Both distribution centers and fulfillment centers are vital in the fulfillment strategy. However, distribution centers appear at a different point in the supply chain when compared to fulfillment centers.
A significant difference between a distribution center and a fulfillment center is that distribution centers don’t ship directly to the customer. Instead, the distribution center is a transit point to change means of transportation. Thus, a distribution center is any location that allows product redistribution. For example, you can switch to shipping goods by ship to truck through distribution centers. In contrast, what is a fulfillment center doing in the supply chain?
Fulfillment centers hold the products before shipping to customers.
Most eCommerce retailers need a fulfillment center instead of a distribution center for quick turnaround and eliminating delays between supply chains. Multiple eCommerce businesses can use a single fulfillment center to cut operating costs and benefit from economies of scale. In addition, most large retailers use distribution centers as hubs for merchandise, such as grocery chains that rely on distribution centers to maintain proper inventories and replenish inventory.
How is fulfillment cost calculated?