Introducing Amazon Warehousing & Distribution (AWD)

Amazon Warehousing & Distribution (AWD) is an innovative program introduced by Amazon to address critical supply chain challenges and assist sellers in growing and managing their businesses while reducing costs. This comprehensive third-party logistics (3PL) solution allows sellers to store and ship products within the Amazon fulfillment network, even if they are not sold through Amazon. AWD provides a range of benefits and features, streamlining operations and offering a cost-effective solution for businesses.

What is AWD and How Does It Work?

AWD is a pay-as-you-go service that offers sellers low-cost, long-term storage for their inventory. Sellers can send their inventory in bulk to Amazon Distribution Centers with a single click, streamlining the process and eliminating the need for complex logistics arrangements. Amazon warehouses store the stock until it is ready to be delivered to fulfillment centers or distributed through various channels such as wholesalers, manufacturers, brick-and-mortar stores, and directly to customers. AWD's high-level automation allows sellers to manage inventory online and meet customer demands efficiently and easily.

Benefits of AWD:

1. Streamlined Operations: AWD automates the warehousing and distribution process, enabling sellers to send inventory to Amazon Distribution Centers with ease.
2. Cost Savings: With AWD's pay-as-you-go fee structure, sellers only pay for the space they use, resulting in significantly reduced storage costs.
3. Avoid Stockouts: The auto-replenishment feature ensures that products remain searchable and purchasable, even if they go out of stock in Amazon fulfillment centers.
4. Unlimited Storage Space: AWD provides unlimited storage space, thanks to Amazon's overbuilt warehouses.
5. Lower Storage and Processing Fees: Compared to traditional 3PLs, AWD offers competitive pricing, reducing storage and processing fees.
6. Consolidated Inventory Management: The "Global Inventory Viewer" feature allows sellers to view both AWD and FBA inventory within their Seller Central Account, enabling efficient inventory management across sales channels.

Limitations of AWD:

1. Separation of Inventories: AWD and FBA inventories cannot be shipped together in the same truckload, requiring separate logistics arrangements.
2. Product Restrictions: Currently, AWD only supports Standard Size products, excluding Oversize and Extra-Large items. Additionally, mixed SKU boxes are not allowed.
3. Excluded Product Types: AWD does not support products with an expiration date, high hazmat goods levels 3, 5, and 6, and other hazardous materials prohibited by FBA. Certain categories, such as jewelry, shoes, watches, high-value products, Amazon devices, gift cards, and groceries, are also excluded.
4. Size and Weight Restrictions: Cartons must not exceed 25 inches long x 25 inches wide x 36 inches high and should not weigh more than 50 pounds. Individual SKUs within the carton should not exceed 18 inches long x 14 inches wide x 8 inches high or weigh more than 20 pounds.

AWD offers a transparent pricing model with three types of fees:

1. Storage Fees: A single, straightforward fee structure based on the physical volume of inventory, eliminating storage limits and overage fees. The storage fee is $0.42 per cubic foot from January to September and $0.80 per cubic foot during the holiday months of October to December.
2. Processing Fees: AWD charges a processing fee of $2.00 per case, simplifying the fee calculation compared to per-item charges.
3. Transportation Fees: A straightforward, volume-based calculation of $1.00 per cubic foot, making transportation costs predictable for sellers.

Conclusion: If you are an e-commerce business struggling with FBA replenishments, upstream supply chain management, and FBA storage limits, Amazon Warehousing & Distribution (AWD) is a solution worth considering. This cost-effective service is designed to alleviate supply chain issues, providing a huge relief for overwhelmed businesses. With streamlined operations, competitive pricing, and convenient features like auto-replenishment and consolidated inventory management, AWD offers a compelling alternative to traditional 3PL services.

The introduction of Amazon Warehousing & Distribution is good news for third-party sellers, as it provides them with greater control and flexibility over their inventory and distribution channels. However, it may pose challenges for other 3PLs, as AWD offers a comprehensive solution within the Amazon ecosystem. As the e-commerce landscape continues to evolve, AWD stands out as a valuable tool for sellers looking to optimize their supply chain and grow their businesses efficiently. Embracing AWD can lead to enhanced operational efficiency, reduced costs, and improved customer satisfaction, ultimately contributing to the success and growth of e-commerce businesses.