Fulfilment Centre vs. Distribution Centre: How Are They Different?

November 13, 2020

By Nitin Antony

There is way difference between a fulfilment centre and a distribution centre. These terms seem confusing for many entrepreneurs. One should know the difference in functioning of both to choose between them, that which best suits a business. In this blog, we will bring to you a better understanding of both terms that will help you to choose the best option for your business.

A fulfilment centre facilitates the smooth running of inventories for e-commerce platforms or wholesalers, from the centre to retailers or customers. Fulfilment centres or 3PL (4PL or 5PL centres offer more complex logistic operations) provide you real-time tracking of merchandise and are often used by dealers whose merchandise or inventories remain less static for a longer period. Fulfilment centres integrate e-commerce websites with their warehouse management system (WMS) and provide kitting & customisation according to customer needs. They provide reverse logistic services as well for ‘returns.’ Most centres have a dedicated customer service team with whom you can always get in touch. However, such centres are not generally intended to ship products in bulk quantity and cannot provide housing of static inventories for longer periods. Some centres provide the warehousing but will cost you more than a distribution centre.

Distribution centres act as a hub where goods and products are redistributed. If your business has to ship a large quantity of items from one location to the other or retail dealers, choosing a distribution centre will be a prudent choice. It can offer housing for merchandise in large quantities for a longer period. It acts as a waystation and is not intended to meet individual customer needs. Generally, distribution centres are located quite away from markets. The cost of storage for a longer period will be less than fulfilment centres. Distribution centres generally have limited services for direct interface with customers. You cannot expect all ‘order fulfilment’ from a distribution centre.

So choose wisely the service you need depending on the type of your business and the product that you sell.