Amazon Warehousing and Distribution (AWD): Should You Use It?

If you are an Amazon seller looking to streamline your supply chain and reduce costs, Amazon Warehousing and Distribution (AWD) may be the solution for you. AWD is a third-party logistics (3PL) solution that provides low-cost upstream inventory storage and distribution for your business. With AWD, you can store and ship your products within the Amazon fulfillment network even if they’re not sold through Amazon.

The AWD ecosystem is designed to help you grow and manage your business while addressing critical supply chain challenges. AWD provides long-term storage for your upstream inventory in Amazon’s Distribution Centers and enables automatic movements of products to Amazon’s Fulfillment Centers. This ensures a seamless flow of inventory into Prime-ready fulfillment centers. Additionally, AWD integrates with Fulfillment by Amazon (FBA) to provide a comprehensive fulfillment solution for your business.

Key Takeaways

  • Amazon Warehousing and Distribution (AWD) is a third-party logistics (3PL) solution that provides low-cost upstream inventory storage and distribution for your business.
  • AWD provides long-term storage for your upstream inventory in Amazon’s Distribution Centers and enables automatic movements of products to Amazon’s Fulfillment Centers.
  • AWD integrates with Fulfillment by Amazon (FBA) to provide a comprehensive fulfillment solution for your business.

Overview of Amazon Warehousing & Distribution

If you’re a seller on Amazon, you’ve likely heard of Amazon Warehousing & Distribution (AWD). AWD is a third-party logistics (3PL) solution offered by Amazon that provides long-term storage for the upstream inventory in Amazon’s Distribution Centers and enables automatic movements of products to Amazon’s Fulfillment Centers. In this section, we’ll explore the evolution of AWD, its benefits for sellers, and how it compares to traditional warehousing.

Evolution of AWD

AWD was launched by Amazon in 2022 as a strategic initiative designed to provide sellers with a cost-effective, long-term bulk inventory storage solution. Amazon Warehousing & Distribution provides low-cost, long-term storage that gives sellers the option to store their inventory in Amazon distribution centers and seamlessly replenish to fulfillment centers. AWD is part of the Amazon Fulfillment Network, which includes more than 175 fulfillment centers and 25 sortation centers across North America.

Benefits for Sellers

One of the main benefits of AWD is its cost-effectiveness. With AWD, sellers can reduce their storage costs by up to 75% compared to traditional warehousing solutions. AWD also offers automatic replenishment, which ensures a seamless flow of inventory into Prime-ready fulfillment centers. This feature saves sellers time and money by reducing the need for manual inventory management.

Another benefit of AWD is its scalability. AWD allows sellers to store as much or as little inventory as they need, and they can easily scale up or down as their business grows or changes. This flexibility is especially important for seasonal sellers or those who experience fluctuations in demand.

Comparison with Traditional Warehousing

Compared to traditional warehousing solutions, AWD offers several advantages. Traditional warehousing solutions typically require sellers to sign long-term contracts and pay high fees for storage and inventory management. In contrast, AWD offers low-cost, flexible storage options and automatic inventory management.

AWD also offers faster delivery times. With AWD, sellers can take advantage of Amazon’s extensive fulfillment network, which includes more than 175 fulfillment centers and 25 sortation centers across North America. This network allows sellers to reach customers faster and more efficiently than traditional warehousing solutions.

In conclusion, Amazon Warehousing & Distribution is a cost-effective, flexible, and scalable solution for sellers who need long-term storage and automatic inventory management. With its extensive fulfillment network and automatic replenishment feature, AWD offers significant advantages over traditional warehousing solutions.

The AWD Ecosystem

If you are a seller looking for a cost-effective and flexible logistics solution, Amazon Warehousing and Distribution (AWD) may be the answer. AWD is a third-party logistics (3PL) solution that provides long-term storage for your inventory in Amazon’s Distribution Centers and enables automatic movements of products to Amazon’s Fulfillment Centers.

Fulfillment Centers

Amazon’s Fulfillment Centers are the backbone of its fulfillment network. They are strategically located across the globe to ensure fast and reliable delivery of products to customers. AWD allows you to store your inventory in Amazon’s Fulfillment Centers, making it easier for you to fulfill orders and meet customer demands.

