Food Business Ideas Series Co Packers and Fulfillment centers whats the difference

Posted by Damian Robert on

So what, 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 and just for a lot of, not a new, a new, uh, business owners, excuse me, to do a food business entrepreneurs to understand the difference between a fulfillment center in a Co-packer. So a 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. 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 would have a company manufacturer your product for you.

 

They put your label on it and then they would ship it to the appropriate 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 even got to 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 at 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 pack and 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 them, 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 then you hire that company, I co-packer, we'll private label 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 you. I'll have the boxes, I'll have everything you need to bring the product together. And then I need about 50,000 units 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. I'm down in Louisiana May, let's say. So you could have them basically produce a product and ship it there.

From that point then you could be running your e-commerce business. If you have a website, if you're selling stuff online, if you decide not to do Amazon Fba and you want to have another fulfillment service, do what they do 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 qualms 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 have actually, I'm on, I'm on a 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 to have someone produce a product for you. Don't get me wrong. It's also a great idea to have a fulfillment center shipped the product for you. That's also another great thing. But keep in mind that you own the business. It is you. So you need to be running it. It's not 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 video. I'm going to close up for the day. Take care.

 

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