Fulfillment Center vs. Distribution Center: What's the Deal?
by Lori Boyer
Fulfillment centers vs. distribution centers—it's easy to mix them up! Both play important roles in logistics, but their purposes are quite different. In this guide, we’ll clear up the confusion and walk you through everything you need to know, so you can decide which one fits your business needs best.
What’s a fulfillment center?
Picture a fulfillment center as a busy little hive where products get stored, picked, packed, and shipped right to customers’ doors. It’s basically the heartbeat of ecommerce, handling everything from the moment products arrive to the second they’re sent off for delivery. These centers serve as the backbone of ecommerce operations, handling every step in the order fulfillment process, from receiving goods to ensuring they reach the customer as quickly as possible.
Fun fact: by 2027, fulfillment centers are expected to nearly double, making up 20% of all warehouses. That’s some serious growth! Why? Because ecommerce is booming, and direct-to-consumer shipping is taking over. This growth highlights the ongoing shift in logistics to meet increasing direct-to-consumer demands driven by the boom in ecommerce.
At the core, a fulfillment center’s job is simple: grab items from inventory, pack them up securely, and ship them out to customers. They are key players in making sure online orders arrive fast and hassle-free. Without these hubs, the ecommerce experience wouldn’t be nearly as smooth! Ecommerce fulfillment plays a vital role in connecting inventory to customers, ensuring a seamless experience from start to finish.
Wondering how to choose the right fulfillment center for your business? Click here.
What’s a distribution center?
Now, a distribution center is more of a behind-the-scenes player. While similar to fulfillment centers, the primary goal of a distribution center is not direct-to-consumer shipping but rather ensuring products reach retail stores, warehouses, or other distribution hubs.
Distribution centers manage big orders—think pallets instead of small packages. They keep products moving from the manufacturer to the retail shelves, ensuring there’s always something for you to grab, whether in-store or online.
These facilities are key players in the overall logistics process, bridging the gap between manufacturers and the end points where goods are sold to consumers.
But wait, what about warehouses?
There is sometimes confusion about where warehouses come into the equation. Good question! A warehouse mostly stores stuff for long periods of time. Meanwhile, fulfillment and distribution centers are all about movement and getting products to customers or retailers quickly.
For a deeper dive, check out our guide: What Is Warehouse Management and How To Do It Right.
Fulfillment center vs. distribution center: what sets them apart?
The main job. Fulfillment centers focus on direct-to-consumer orders, ensuring products are shipped fast and efficiently. Distribution centers are more about B2B, shipping large quantities to retailers or other distribution points. On the other hand, distribution centers serve a business-to-business (B2B) model, shipping products to retailers, wholesalers, or other warehouses.
Order sizes. Fulfillment centers handle small, frequent orders—often just a couple of items at a time. Distribution centers? They’re moving big batches and pallets.
Speed. Fulfillment centers are all about speed to keep up with customer expectations (thanks, Amazon!). Distribution centers prioritize getting products to their next stop, but the timeline isn’t as rushed.
Tech and automation. Fulfillment centers love their gadgets—robots, automation, real-time tracking, you name it. As labor costs rise, automation is becoming even more important. Distribution centers use tech too, but it’s more about managing inventory and handling bulk orders. With rising labor costs, there is an increasing trend of fulfillment centers adopting automation technologies. Many fulfillment centers are investing in automation, such as robotics, to enhance efficiency, which is becoming essential as labor costs continue to climb. Distribution centers also use technology, but they tend to emphasize inventory management and bulk processing rather than individual order fulfillment.
Choosing between a fulfillment center vs. distribution center
So, which is right for you? It really depends on your business. Here’s what to consider:
- Business needs assessment. Do you sell directly to consumers, or do you primarily ship to retailers? A fulfillment center (or logistics hub) is ideal for direct-to-consumer businesses, while a distribution center fits companies distributing in bulk.
- Shipping needs. Consider how fast your customers expect delivery. If rapid delivery times are crucial, fulfillment centers may be a better option.
- Customer needs. Your customer expectations also play a role—direct shipping to end customers requires a fulfillment approach, whereas managing retailer supply chains needs a distribution setup.
- Cost consideration. Fulfillment centers often have higher costs per order due to labor and technology needs, while distribution centers, dealing in bulk, may present cost savings in storage and handling.
- Scalability and flexibility. Think about how easily the center can adapt to changing business volumes. Fulfillment centers tend to be more flexible for scaling up during peak seasons due to their focus on D2C services.
Fulfillment and distribution the easy way
Whether you use a fulfillment center or a distribution center, EasyPost is part of your team. We offer solutions to streamline your shipping, cut down costs, and make sure your customers are happy with speedy deliveries. By providing flexible services, EasyPost helps your business streamline operations, save on costs, and deliver excellent customer experiences.
Ready to simplify your logistics? Give EasyPost a try for free!