Distribution Centers

Amazon’s Distribution Centers are strategically located across the globe to ensure efficient and timely delivery of products to customers. AWD allows you to store your inventory in Amazon’s Distribution Centers, providing you with a cost-effective and flexible logistics solution.

Upstream Facilities

Upstream facilities are the facilities where your inventory is stored before it is sent to Amazon’s Distribution Centers. AWD provides you with flexible and low-cost upstream bulk inventory storage and distribution for your business. With AWD, you can store your inventory in upstream facilities and seamlessly replenish to Amazon’s Fulfillment Centers.

Overall, AWD provides you with a comprehensive logistics solution that helps you manage your supply chain and global inventory. It allows you to store your inventory in Amazon’s world-class facilities and leverage its fulfillment network to deliver products to customers efficiently and reliably.

Enrollment and Setup

Getting Started with AWD

Enrolling in Amazon Warehousing and Distribution (AWD) is a straightforward process that requires a few simple steps. First, log in to your Seller Central account and navigate to the Inventory tab. From there, select the Amazon Warehousing and Distribution option to start the enrollment process.

Once you have enrolled in AWD, you can begin to create shipments of your inventory to Amazon’s distribution centers. These shipments will be stored in AWD and can be replenished to Amazon’s fulfillment centers as needed.

Requirements for Sellers

To be eligible for AWD, you must meet certain requirements as a seller. These requirements include having an active Professional Selling account, meeting Amazon’s performance criteria, and having inventory that is eligible for storage in Amazon’s distribution centers.

Additionally, sellers must comply with Amazon’s policies and procedures, including those related to product listing, pricing, and customer service. Failure to comply with these policies may result in suspension or termination of your AWD enrollment.

Overall, enrolling in Amazon Warehousing and Distribution can be a great way for sellers to manage their inventory and streamline their supply chain. By following the enrollment process and meeting the requirements for sellers, you can take advantage of this valuable service and grow your business on Amazon.

Inventory Management in AWD

When it comes to inventory management in Amazon Warehousing and Distribution (AWD), there are a few key factors to keep in mind. In this section, we’ll explore some of the most important considerations for managing your inventory in AWD.

Replenishment Strategies

One of the most important aspects of inventory management in AWD is developing a solid replenishment strategy. With AWD’s auto-replenishment feature, you can automatically move products from Amazon’s Distribution Centers to its Fulfillment Centers, helping to ensure that your inventory levels stay consistent and your customers receive their orders on time.

To make the most of this feature, it’s important to carefully monitor your inventory levels and adjust your replenishment settings as needed. You can use tools like Amazon’s Inventory Performance Index (IPI) to help you optimize your inventory levels and ensure that you’re not overstocking or understocking your products.

Inventory Levels and Stock Control

Another key aspect of inventory management in AWD is maintaining the right inventory levels and exercising proper stock control. With AWD’s long-term inventory storage solution, you can store your bulk inventory in Amazon’s Distribution Centers, helping to reduce your storage costs and ensure that your products are always available when you need them.

To keep your inventory levels under control, it’s important to regularly review your inventory reports and adjust your stock levels as needed. You can use tools like Amazon’s Restock Inventory tool to help you determine when it’s time to replenish your inventory and how much to order.

Overall, effective inventory management is crucial to the success of your business on Amazon. By developing a solid replenishment strategy and maintaining proper stock control, you can help ensure that your products are always available when your customers need them, while also minimizing your storage costs and maximizing your profits.

Fulfillment by Amazon (FBA) Integration

If you are an FBA seller, you can integrate your FBA inventory with AWD. This integration allows you to store your inventory in AWD for long-term storage and still enjoy the benefits of FBA.

FBA and AWD Synergy

FBA and AWD are complementary services that offer different benefits to sellers. While FBA provides fast and reliable shipping to customers, AWD offers long-term storage solutions. By integrating your FBA inventory with AWD, you can enjoy the best of both worlds. You can use FBA to fulfill your orders while keeping your inventory in AWD for long-term storage. This integration can help you save on storage fees, reduce your shipping costs, and improve your overall efficiency.

