[.blue]What is warehousing?[.blue] Is it different to fulfilment centres?
April 28, 2022
Warehousing is the process of safely and securely storing goods in an organised way. It is a vital part of the supply chain, as it enables businesses to keep track of and manage their stock, ensuring that products are available to customers when needed.
Within the eCommerce world, products are typically stored in a warehouse before they are shipped to the end-customer when an order is placed online. Traditional retail often involves storing inventory in a warehouse before transporting it to a brick-and-mortar store to be sold.
Small or new businesses will typically carry out warehousing of their products in-house until they outgrow the space. At this stage, businesses have several options they can choose from, which may include renting or leasing storage space, investing in their own warehouse facilities, or outsourcing their logistics to a trusted 3PL (third-party logistics) fulfilment provider.
Although it might be appealing to have your own facility for storing products, it can be costly – not just in terms of the physical space required to house your goods, but also the elements that go into successfully managing a warehouse. These include staff, training, inventory management, equipment, health and safety, security, couriers, and other back-end processes.
For this reason, many eCommerce brands that reach a certain pace of growth often decide to outsource warehousing – along with all the other moving pieces that make up the fulfilment process – to an external company. The best 3PL providers can handle warehousing on behalf of businesses, but also continuously pick, pack, and ship orders to customers.
Warehouse vs fulfilment centre: What’s the difference?
The key difference between a warehouse and a fulfilment centre is that warehouses are designed for longer-term storage, whilst a fulfilment centre does not simply perform warehousing, but also acts as a distribution hub, turning inventory over very quickly. In fact, fulfilment centres provide a scalable solution for fast-growing eCommerce businesses that aren’t in the position, or do not wish to invest in their own warehousing facilities.
This is not to say that fulfilment centres are small – some of them are enormous and encompass multiple facilities located in various locations. However, warehouses tend to house large volumes of a small selection of products, whereas fulfilment centres often temporarily store small volumes of thousands of different products that are sent out to individual addresses.
Who uses warehousing?
Productivity and demand aren’t always equal. Most manufactured goods experience fluctuations in demand and sales. One of the best ways to cope is to make more products than are needed and to store these products until there is demand for them. Making products on demand would require much bigger, faster factories and a larger workforce, which ultimately wouldn’t be the most cost-effective option for many businesses.
Warehousing provides that buffer, enabling businesses to manufacture non-perishable products throughout the year, before selling them when they’re in demand. Warehouses are generally used by manufacturers and big retailers who can afford to have large amounts of stock in storage.
Who uses fulfilment centres?
Fulfilment centres are used by businesses that sell direct-to-consumer, as well as those that sell to small and medium-sized retailers, and independent stores. Many of these businesses leverage fulfilment centres based on their knowledge that there is a market for their goods in the near future. That can mean that the order has been placed, so the stock is moved from a factory or warehouse to the fulfilment centre for delivery to the end-customer’s doorstep. However, it can also mean that the vendor has reason to believe that there will soon be a demand.
For example, a business making Christmas decorations might move some stock from warehouse to fulfilment in October and keep up regular deliveries until mid-December. In contrast, a garden furniture retailer might be keeping an eye on long-range weather forecasts in addition to the calendar, before shifting their stock from storage. Other businesses may have more subtle indications about when demand will peak and trough, and will send their goods to fulfilment accordingly.
Making the choice
Whether you are looking for a warehouse or a fulfilment centre, there are a number of factors to consider before making your choice. These may include the volume of orders you are fulfilling and the type of products you sell, as well as the storage capabilities and sustainable credentials of the warehouse or fulfilment centre you are scoping. That’s why it is important to research your options thoroughly and choose a solution that meets your specific business needs.
To find out how Zendbox can support your business with a premium 3PL fulfilment service, contact us today.
Micah assists in developing and implementing innovative marketing campaigns that promote the products and services at Zendbox. She also produces articles, eBooks and other useful resources to help online retailers optimise their eCommerce operations and grow their business.