February 23, 2024

Two Characteristics of Direct Distribution That Differ From Fulfillment Centers

As a small business owner, you're likely considering what your company should do to expand its presence in the market. You may have a lot of factors to consider, including the costs you'll have to pass on to customers, how fast your competitors make their deliveries, and what kind of control you feel comfortable letting go of over customer relationships.

One way to make decisions about your business's distribution channel is to choose between direct and indirect channels. Direct distribution involves selling goods to consumers directly from the manufacturer, while indirect distribution moves products through various intermediaries for sale and delivery to consumers. This article discusses two characteristics of direct distribution that differ from fulfillment centers, so you can make the best decision for your business.

Warehouses and fulfillment centers have very different roles in the supply chain, though they're sometimes used interchangeably. Warehouses are spacious buildings where large amounts of inventory are stored for the long term. These facilities are typically owned by wholesalers or manufacturers and are used for stocking and supplying retail locations. Fulfillment centers are specialized facilities that perform order processing, packaging, and shipping on behalf of e-commerce retailers. These facilities offer scalability, speed, and enhanced customer experience, making them an important component of the supply chain for many e-commerce and direct-to-consumer businesses.

Distributors that use a direct-to-consumer model may operate both fulfillment and distribution centers in the same location, using the same space, equipment, and staff for both functions. This can be cost effective for a company that wants to keep its customers satisfied. This is especially beneficial for companies that rely on repeat sales, where quick and seamless exchanges and quality shipping practices can help turn a one-time buyer into a lifetime customer and brand advocate.

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