Multi-Channel Fulfillment

If you are an FBA seller, you can also use Multi-Channel Fulfillment (MCF) to fulfill orders from non-Amazon sales channels. MCF allows you to use your FBA inventory to fulfill orders from your own website, eBay, or other marketplaces. With MCF, you can expand your sales channels and still enjoy the benefits of FBA.

When you use MCF, Amazon will pick, pack, and ship your orders to your customers. You can also use AWD to store your inventory for MCF orders. This allows you to keep your inventory in AWD for long-term storage and still fulfill orders from non-Amazon sales channels.

In summary, integrating your FBA inventory with AWD can help you save on storage fees, reduce your shipping costs, and improve your overall efficiency. You can also use MCF to expand your sales channels and still enjoy the benefits of FBA.

Pricing and Fees

Understanding AWD Fees

When it comes to Amazon Warehousing and Distribution (AWD), it’s important to understand the fees associated with this service. AWD charges pay-as-you-go fees for processing, transportation, and storage. The processing fee is charged per unit and covers the cost of receiving, labeling, and preparing your inventory for storage. The transportation fee is charged per unit and covers the cost of shipping your inventory from the AWD location to an Amazon Fulfillment Center. The storage fee is charged per cubic foot and covers the cost of storing your inventory in the AWD location.

It’s worth noting that AWD fees can vary depending on the time of year. During the holiday season, AWD may charge a peak season surcharge for storage fees. However, in October-December 2023, AWD is not charging the peak season surcharge, so the current price remains $0.42 per cubic foot per month 1.

Cost-Effective Strategies

To keep your AWD fees low, it’s important to use cost-effective strategies. One such strategy is to optimize your inventory levels. By keeping your inventory levels in check, you can avoid paying unnecessary storage fees. Another strategy is to take advantage of Amazon’s storage fee calculator. This tool can help you estimate your storage fees and plan accordingly.

Another way to save on AWD fees is to use Amazon’s FBA program. With FBA, Amazon handles the storage, packing, and shipping of your products. This can save you both time and money, as you won’t need to pay for AWD processing, transportation, or storage fees 2.

Overall, understanding AWD fees and using cost-effective strategies can help you save money and maximize your profits. By taking advantage of these strategies, you can make the most out of Amazon’s Warehousing and Distribution service.

Capacity and Storage Solutions

When it comes to managing inventory, Amazon Warehousing and Distribution (AWD) offers a variety of storage solutions to meet your needs. Whether you need to store inventory for peak seasons or require long-term storage options, AWD has you covered.

Managing Peak Seasons

During peak seasons, such as the holiday season, it can be challenging to manage your inventory and ensure that you have enough stock to meet demand. With AWD, you can take advantage of Amazon’s storage capacity to store your inventory in Amazon distribution centers. This allows you to replenish your inventory seamlessly to fulfillment centers, so you can fulfill orders quickly and efficiently.

Long-Term Storage Options

If you need long-term storage options, AWD provides low-cost, long-term storage that gives you the option to store your inventory in Amazon distribution centers. AWD also offers flexible and low-cost upstream bulk inventory storage and distribution for your business. You can store your inventory in Amazon’s warehouse, where it is safe and secure, until you need it.

With AWD, you can take advantage of Amazon’s warehousing and distribution capabilities to manage your inventory and meet your storage needs. Whether you require short-term or long-term storage solutions, AWD provides the flexibility and scalability you need to grow your business.

Technology and Automation

Innovation in Warehousing

Amazon Warehousing and Distribution (AWD) is a newly-launched third-party logistics (3PL) solution that provides long-term storage for the upstream inventory in Amazon’s Distribution Centers and enables automatic movements of products to Amazon’s Fulfillment Centers. The system is highly automated and incorporates the latest technology in warehousing and logistics.

One of the most significant innovations in AWD is its automated replenishment system. This system automatically replenishes inventory at Amazon’s fulfillment centers, ensuring that products are always available for customers. The automated replenishment system also helps to reduce the risk of stockouts and overstocking, which can be costly for businesses.

