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Understanding Fulfilment Houses and Fulfilment Centres: What’s the Difference?

Writer's picture: Compare3PLs.comCompare3PLs.com

When it comes to logistics and order processing, the terms "fulfilment house" and "fulfilment centre" often come up, sometimes interchangeably. However, they refer to different aspects of the supply chain. If you're considering outsourcing your fulfilment operations, understanding this distinction is crucial. Let’s break down what each term means, the roles they play in eCommerce, and why a fulfilment house could be the ideal solution for your business.

Fulfilment House

What Is a Fulfilment House?


A fulfilment house is a company that specialises in storing, processing, and distributing orders for businesses, particularly eCommerce brands. Acting as a third-party logistics (3PL) provider, it offers a comprehensive suite of services, including:


  • Order Processing: Receiving and managing customer orders.

  • Inventory Management: Storing products in their facilities and providing tools to track stock levels.

  • Picking and Packing: Accurately selecting items for each order and preparing them for shipment.

  • Shipping: Coordinating with carriers to deliver goods to customers.

  • Returns Management: Handling product returns, ensuring a smooth process for both the business and its customers.


Fulfilment houses relieve businesses of the logistical burden, allowing them to focus on growth, product development, and customer acquisition.


What Is a Fulfilment Centre?


A fulfilment centre refers specifically to the physical facility where the fulfilment process happens. These vast buildings are designed to store inventory, process orders, and manage the shipping of goods. Fulfilment centres utilise advanced technologies such as cloud-based software, automated picking systems, and real-time inventory tracking to ensure high efficiency and accuracy.


Key Difference Between Fulfilment Houses and Fulfilment Centres


The primary difference lies in scope:


  • A fulfilment centre is the operational hub – a physical location where orders are picked, packed, and dispatched.

  • A fulfilment house is the broader organisation that operates fulfilment centres and provides end-to-end logistics services to its clients.


In essence, fulfilment centres are components of fulfilment houses.


The Role of Fulfilment Houses in the Supply Chain


Fulfilment houses play a pivotal role in modern eCommerce. They bridge the gap between online retailers and their customers, ensuring orders are delivered accurately and promptly. Here’s how they contribute to the supply chain:


  1. Warehousing and Inventory Management Fulfilment houses store large quantities of inventory, allowing businesses to outsource their storage needs. With real-time inventory tracking, businesses can monitor stock levels, avoid overstocking or stockouts, and plan reordering efficiently.

  2. Order Processing and Fulfilment Once a customer places an order, the fulfilment house takes over. They pick the right items from their fulfilment centre, pack them securely, and prepare them for shipment.

  3. Shipping and Delivery Fulfilment houses partner with carriers to ensure fast and cost-effective delivery. Many offer next-day delivery services to major cities, helping businesses meet customer expectations.

  4. Returns Management Handling returns can be a logistical nightmare. Fulfilment houses streamline the process by managing returned products, inspecting them, and restocking or disposing of them as necessary.


Why Should Businesses Outsource to a Fulfilment House?


For many eCommerce businesses, managing fulfilment in-house can be time-consuming and costly. Outsourcing to a fulfilment house provides several benefits:


1. Reduced Operational Costs

Fulfilment houses leverage economies of scale to offer competitive pricing. By consolidating shipments and negotiating bulk rates with carriers, they can pass on these savings to their clients. This makes outsourcing more cost-effective than maintaining an in-house fulfilment operation, particularly for smaller businesses or those experiencing rapid growth.


2. Enhanced Speed and Efficiency

Fulfilment houses are experts in logistics. They operate streamlined processes and utilise advanced technologies to ensure orders are fulfilled quickly and accurately. With their help, businesses can achieve faster delivery times, improving customer satisfaction and loyalty.


3. Scalability

As your business grows, so do your logistical needs. Fulfilment houses provide the flexibility to scale up operations without significant upfront investment. Whether you’re handling a seasonal surge or expanding into new markets, a fulfilment house can adapt to your requirements.


4. Focus on Core Business Activities

By outsourcing fulfilment, businesses can concentrate on their core competencies, such as product development, marketing, and customer service. This allows them to allocate resources more effectively and drive growth.


5. Access to Advanced Technology

Modern fulfilment houses utilise cutting-edge software to provide real-time insights into inventory, order status, and shipping. This level of visibility helps businesses make informed decisions and maintain control over their operations.


Choosing the Right Fulfilment House


Selecting a fulfilment house is a crucial decision that can significantly impact your business. Here are some factors to consider:


1. Cost Structure

Fulfilment houses typically charge fees based on factors such as storage space, order volume, and shipping requirements. It’s essential to understand their pricing model and ensure it aligns with your budget and profit margins.


2. Range of Services

Different fulfilment houses offer varying levels of service. Some provide basic warehousing and shipping, while others offer additional services like customer support, returns management, and payment processing. Choose a provider that meets your specific needs.


3. Technology and Integration

A good fulfilment house should offer robust inventory management tools and seamless integration with your eCommerce platform. This ensures smooth operations and real-time visibility into your fulfilment process.


4. Location and Reach

The geographical location of fulfilment centres affects shipping times and costs. Fulfilment houses with a global network of centres can help you reach customers worldwide efficiently.


5. Compliance with Regulations

In the UK, businesses that store goods on behalf of overseas sellers must register with the Fulfilment House Due Diligence Scheme (FHDDS). Ensure your chosen fulfilment house complies with this and other relevant regulations.


Fulfilment House Due Diligence Scheme (FHDDS)


The FHDDS was introduced by HM Revenue and Customs (HMRC) to combat VAT fraud among overseas traders. If you store goods in the UK on behalf of non-UK businesses, you must ensure your fulfilment house is registered under this scheme. Failure to do so can result in penalties.


This highlights the importance of conducting due diligence when selecting a fulfilment house. Compare providers, verify their credentials, and ensure they operate within legal frameworks.


Final Thoughts: Is a Fulfilment House Right for Your Business?


Outsourcing to a fulfilment house can be a game-changer for eCommerce businesses. It offers cost savings, operational efficiency, and the ability to scale quickly. However, the decision to outsource should be based on your specific business needs and goals.


At Compare3PLs.com, we help businesses find the perfect 3PL provider free of charge. Whether you’re a start-up looking to streamline operations or an established brand aiming to expand globally, our platform allows you to compare fulfilment houses and select the best fit for your business.


By partnering with the right fulfilment house, you can focus on growing your brand while leaving the logistics to the experts.

Fulfilment House

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