

• Facility Operation

The main role of a warehouse is to provide nothing more than storage, whereas a fulfillment center is a much more complex operation and in constant motion that is intended to improve the customer experience by streamlining the fulfillment process and ensuring that items are delivered on time. Fulfillment refers to the process of preparing and placing the products you sell online in the customer’s hands. The process is usually carried out by 3PLs or fulfillment service providers, mainly involving warehousing, processing, packing, and shipping the orders, and managing any exchanges and returns. 

• Long term and short term storage

A warehouse is used as a long-term storage solution that is a part of a fulfillment center used to store a merchant’s inventory in its designated locations. But, a fulfillment center often offers temporary storage facilities whose primary purpose is to turn inventory over as quickly as possible. Ideally, inventory should not sit in a fulfillment center for long periods of time. A higher warehousing fee will be charged if the inventory is stocked in a fulfillment center for long-term storage. 

• Frequency of picking by shipping 

A fulfillment company can work with many different shipping companies. Because a fulfillment center offers direct-to-consumer order fulfillment as soon as they are placed, shipping carriers must pick up goods at least once a day to guarantee the orders are delivered on time to customers as estimated. Depending on the particular service a fulfillment company offers, shipping carriers may be required to pick up the orders for any guaranteed shipping service chosen by consumers at specific times each day.

In contrast, it is more cost-effective to send out all the orders simultaneously and have boxes packed together on a pallet rather than processing individual packages; thus, a warehouse typically will often require scheduled and have less frequent pickups.