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Warehousing & Fulfillment

Distribution Center vs. Warehouse in Logistics

What's the difference between a distribution center vs. a warehouse? Read this blog to find out.
Distribution Center vs. Warehouse in Logistics
Alexandra Ortolani

By Alexandra Ortolani

 

March 30, 2022

Key Points:

  • A distribution center distributes goods to retail stores and directly to consumers
  • The warehouse helps to store inventory for sale or distribution
  • The distribution center is a facility primarily used for receiving, temporal storage, and distribution of goods based on the orders received

As a merchant involved in logistics and fulfillment, the terms distribution center and warehousing are likely not strange to you. These facilities have different functions in helping merchants see the smooth running of their business and meeting customers' expectations and delivery. However, they are often used interchangeably, even by professionals.

To help your business provide the best services to your customers via fulfillment, you need to understand the distinctions between distribution center vs. warehouse in logistics. Learning these distinctions will help you decide on the facility to use and when to use them.

This article will proffer the necessary explanation of both distribution centers and warehousing related to eCommerce and the differences between them.

Table of Contents

What's a Distribution Center?

The distribution center is a facility primarily used for receiving, temporal storage, and distribution of goods based on the orders received. As an essential component of the supply chain, distribution centers link suppliers of products and customers. They also oversee the order fulfillment of produced goods before shipment to wholesalers or retailers.

Distribution Center vs. Warehouse

Distribution centers have customers as their focus, and as a result, they tend to deal directly with retailers. So, for example, say you make an order online from a platform like Walmart, and you prefer to pick it up in-store, a distribution center near you will ensure you get your order.

For eCommerce businesses that deal with a high number of products and orders, distribution centers serve the purpose of helping them manage order processing. To enhance their effectiveness in achieving this, they deploy the latest technology like Warehouse Management Systems (WMS) and Transportation Management Systems (TMS).

What's a Warehouse Space?

A warehouse is defined as a building used explicitly for storing goods and is an integral part of supply chain management.

Warehouse vs. Distribution Center

The size of inventory dictates the size, shape, and function of the warehouse. In general, there are six different types of warehouses:

  • Private Warehouse: A warehouse is owned by a single organization and used to support the organization's supply chain.
  • Public Warehouse: It is a warehouse rented to retailers who need additional space for their inventory.
  • Automated Warehouse: This warehouse relies on technology, including robotics and sometimes artificial intelligence, to carry out its operations.
  • Climate-Controlled Warehouse: They are structured and designed to store temperature-adaptable goods.
  • On-Demand Warehouse: This type offers temporal storage and inventory management services to retailers on a short time basis.

The various warehouses listed are specifically designed to meet different needs, and the one you would need is mainly dependent on the kind of eCommerce business you run.

Related Post: Warehousing & Fulfillment

Differences & Similarities Between Warehouse vs. Distribution Center

A warehouse and a distribution center are similar in many ways, yet major differences set them apart for managing inventory. Many people use them interchangeably because they involve similar operations like receiving, storing, managing, picking, and shipping goods.

However, certain factors make them different. For example, the traditional warehouse was not structured to fulfill the supply chain demand, which necessitated the expansion of conventional warehouses into distribution centers.

Let's go over the differences between warehouses and distribution centers below:

  • The warehouse and distribution center is used to store products, but the distribution center includes services like order fulfillment, packaging, cross-docking, and product mixing.
  • Compared to the warehouse in terms of the storage of products, the distribution center tends to store products for a shorter period because the distribution center has a higher flow velocity than the warehouse.
  • The distribution center serves as a link between suppliers of a product and their customers to meet the customers' needs. The warehouse, on the other hand, focuses on efficient product storage.
  • The warehouse is not designed to serve external customers, whereas the distribution center is. Retail and warehouse orders are shipped from a distribution center.
  • Distribution centers carry out more complex operations than warehouses. For this reason, they rely heavily on high-end and up-to-date technology for operations like order processing, transport, and warehouse management.

In contemplating between a warehouse vs. distribution, the choice primarily boils down to the needs of your business. While the warehouse is still needed to handle some long-term storage, the distribution center can help you manage B2C customer operations.

Optimize Your Warehouse Management with Easyship

The warehouse and the distribution center are integral components of the eCommerce business and for shipping orders. Though they are often confused, they vary from each other in the modes of operations. On the one hand, the warehouse helps you store inventory for an extended period, while the distribution center offers additional services like order fulfillment.

Your business size and need determine your choice of the one to use among these two fulfillment services. Ultimately, you should focus on having your products delivered to your customers at the right time.

Easyship’s range of services and features have been designed to help you give your customers the best delivery experience and help optimize your warehouse management system. Some of Easyship’s features include the following:

  • Global Fulfillment: Easyship has warehouse partners and fulfillment centers on four continents so that you can reach your customers all across the world. Plus, Easyship helps scale up fulfillment capabilities without increasing overhead costs.
  • Easyship Shipping Dashboard: Manage all your orders and shipping activity from our shipping dashboard. Import orders, upload CSVs or sync directly from your eCommerce store.
  • Shipping Policy Generator: Our shipping policy generator helps merchants and crowdfunding campaigns generate their shipping policy by providing tracking and insurance options, plus other vital information for your shipping process.

Ready to ship? Sign up for a FREE Easyship account and get instant access to our global fulfillment network and warehouse management system tools and benefits

Distribution Center vs. Warehouse FAQ

What does shipping to a distribution center mean?

This is when a manufacturer's goods are taken to the distribution center, a product storage facility.

What is the importance of distribution centers?

Distribution centers are built and structured to ensure efficiency in the processing, storage, and distribution of goods. As a result, money is saved, and customer experience is optimized.


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