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Amazon Warehousing & Distribution (AWD): A Guide to Amazon’s New Upstream Bulk Inventory Solution

Claire Lindsey
Dec 15, 2022 12:48:54 PM

AWD Guide: Amazon’s New Upstream Bulk Inventory Solution

Over 90% of top sellers on Amazon use FBA, Fulfillment by Amazon. After all, FBA offers access to one of the most advanced fulfillment networks in the world—and it’s tied to the coveted Prime badge and two-day shipping turn-around. But the past few years have been a rollercoaster for both Amazon and FBA sellers, as Amazon continues to face supply chain and labor challenges, as FBA fees, restock limitations, and storage restrictions continue to fluctuate, and as macroeconomic concerns continue to impact consumer spend.

In September 2022, during Amazon Accelerate (their premier annual seller conference), the giant revealed they've been working on a storage solution to give sellers a lower cost way of managing bulk inventory before it hits FBA warehouses: Amazon Warehousing & Distribution, AWD. Over the past few months, SupplyKick’s logistics team has unpacked the ins and outs of the new program and what this means for 3P sellers, FBA inventory forecasting, important shipping timelines, and more. 

Read this article for:

  • What we know about AWD so far, including product size and Parcel & LTL parameters
  • Key advantages and disadvantages of Amazon Warehousing & Distribution
  • The AWD fulfillment process and storage, processing, and transportation fees
  • How FBA sellers can leverage the upstream inventory solution in 2023
 

What Is Amazon Warehousing & Distribution (AWD)?

Launched by Amazon in 2022, AWD is a 3PL and bulk storage solution offered by Amazon for third-party marketplace sellers. As described by Amazon: “Amazon Warehousing & Distribution (AWD) is a new third-party logistics (3PL) solution offered by Amazon Supply Chain. AWD provides flexible and low-cost upstream bulk inventory storage and distribution for your business.”

AWD seeks to specifically help brands who are experiencing issues with FBA storage limits and stockouts. The long-term inventory storage solution allows FBA sellers to avoid stockouts and auto-replenish inventory directly into Amazon Fulfillment Centers/the Amazon Fulfillment Network.

As highlighted by Amazon, AWD’s top features include:

  • The ability to send bulk inventory to Amazon Distribution Centers
  • The ability to store bulk inventory in Amazon Distribution Centers “for as long as you need”
  • A cost-effective, “pay as you go” pricing model for storage and transportation
  • No hidden fees or long-term contracts necessary
  • The ability to integrate upstream storage operations with the Amazon Fulfillment Network
  • Auto-replenishment feature from AWD to FBA that keeps inventory from going out-of-stock

   

Important Pros and Cons of AWD

So you may be wondering, “Is AWD something I should seriously consider?” From SupplyKick’s perspective, AWD in its current state could possibly work for you if: 

Blog-Checkbox You’re an FBA seller with Standard Size items who ships Less-Than-Truckload (LTL), looking for a bulk Amazon inventory storage solution
Blog-Checkbox You’re an international brand with Standard Size items who ships LTL, looking for a U.S.-based bulk storage solution

Here’s a list of benefits and limitations we’ve identified within the Amazon Warehousing & Distribution program so far:

Pros of Amazon Warehousing & Distribution:

  • Auto-replenishment allows sellers to bypass FBA storage limits. 
  • Auto-replenishment allows sellers to avoid Amazon stockouts.
  • There isn’t a stock limit for AWD inventory, yet (this might change in the future if/when the solution gains popularity and if/when Amazon runs low on storage space).
  • Sellers won’t accumulate aged inventory in AWD (the aged inventory clock does not begin until your AWD inventory hits FBA).
  • The “Global Inventory Viewer” feature allows sellers to view AWD and FBA inventory within their Seller Central Account.

Cons of Amazon Warehousing & Distribution: 

  • Amazon Warehousing and Distribution (AWD) and Fulfilled by Amazon (FBA) inventories cannot be shipped in the same truck load.
  • Sellers are responsible for arranging and paying for transportation costs from their facility to AWD (unless shipping from a foreign country, in which Amazon Global Logistics can be used).
  • Sellers cannot ship Parcel to AWD—only Less-Than-Truckload (LTL) shipments are accepted at AWD (which may cause delays, as LTL can take 3x times longer to process).
  • Only Standard Size products are allowed by AWD at this time, meaning Oversize and Extra-Large product inventory are excluded from the program.
  • AWD does not allow mixed SKU boxes (each individual SKU must be shipped in its own box).
  • AWD does not allow items with expiration dates, hazmat products, or products within the following categories: shoes, watches, jewelry, high value products, Amazon devices, gift cards, grocery.
  • Generally speaking, with any newly launched program, Amazon is still ironing out logistics, so inventory could see delays stocking in at AWD (this means you should ensure the inventory you’re sending into AWD also should have ample inventory levels at FBA to avoid stocking out).

