If you’re considering launching a fulfillment center in China, you might be confused about fulfillment centers and distribution centers. Both are essential for the smooth functioning of the supply chain process. Hence, in this blog post, I’ll clarify the difference between these two types of warehouses and explain why you might need one or the other.
Fulfillment center overview
A fulfillment center refers to a facility used for storing products, transloading, processing orders, and facilitating product distribution. It is primarily responsible for accepting, picking, packing, and shipping online orders, ensuring that orders are completed according to the client’s specifications, and for fast and accurate delivery.
Fulfillment centers can be established and operated by the companies themselves. It is suitable for large-scale enterprises with high sales volumes and diverse product ranges. It allows companies to establish multiple fulfillment centers worldwide to better meet the needs of different regions.
For example, Amazon has its own fulfillment centers. These centers are typically located closer to areas with high consumer density for faster delivery of goods. All goods sold on Amazon, whether by Amazon itself or third-party sellers, are consolidated in these warehouses. When a customer places an order, the order is sent to the nearest Amazon fulfillment center, where workers pick and pack the items before they are shipped to the designated area.
In addition, fulfillment services can also be outsourced to 3PL companies. This is suitable for small and medium-sized enterprises. Because establishing and operating their warehouse can be costly. Outsourcing can help reduce costs and provide flexibility in managing storage capacity and logistics. As a result, fulfillment centers have acquired several alternative names, including “3rd-party logistics warehouse,” “order fulfillment center,” and “fulfillment warehouse.”
Explore distribution centers
Distribution centers are logistics hubs used for storing and distributing products. They can also serve as transit points where goods are transferred from one mode of transportation to another. The primary objective of distribution centers is inventory management, storage, and product allocation to ensure timely availability in the market. This helps maintain a stable supply chain.
Take Walmart as an example. It has numerous distribution centers worldwide. They are responsible for receiving products from suppliers and distributing them to Walmart stores and fulfillment centers to meet consumer demands.
Similar to fulfillment centers, distribution centers can be established by companies themselves or with the help of 3PL providers, such as Locad. It depends on the budget and strategies of the business.
Distribution centers vs warehouses
The functions of a distribution center are similar to that of a warehouse, but there are also many differences between them. A distribution center typically involves broader supply chain operations, with the main objective of distributing products to retailers, wholesalers, or end customers to meet market demands. It has high product fluidity and shorter turnover times.
On the other hand, the main objective of a warehouse is to provide storage and preservation of products to meet supply chain needs. Their product fluidity is lower. Besides handling regular products, they are also suitable for storing products with longer cycles.
Additionally, distribution centers are usually large logistics facilities that involve multiple sales channels and product ranges. They can span multiple regions or countries and support large-scale product distribution. Warehouses can be smaller in scale, focusing on specific product categories or geographical areas.
It is important to note that the usage of these two terms may vary in different industries, companies, and regions.
Unlock the differences between distribution and fulfillment center
Different focus
In comprehensive logistics facilities, the functions and responsibilities of distribution centers and fulfillment centers may overlap, such as inventory management and logistics operations.
Fulfillment centers focus on order fulfillment and fast delivery, primarily targeting end consumers. And distribution centers emphasize inventory management and optimizing distribution channels, serving wholesalers, retailers, online platforms, and end customers.
When serving end customers, distribution centers serve both distribution and fulfillment. Therefore, compared to fulfillment centers, distribution centers have a broader scope, covering the entire supply chain.
Different business types
Fulfillment centers provide comprehensive services. They can handle packaging, shipping, and tracking, as well as provide inventory management and returns processing services. Therefore, it is well-suited for e-commerce sellers or companies engaged in direct sales/remote sales. It helps ensure accurate fulfillment and delivery of orders to customers.
A distribution center, on the other hand, is designed to store and distribute products in bulk to various channels. Therefore, it is suitable for large manufacturers, wholesalers, and retailers.
As a leading sourcing company in China, Jingsourcing has helped 4000+ clients source and customize products from China. Most of them are Amazon sellers and use our fulfillment service. If you choose us for your sourcing in China, we can offer you free storage for 1-2 months. And we can also send them to the Amazon FBA warehouse in batches at different times when you need replenishment. Or we can directly send them to your customers.
Meanwhile, we provide a more cost-effective option at only $5 per hour for Amazon FBA labeling, which includes FNSKU labels, shipping labels, warning stickers, etc. In addition, We can also repackage the goods, and conduct product inspections according to your requirements.
