While some people use the terms “warehouse” and “distribution center” interchangeably, there are some important differences between these two types of facilities. In today’s post, we discuss how these properties differ as well as the factors they have in common.
What Is a Warehouse?
As we saw in a previous post, a warehouse (or warehouse space) is a property whose main purpose is to house an inventory of goods and facilitate its distribution.
Although this definition may sound simple, warehousing is actually a complex task. For example, some of the activities typically carried out in a warehouse include:
- Storage of goods
- Inspection
- Documentation
- Order picking
- Delivery
The goods stored in a warehouse are typically shipped to wholesalers or manufacturers. Distribution centers, on the other hand, can also ship goods directly to consumers.
What Is a Distribution Center?
Also known as a fulfillment center, a distribution center is a specialized facility equipped to support all the functions of a traditional warehouse plus order processing, custom packaging, and in some cases, even light assembly.
In other words, the set of activities carried out in a distribution center tends to be more complex than in a typical warehouse. Some of the key processes of a distribution center include:
- Storing
- Shipping
- Restocking
- Return management
- Packing and kitting
Depending on its size and needs, a company can choose to build and run its own distribution centers or rely on third-party logistics (3PL) providers.
The Difference Between Warehouse and Distribution Center
To wrap it up, the basic difference between warehouses and distribution centers is their main function. Warehouses are designed for long-term storage while distribution centers (as their name suggests) are focused on facilitating the order fulfillment process.
A relevant consequence of these differing but similar goals is that distribution centers offer more services in addition to storage. Plus, products tend to sit for shorter periods of time in a distribution center compared to a traditional warehouse.
Another difference between these two types of structures is that warehouses typically ship goods to wholesalers, while distribution centers also ship them directly to individual consumers, which makes them the best alternative for businesses in the direct-to-consumer (D2C) market.
However, in addition to storing goods, warehouses and distribution centers share at least a fundamental similarity: In both cases, location is key.
Being located near a port or densely-populated area is an important consideration when choosing a warehouse or distribution center. That’s why both types of structures are thriving in the Inland Empire.
To learn more about warehouses and industrial properties, read our previous blogs, “2023 Commercial Real Estate Outlook” and “How Many Types of Industrial Buildings Are There?”
Disclaimer: This material is for general information and educational purposes only. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions.
SoCal CRE Team: The Experts in Commercial Real Estate in Southern California
At SoCal CRE Team, we specialize in industrial real estate solutions in the most sought-after Southern California markets such as Los Angeles, Orange County, Riverside, Anaheim, and more.
Interested in learning more? Contact us today by telephone (714) 456-0500 or email at gary@ashwillassociates.com.
