Food Business Co Packers for your food business and how they work

Posted by Damian Roberti on

So I was going to get into this really quick question. It's about closing time. We're wrapping it up here. I'm actually doing this in our office, in our shipping department, which is all those wonderful boxes back there. Um, so I wanted to answer the question, um, and just for a lot of, not a new, a new, uh, business owners, excuse me, a new food business entrepreneurs to understand the difference between a fulfillment center and a co-packer.




So, uh, really quick. So what a co-packer or a private label company does is that they'll take your product and they'll kind of do the manufacturing end of it. Uh, they'll bring together all of the products, as far as the ingredients, the box, the label, whatever it may be. Um, and they bring together that final product for you. So the way it works is that you have a company manufacturer your product for you.

They put your label on it, and then they would ship it to the appropriate of address or wherever it may be. If you're doing Amazon FBA, you can have them ship the product out to FBA for you. Or if you've got retail stores that you're supplying that co-packer or private label, or can actually ship it to those different areas. So the difference between that and having a fulfillment center, a fulfillment center is really just a warehouse that would fulfill the orders for a product as it comes in. So if you have an online store, um, what they would do is you could have a co-packer ship, your product to a fulfillment center, they would warehouse the product. And then as you're selling it online on your computer, or if you've even got retail stores that they could fulfill for you, they're going to be the ones that didn't take the product off of their warehouse shelves, and then ship that to the ship at accordingly to wherever you want them to go.

If it could be a retail store, maybe another distribution center, um, maybe even just directly to a customer, if you're selling individual units, that's how Amazon FBA works. And that's very similar to other fulfillment centers. The process is relatively the same. It's really utilizing a warehouse to stockpile your products. And then when it's right, the right time comes when an order is placed, they fulfill it, they pull it off the shelf and ship it appropriately. So a co-packer manufacturer would be the producer, the manufacturing end of it, the fulfillment center is different from a co-packer because that is where most of the product would be stored. And then from there it would be shipped appropriately. So now you can use fulfillment centers for much larger orders. Obviously let's say, if you are working out of, um, how can let's see, how can I give a great example of this?

So if you were in a situation where you're renting a commercial kitchen and you have a handful of ideas for food products, you can't necessarily produce a massive amount of product from that small commercial kitchen. Okay. But what you can do is a new hire that company. I co-packer will private label the company that has the equipment you would need for your specific food product. And then you would say, look, I'm going to have all of the ingredients shipped to your house. The boxes all have everything you need to bring the product together. And then I need about 50,000 units I made over the next course of, let's say a few weeks or a couple of months, depending on how fast they can manufacture the product for you. And then from there, please ship it to the fulfillment center, um, yeah. Down in Louisiana, but let's say so you can have them basically produce a product and ship it there.

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From that point, then you could be running your eCommerce business. If you have a website, if you're selling stuff online. Yeah. If you decide not to do Amazon FBA and you want to have another fulfillment service, do what they do right at Amazon, um, you would have to kind of weigh out the pricing and see who would be better. Um, Amazon has a wonderful, I personally have had a great experience with FBA through Amazon. I've never had really any quorums or little problems or issues, uh, with every business. Of course, you just need to maintain it. It's not something where you can press the auto button and then step back and not maintain it or manage it and go over it every day. Um, I actually am on I'm on our, uh, computer every single day. Uh, we've got six stores online. We also do utilize Amazon FBA.

So there's a lot going on and I can't just necessarily let that go into autopilot. Um, so definitely keep that in mind. It is great. It is a great idea, DIA, to have someone produce a product for you, don't get me wrong. It's also a great idea to have a fulfillment center ship the products for you. That's also another great thing, but keep in mind, you own the business. It is you, so you need to be running it. That's something to go on autopilot. Okay. So I hope that explanation gives you the distinction between the two, um, that they are totally separate types of entities and they actually perform different tasks. So keep that in mind and, uh, I'll see you guys on the next one. I'm going to close up for the day. Take care.


Read Saurabh Leekha's answer to I am going to start a new fast food business, but I am new in this line. How do I manage everything? on Quora Listen to "Marketing Food Online Food Entrepreneur" on Spreaker.