Need help optimizing your Amazon strategy? Let's talk.      

 

How Does AWD Work? Standard Shipping Process & Guidelines

As previously mentioned, AWD provides a long-term bulk storage solution that empowers sellers to automatically position their inventory in Amazon FCs. Before you decide to ship to AWD, be sure to review the pros and cons listed above, as well as the following Amazon guidelines: 

  • Amazon Warehousing and Distribution (AWD) and Fulfilled by Amazon (FBA) inventories cannot be shipped in the same truck load. Sellers should ensure your carrier selects the correct AWD location specified on the “Confirm Carrier (Step 4)” of the Seller Central booking process. Each Purchase Order (PO) must match the destination Fulfillment Center (FC) listed on the appointment request. Failure to do so can result in refused loads or lost/delayed shipments.
  • Carriers must arrive within 1 hour to the scheduled appointment time. Early arrivals may be turned away or re-routed to alternate buildings to wait until the appointment time and late arrivals may need to be rescheduled, as operations are limited to a certain number of loads per day.

Once accepted into the program, here is the standard process for sending in inventory to AWD.  Amazon recommends sending in a small test shipment when starting the program:

Blog-Checkbox Seller sends in eligible SKUs (via LTL) to AWD using their own carrier.
Blog-Checkbox Amazon holds the inventory in AWD and, using their algorithm, automatically replenishes inventory into their FBA Fulfillments Centers when levels get low. 
Blog-Checkbox Seller has the ability to see automated replenishment orders and can track their inventory levels at AWD within their Seller Central account.
Blog-Checkbox When necessary, the seller sends in more inventory to AWD.

  

Amazon Warehousing and Distribution Pricing

How much do AWD storage fees cost? Compared to FBA, AWD storage fees are much lower than typical FBA fees, but all AWD inventory also incurs processing and transportation fees, so it’s important to do a cost analysis to see if AWD is an efficient solution for your business.

The following fees are applied to AWD inventory: 

  • Upstream storage fees: charged 1x per month for all inventory sent to AWD. These fees are calculated based on daily usage and change only per cubic foot of space used.
  • Processing fees: cover all inbound and outbound handling activities for AWD inventory. These fees are applied once inventory exits the AWD center and is delivered to Amazon’s Fulfillment Network/FBA.
  • Transportation fees: charged per cubic foot for cases replenished to the Amazon Fulfillment Network/FBA from the AWD center.

Below is Amazon’s rate card as of August 1, 2022:

Amazon's Rate Card (as of August 1, 2022)
AWD Fee Type Rate
Storage Non-holiday (Jan-Sept): $0.42 per cubic foot
Holiday season (Oct-Dec): $0.80 per cubic foot
Processing $2.00 per case
Transportation $1.00 per cubic foot

  

What’s Ahead for Amazon & AWD in 2023?

In addition to expanding their Buy with Prime program, Amazon continues to refine logistics and features for Amazon Warehousing and Distribution. This solution is still very much in its infancy, so SupplyKick will continue to update this post with future AWD program additions or changes.

There are a few AWD features Amazon has mentioned that are in development for 2023. Here’s what we most look forward to becoming a reality within the next year: 

  • 100% auto-replenishment opt-out (at the ASIN level): potential to have more control over inventory movement
  • Off-Amazon bulk distribution: potential to distribute to other marketplaces in bulk
  • Providing API integration support: potential to link bulk distribution from Amazon to other inventory locations
  • Storage reservations: potential to communicate with AWD and confirm reservation, ensuring space availability prior to shipping to AWD
  • Selection expansion: potential to include perishable products, shoes, non-sort sizes

From inventory management to listing optimization services, keeping up with marketplace changes, competitors, and new programs is a full-time job. If you’re looking for Amazon consultancy services or a trusted Amazon wholesale seller to help tackle it all (while saving you time, resources, and a lot less stress), connect with our team.

Amazon FBA 2023 Holiday Calendar and Seller Checklist

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