What are the differences between fulfillment centers and warehouses? The two terms are often used interchangeably, but there are significant differences. While they both hold inventory for businesses which sell products, there are many more differences than similarities.
A warehousing solution stores stock for an extended period of time. It is a large space designed to house inventory in bulk. Shelves are stacked high and stocked with substantial quantities of products. They need to be managed with equipment like containers and forklifts. They aim to provide services for businesses that fulfil wholesale or B2B orders in bulk. Larger retailers will have their own warehouse space(s) for storing excess inventory. Others will rent space in a warehouse they share with other businesses. This is the option preferred by small to mid-sized retailers, as it is more cost-effective than buying their own space.
In contrast, a fulfillment center fulfills customer orders in a timely fashion, with strategic storage of inventory for various businesses in readiness to fulfill customer orders. When a shopper completes an online order, for example, the inventory is picked, then boxes packed and labeled for shipment. Fulfillment centers are at home with large B2B (business-to-business) orders and individual B2C (business-to-consumer) orders. The center manages its clients’ inventory and negotiates shipping rates on their behalf.