Efficiency and Scalability

Another key feature of AWD is its automated distribution system. This system enables businesses to ship their products directly to Amazon’s distribution centers, where they are stored until they are needed at the fulfillment centers. The automated distribution system is highly efficient and scalable, allowing businesses to easily scale their operations as their business grows.

The use of automation in AWD has several benefits, including increased efficiency, reduced labor costs, and improved accuracy. With AWD, businesses can reduce the time and resources required to manage their inventory, allowing them to focus on other aspects of their business.

In conclusion, Amazon Warehousing and Distribution (AWD) is a highly automated and innovative solution for businesses looking to streamline their supply chain and logistics operations. With its automated replenishment and distribution systems, AWD offers businesses increased efficiency, scalability, and accuracy, making it an ideal solution for businesses of all sizes.

Challenges and Considerations

When it comes to Amazon Warehousing and Distribution (AWD), there are a few challenges and considerations to keep in mind. In this section, we will discuss how to navigate supply chain disruptions, and strategies to avoid overstocking.

Navigating Supply Chain Disruptions

One of the biggest challenges in supply chain management is navigating disruptions. These disruptions can be caused by a variety of factors, such as natural disasters, political instability, or global pandemics. To mitigate the impact of these disruptions on your business, you should have a contingency plan in place.

With AWD, Amazon takes care of the storage and distribution of your inventory. This means that you can rely on Amazon to manage your inventory during times of disruption. With Amazon’s extensive network of fulfillment centers and transportation partners, you can be confident that your products will be delivered to customers on time.

Strategies to Avoid Overstocking

Overstocking can be a serious problem for businesses of all sizes. It ties up capital and can lead to stockouts, which can damage your reputation and lead to lost sales. To avoid overstocking, you should have a clear understanding of your inventory needs and sales projections.

With AWD, you can leverage Amazon’s expertise in inventory management to avoid overstocking. Amazon uses sophisticated algorithms to predict demand and optimize inventory levels. This means that you can rely on Amazon to manage your inventory levels and avoid overstocking.

In addition to leveraging Amazon’s expertise, you can also use tools like Amazon’s Inventory Planning Dashboard to monitor your inventory levels and make informed decisions about when to reorder products.

Overall, while there are some challenges and considerations to keep in mind when using AWD, the benefits of outsourcing your inventory management to Amazon far outweigh the risks. With Amazon’s extensive network and expertise, you can be confident that your products will be delivered to customers on time, every time.

AWD for Specialized Products

If you sell specialized products such as hazmat products, Amazon devices, gift cards, jewelry, or shoes, you may wonder if Amazon Warehousing and Distribution (AWD) is the right solution for you. AWD is a third-party logistics (3PL) solution that provides long-term storage for the upstream inventory in Amazon’s Distribution Centers and enables automatic movements of products to Amazon’s Fulfillment Centers.

Handling Sensitive Items

If you sell sensitive items such as jewelry or gift cards, you may worry about their safety and security. AWD provides secure storage for your items and ensures their safe handling and transportation. Amazon has strict policies and procedures in place to ensure compliance with all regulations and laws related to the handling and storage of sensitive items.

Compliance and Safety

If you sell hazmat products, you must comply with strict regulations related to their storage and transportation. AWD provides specialized storage and handling for hazmat products to ensure compliance with all regulations and laws related to their storage and transportation. Amazon has strict policies and procedures in place to ensure the safety and security of your products and the people who handle them.

In conclusion, if you sell specialized products such as hazmat products, Amazon devices, gift cards, jewelry, or shoes, AWD can provide secure storage and handling for your items and ensure compliance with all regulations and laws related to their storage and transportation. Amazon has strict policies and procedures in place to ensure the safety and security of your products and the people who handle them.

Program Enhancements and Updates

Recent AWD Innovations

Amazon Warehousing and Distribution (AWD) is an evolving program that continues to add new features and enhancements to better serve its customers. One recent innovation is the automatic replenishment feature. This feature ensures a seamless flow of inventory into Prime-ready fulfillment centers, making it easier for sellers to manage their inventory and fulfill orders quickly.

