Often times when speaking with a client about their real estate needs, they describe their operations as either a Fulfillment center or Distribution center. The other day I was meeting with a client that is starting up a new venture in the E-commerce world. He stated they needed a Distribution center. After 20 minuets hearing about their what types of product they will be selling, where their customer base is primary located, what their delivery goals are, etc, I stated "Ohh, so you need a Fulfillment Center not a DC." He said, yes, a Fulfillment Center.....the baffled look on his face was telling me he did not know the difference. So I went on to explain to him what the difference was:
A Fulfillment Centers (FC) usually relies on a third party or 3PL or internally to handle the storage, packaging and shipping of the companies product to be sent directly to the consumer. Typically a FC is a warehouse that stores all of the products from a web site that are to be individually picked and packaged to be sent out to the consumer. For Example, A company such as Newegg.com will have thousands of SKU's in their FC. Jack places an order for a Keyboard and a mouse. The workers will find those locations in the FC, box them and ship them to Jack. The order has been Fulfilled. Fulfillment Centers are key parts to a companies supply chain so the consumer receives their goods in the quickest and most efficient way possible.
A Distribution Center (DC) is a facility that receives their products, stores the product and then the products are shipped based on their orders. A Distribution Center will ship goods directly to a retailer, wholesaler or directly to the consumer. Usually the products are shipped in bulk or on a pallets.
Final Thoughts - The main role of a DC is to store products in bulk and shipped in Bulk to a retailer, whereas the main role of an FC is to pick, pack and ship the products directly to the consumer. While bother terms are interchangeable, the needs for these 2 different types of facilities are much different. Most of the Fulfillment centers I have seen and being a part of the site selection usually are outfitted with a tremendous amount of internal infrastructure including pallet racking, pick and pack sortation systems, multi-level mezzanines and robotic picking areas. In a Distribution facility, they mainly consist of pallet racking and floor stacking capabilities.
Here at CBRE we have looked at the E-commerce Data and it states that for ever $1 Billion in sales, a company would require 1.25 million square feet of warehouse space to meet their consumer demands. Strategically locating these facilities to ensure your consumer has a positive purchasing experience is more crucial today than ever. 10 years ago when someone ordered a product on line, a 5-7 day delivery time was acceptable. Today that company would be struggling because the larger E-Commerce companies are 1 to same day delivery time. Those companies that take care of their consumers, will win. And that means having their products close to their consumers.
FAQs
Fulfillment Centers are key parts to a companies supply chain so the consumer receives their goods in the quickest and most efficient way possible. A Distribution Center (DC) is a facility that receives their products, stores the product and then the products are shipped based on their orders.
What is the difference between fulfillment and distribution centers? ›
While a fulfillment center processes and ships orders directly to consumers, a distribution center is a waystation within the wholesale portion of the supply chain where manufacturers deliver products to be distributed to retail outlets. For example, many grocery chains use distribution centers to stock their stores.
What is the difference between a distribution center and a fulfillment center at Walmart? ›
The key difference between a fulfillment center and a distribution center is the size and quantity of orders being processed. While distribution centers may move millions of units at a time, they're processing relatively few orders and shipping them to just a handful of locations (primarily businesses).
What is the difference between a distribution center and a fulfillment center quizlet? ›
Fulfillment centers ship directly to customers and distribution centers ship to stores.
What is the difference between a distributor and a distribution center? ›
The main difference between a distributor and a distribution center is that a distributor is a type of business, while a distribution center is a business facility. Distributors typically operate their primary business activities out of a distribution center, but other types of businesses also use distribution centers.
Is Amazon a distribution center or fulfillment center? ›
An Amazon fulfillment center is, quite simply, a massive warehouse where Amazon receives products from their sellers. For FBA sellers, Amazon will store, pick, pack, and ship these products to customers around the world.
What are the basic differences between a warehouse and a distribution center? ›
Distribution centers store products as well as perform product mixing, cross-docking, order fulfillment, and packaging. Warehouses store products for longer periods of time. On the other hand, distribution centers have a faster flow rate through storage to the store or customer.
What is the biggest difference between direct distribution and fulfillment centers? ›
In simple terms, DCs act as large centralised hubs for storing goods and distributing them in bulk quantities to a variety of outlets or other DCs. FCs , on the other hand, are designed to handle individual orders directly for end consumers and execute fast, efficient order processing and shipping.
What does fulfillment mean at Walmart? ›
Once your products have reached a Walmart fulfillment center, their team will store, pick, pack, and ship customer orders for you. They'll also handle all customer service issues on your behalf (including returns), for the ultimate in fulfillment ease and convenience.
Is fulfillment the same as distribution? ›
Fulfillment centers process and sell orders for consumers. Distribution centers spread goods out across a number of recipient warehouses. Fulfillment centers are ideal for eCommerce businesses because their warehouse locations are closer to their customers.
Processing and Distribution Centers — P&DCs process and dispatch mail from Post Offices and collection boxes within a region. Network Distribution Centers — NDCs consolidate mail processing, increase operational efficiency, decrease costs and maintain service while expanding the surface transportation reach.
What is the difference between warehouse fulfillment and store fulfillment? ›
A fulfilment center stores items for short periods before the product is shipped out, unlike warehouses where products are stored for a longer duration.
What is the main difference between a distribution center DC and a fulfillment center FC )? ›
Most distribution centers (DCs) offer fewer services than fulfillment centers. They are generally not intended to interface directly with the consumer, and are oriented more toward business to business (B2B) transactions. An advantage to a DC is that it is typically lower cost than a fulfillment center (FC).
Is a fulfillment center temporary or long-term? ›
Warehouse spaces are used as a long-term storage solution, while fulfillment centers offer temporary storage for products that will soon go out for delivery to customers.
What is regional fulfillment? ›
A regional fulfillment center is an industry term for a fulfillment center that typically serves a large geographic region. It supports logistics processes needed to get a product from the seller to the customer.
What are two ways that fulfillment centers differ from direct distribution centers? ›
Expert-Verified Answer. The two characteristics of fulfillment centers which differ from direct distribution are: Warehousing is a primary role of fulfillment centers. Inventory is created on-demand rather than stored.
