Distribution Center

What is a Distribution Center?

A distribution center is a strategically located hub in which finished goods are stored, packed, and then sent to another facility or to their final destination.

They typically store products for a short term and ship out products in bulk, making them ideal for online sellers who also have retail stores as it allows them to restock their stores faster and more efficiently.

What Do Distribution Centers Do?

There are three main functions that distribution centers serve for your business.

  • Speed up your Shipping Process
    Since most distribution centers are located near major metropolitan areas. This means your finished products can reach your customers or stores quickly rather than over the course of a few days.
  • Inventory management
    By using a distribution center, you can always replenish your store’s shelves quickly since more products can often arrive the same or next day. Distribution centers usually partner with 3PLs to make sure you never run out of products at the distribution center as well.
  • Help manage returns
    By using a distribution center you’ll be able to accept returns faster, have someone inspect the returned item, and then have them get it ready for another shipment. This means customers get their refunds faster and are more willing to spend with you again.

What is The Difference Between a Distribution Center and a Warehouse?

When you work with a warehouse you will need to rent space within the facility to store your products, most of the time on a long-term basis. Warehouses typically are located away from metropolitan areas since they take up a lot of space. When you ship from a warehouse you’re typically shipping in bulk to the next part of your business’s supply chain.

With a distribution center, your products are stored in a smaller quantity closer to metropolitan areas. You can still ship out in bulk but you’ll also have the ability to send out smaller shipments. You’ll also be able to have help packaging the products which you won’t find in a warehouse.

What is the Difference Between a Distribution Center and a Fulfillment Center?

The difference between a distribution center and a fulfillment center comes mostly in terms of timing and volume. With a fulfillment center, your items are stored only on a short-term basis. At these centers, people will pack and ship your products as quickly as possible to your individual customers.

A distribution center works similarly but has the ability to store goods for longer periods of time and ship out larger quantities per shipment. Shipments usually involve a large shipment to your retail store rather than individual customers.

Related Shipping Terms

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