What Is A Fulfillment Center? (And Why You Should Build One)

Jamie Jacobs
Jamie Jacobs joined APX Construction Group in June of 2020 specializing in interior design, marketing, event planning, and business development.
  • Imagine if a “fulfillment center” was a place we could walk into and immediately feel fulfilled in our lives. While these operations don’t quite work like that, they still provide fulfillment— for goods! And if your business will operate better after building a fulfillment center, then you’ll likely feel more fulfilled as well.

    But since fulfillment centers aren’t a place that makes our dreams come true (necessarily), what are they? And why would your business benefit from building one? Let’s take a closer look!

    What Are Fulfillment Centers & How Do They Work?

    close view of amazon products fulfillment center

    A fulfillment center is a type of warehouse space that stores products until they need to be shipped. Once an order is placed, the fulfillment center springs into action to make sure the product arrives at its destination safely and on time.

    Fulfillment centers are a vital part of eCommerce businesses because they help companies keep inventory in one place (so it’s not taking up valuable space in your office or home!), and they can ship items out quickly. This is especially important if you sell products that are time-sensitive or need to be shipped internationally.

    These centers also offer other fulfillment services like packaging and labeling, so you can be sure your products look their best before they’re sent to customers. And if you’re selling on a marketplace like Amazon, they can even handle returns for you!

    How Do They Differ From Warehouses?

    Fulfillment centers and warehouses may seem like the same thing, but they differ in a few key ways.

    • First, warehouses are typically much larger than fulfillment centers. They may store items for different companies, whereas fulfillment centers usually only store products for one business.
    • Second, warehouses generally don’t provide the same level of service as fulfillment centers. For example, they may not offer packaging or labeling services. The goal of a warehouse is to provide inventory storage, but a fulfillment center ships goods.
    • Warehouses are a better option for the long-term storage of goods, but the goal of fulfillment centers is to turn inventory over quickly. Inventory in a fulfillment center shouldn’t be there for more than a month, but products in a warehouse can remain in storage for many months.
    • And finally, warehouses tend to be located further away from population centers, which can make shipping times longer.

    6 Reasons You Should Build a Fulfillment Center for Your eCommerce Business

    ecommerce worker scans products inside fulfillment center

    If you’re currently running an online store out of your garage, utilizing a fulfillment center is probably top of mind. As your business grows, you’ll quickly outgrow your garage (or office or basement), and you’ll need a more reliable space to fulfill your orders. Take a look at these six advantages of building a fulfillment center:

    1) Free Up Space

    As we mentioned earlier, something many eCommerce business owners are familiar with is running an early business out of their homes. Once you start making sales, it’s not long until your living room is filled with product boxes and your kitchen table is being used as a packaging station.

    A fulfillment center can help to free up this valuable space in your home by storing inventory off-site. This way, you can use your dining room table for, well, dining!

    2) Reach More Customers

    If you’re only fulfilling orders from customers in your immediate area, a fulfillment center can help you to reach a larger audience. By shipping products from a central location, you can sell to customers anywhere in the country (or even the world!), improving customer satisfaction along the way.

    3) Boost Your Customer Service

    Fulfillment centers can help you to improve your customer service in a few different ways. First, they can help you to ship customer orders out more quickly. Second, they can provide packaging and labeling services so that your products look their best when they arrive at your customers’ doorsteps.

    And if you’re selling on Amazon, utilizing a fulfillment center can help you to take advantage of their Prime Shipping program. This way, your customers can get free two-day shipping.

    view inside of warehouse style fulfillment center

    4) Scale Your Business Easier

    If you’re using a fulfillment center, it’s easier to scale your business up or down as needed. For example, let’s say you have an influx of orders during the holiday season. You can easily increase your inventory at the fulfillment center to meet this demand. Then, when things slow down after the holidays, you can reduce your inventory levels accordingly.

    Inventory management is much harder to do if you’re storing all of your inventory in your home or office, as you either have to find a place to store the excess inventory or get rid of it entirely.

    5) Reduce Operating Costs

    Another advantage of using a fulfillment center is that it can help you to reduce your operating costs. When you’re storing inventory in your home, you have to pay for the electricity to keep it cool (if necessary) and the insurance to protect it from theft or damage.

    You also have to pay for packaging supplies, like boxes and bubble wrap. And if you’re doing the packaging and shipping yourself, you have to pay for your time as well.

    All of these fulfillment costs can add up quickly! But when you use a fulfillment center, many of these costs are included in the price of the service.

    6) Lower Shipping Costs

    Finally, using a fulfillment center can help you to lower your shipping costs. This is because most fulfillment centers often get bulk discounts from shipping companies like UPS and FedEx.

    And since they’re located centrally, it’s usually cheaper to ship orders from a fulfillment center than it is to ship them from your home (especially if you’re located in a rural area).

    close up of products stored in fulfillment center

    Grow Your Business With Help From APX

    When it comes time to build a fulfillment center, you need to partner with a general contractor that specializes in commercial construction. Fulfillment centers are very different than residential homes, so you need to be able to rely on the expertise of a commercial contractor.

    Here at APX Construction Group, we solely work in commercial construction. We have many years of experience building fulfillment centers, and we can’t wait to exceed your expectations and help your business grow. Reach out today to get a free consultation and learn more about how we can help!

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