As your company grows, so do your needs – one area that is likely heavily affected by your growth is storing and shipping products. As your order number increases, the time you can, or want, to spend packing boxes decreases. There are clear benefits to outsourcing parts of your fulfillment. The question is, how much outsourcing makes sense for your business?
The terms warehouse, fulfillment center, and 3PL are often used interchangeably in eCommerce. Although they serve a similar purpose of providing storage and keeping inventory of goods contrary to stereotypes, they are not the same.
This article explains the differences between warehouses and fulfillment centers to help you understand which one will best fit your eCommerce business needs.
Warehouses are large facilities that house inventory – they contain shelves, storage pins, pallets, or large storage containers—these containers house products from their customers, each identified by a unique SKU. Public or private warehouses could serve as your fulfillment solution depending on the storage space you need and what's currently available in your area.
Public Warehouses are buildings that provide storage space to multiple companies through long to short-term contracts. Brands pay rent for the area where your products are stored. Depending on the warehouse and terms of the agreement, you may still need to staff the orders' packing and shipping.
Private warehouses are owned and operated by the company that stores their product there. If you are a larger business that needs a dedicated warehouse, your decision is between buying/building your space or renting an existing warehouse. Smaller eCommerce companies can reach out to private warehouses as many brands may have leased/built a warehouse with extra space planning to grow into it over time. These more prominent brands will often lease out a portion of the warehouse to a smaller brand. If you are looking for a short-term solution, this could be the best route for a win-win solution.
In most cases, warehouses expect your team to staff the packing and shipping of your products. The warehouse provides an alternative place to store your excess inventory rather than your home or office space. If you are looking for a solution that allows you to keep your goods and have someone else oversee the shipments, you should consider a Fulfillment Center.
Fulfillment centers do more than store your products. Most are responsible for the receiving, storage, picking and packing, shipping, and sometimes return processing for a business. Similar to warehouses, there are several types of fulfillment centers. Depending on the size of your eCommerce business and the number of orders you are shipping, you can determine which fulfillment type makes the most sense for you.
First are 3PLs - third-party logistics - an external fulfillment center. 3PLs provide both storage and logistic operations. Most 3PLs deal with basic logistic processes. Fulfillment centers, on the other hand, provide more comprehensive services. Many third-party logistic centers will specialize in a specific product category or size. By specializing, 3PLs can increase productivity.
As logistics become more complicated, solutions have continued to evolve, becoming increasingly sophisticated. Another great partner you may want to use is a 4PL or 5PL fulfillment center that allows eCommerce business owners to pick precisely what portion of their shipping and logistics needs they want to offload to the third party.
For businesses that don't want to outsource the logistics of their business, there is Self Fulfillment. Self-Fulfillment is when a brand fulfills its orders in a dedicated space. Many companies that self-fulfill have their warehouse at their headquarters. This proximity allows them to oversee the picking and packing of their products closely.
A fulfillment center handles the entire order fulfillment process, ranging from order picking to processing, packing, and shipping. Fulfillment centers often define themselves as a part of a business's supply chain.
BUKU works with brands using a variety of fulfillment solutions. Our team helps brands navigate fully or partially offloading the supply chain and ensure your shopping cart displays accurate rates, shipping timeframes, and international taxes and duties.
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