Another recent enhancement is the introduction of Supply Chain as a Service (SCaaS) to AWD. This service provides end-to-end supply chain management across all sales channels, allowing sellers to focus on their core business while Amazon handles the logistics. SCaaS also offers automatic cross-border discounts for Amazon Global Logistics (AGL), further reducing costs for selling partners using AWD.

Amazon Accelerate is another program that complements AWD. It is a program designed to help small and medium-sized businesses (SMBs) accelerate their growth on Amazon. Accelerate offers a range of benefits, including access to Amazon’s fulfillment network, advertising tools, and account management support. By leveraging Accelerate, sellers can grow their business faster and more efficiently.

Future Outlook

Looking ahead, Amazon is constantly exploring new ways to enhance AWD and provide even more value to its customers. One area of focus is the use of artificial intelligence (AI) and machine learning (ML) to optimize warehouse operations and improve efficiency. By leveraging AI and ML, Amazon can better predict demand, optimize inventory levels, and reduce waste.

Another area of focus is sustainability. Amazon is committed to reducing its carbon footprint and has set a goal to be net-zero carbon by 2040. To achieve this goal, Amazon is investing in renewable energy, electric vehicles, and sustainable packaging. As part of this effort, Amazon is exploring ways to make AWD more sustainable, such as by using renewable energy to power its warehouses and reducing waste through better inventory management.

In conclusion, AWD continues to evolve and improve, offering sellers a cost-effective, long-term bulk inventory storage solution. With recent innovations like automatic replenishment and SCaaS, and a focus on AI, ML, and sustainability, AWD is well-positioned to help sellers grow their business on Amazon for years to come.

Frequently Asked Questions

How does Amazon Warehousing and Distribution differ from Fulfillment by Amazon (FBA)?

Amazon Warehousing and Distribution (AWD) is a program that allows businesses to store their inventory in Amazon’s fulfillment centers. This program is different from Fulfillment by Amazon (FBA) in that AWD does not involve Amazon fulfilling orders on behalf of the business. Instead, AWD is a self-service program that allows businesses to store their inventory in Amazon’s warehouses and manage their own shipping and handling.

What are the typical fees associated with using Amazon’s Warehousing and Distribution services?

One of the main advantages of AWD is its transparent, pay-as-you-go pricing with no hidden fees or long-term contracts. The fees associated with AWD include storage fees, which depend on the time of year, and fulfillment fees, which are charged when a business uses Amazon’s fulfillment services to ship their products to customers.

Can you explain the role of Amazon Warehousing and Distribution within the larger Amazon supply chain?

Amazon Warehousing and Distribution plays a critical role in Amazon’s larger supply chain by providing businesses with a cost-effective way to store and manage their inventory. By leveraging Amazon’s vast network of fulfillment centers and logistics expertise, AWD helps businesses streamline their supply chain operations and improve their bottom line.

What strategies does Amazon employ in its warehousing and distribution operations to ensure efficiency?

Amazon employs a range of strategies in its warehousing and distribution operations to ensure efficiency, including the use of advanced robotics and automation technologies, real-time inventory tracking and management systems, and sophisticated algorithms that optimize the placement of products within its fulfillment centers. These strategies help Amazon minimize the time and cost associated with order fulfillment, while also improving the accuracy and speed of its delivery operations.

How can businesses contact Amazon Multi-Channel Fulfillment (MCF) for warehousing inquiries?

Businesses can contact Amazon Multi-Channel Fulfillment (MCF) for warehousing inquiries by visiting the Amazon Services website and clicking on the “Contact Us” tab. From there, they can select the appropriate category and submit their inquiry online, or they can call Amazon’s customer service hotline for immediate assistance.

What are the main components of Amazon’s supply chain, as illustrated in their supply chain diagram?

Amazon’s supply chain consists of several key components, including sourcing and procurement, warehousing and distribution, transportation and logistics, and customer service and support. Each of these components plays a critical role in ensuring that Amazon can deliver products to customers quickly, efficiently, and cost-effectively.

Footnotes

  1. Supply Chain Amazon
  2. Seller Cloud

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