Inventory planning on Amazon has unique challenges — from demand planning to seasonality, to Amazon’s announcement that they’re shutting down FBA prep and labeling services. When you utilize FBA, you can be hit with unexpected low-inventory fees if your stock gets too low.
To avoid these fees, many Sellers have started utilizing Amazon Warehousing and Distribution, or AWD. This unique program provides longer-term storage for qualifying items, and it can help you avoid those pesky inventory fees.
Let’s dive into everything you need to know about Amazon Warehousing and Distribution.
What is Amazon Warehousing and Distribution?
Amazon Warehousing and Distribution is a designated longer-term storage facility for Amazon. It’s meant for Sellers using FBA who might need more help or another partner to facilitate moving their inventory from long-term storage into FBA (short-term storage and order fulfillment).
You can also leverage AWD as a fulfillment center for non-Amazon sales channels, which we’ll talk about in more detail later in this post.
How Does AWD Work?
Once your FBA inventory of a certain SKU is getting low, Amazon will automatically trigger a replenishment order to top off FBA inventory with existing stock in AWD. These replenishments are automatic, so the Seller doesn’t need to stay on top of restocking their FBA inventory!
If you don’t want to auto-replenish your FBA inventory, you do have the option to opt-out of this feature! You can manually handle your FBA restocks — but when you do, you might not get certain fee discounts with AWD.
Because AWD is longer-term storage, you might have less capacity restrictions in general with AWD than you would with FBA.
Benefits of Amazon Warehousing and Distribution
Save on Seller and Low-Inventory Fees
Using AWD gives Sellers many benefits, primarily helping them save on costs and other fees that would otherwise be charged by FBA. When you send inventory to AWD instead of FBA, you should save on fees — if you’re following Amazon’s rules correctly and not being penalized, that is.
Additionally, AWD also can help Sellers reduce their low-inventory fees because Amazon will ensure FBA is always topped off. Having this part of your inventory process automated can be a huge time and money saver, especially if you’ve struggled to maintain your FBA inventory in the past.
Non-Amazon Fulfillment
As we mentioned previously, AWD can be used as a fulfillment center for multi-channel distribution. According to Amazon, “multi-channel distribution (MCD) is a new capability that allows you to ship your products in bulk to your own warehouse or third-party warehouses, wholesalers, and distributors.”
So, similar to how you would use AWD to ship inventory to FBA, you can use AWD to ship inventory to another short-term storage warehouse facility where your orders would be actually shipped from. Or, you could use AWD to ship inventory to a wholesale customer that already buys from you in bulk.
Rather than having a separate longer-term storage facility for your non-Amazon channels, you can keep all inventory together at this stage.
Drawbacks of AWD
Increased Storage Costs
Using AWD intrinsically means you’re storing more inventory with Amazon — which means that you’ll have to pay costs associated with this additional storage, and more of your inventory and cash is therefore tied to the Amazon sales channel.
The benefit of this additional storage might outweigh the cost, but it’s important to understand your P&L on Amazon to understand if AWD will benefit your business overall.
Slowdowns
Despite Amazon’s assurances, AWD is not immune from the slowdowns and other issues that FBA Sellers might have endured. During peak events or seasons, many FBA Sellers experience slow inventory restocks, which could impact your FBA fees or out-of-stock fees. Additionally, AWD users might experience lost shipments or damaged inventory, which can be a hassle to escalate to Amazon for resolution.
Auto-Replenishment Mistakes
Lastly, AWD auto-replenishment is not perfect and can make mistakes. Whether the wrong inventory was shipped or a shipment was missed completely, you might experience errors that cause you to go out of stock in FBA. You have to use this auto-replenishment feature to save on certain FBA fees, but if you consistently experience errors from Amazon, it might not be worth it for your business.
What Products Can’t Be Stored in AWD?
Similar to FBA, there are certain restrictions that Amazon has in place for AWD storage. According to Amazon, here are a list of products that are not eligible for AWD at this time:
- Amazon devices
- Gift cards
- High-value products
- Jewelry
- Meltable products
- Refrigerated goods
- Watches
- Dangerous goods (hazmat)
- Boxes that are larger than 25 inches on any side and that weigh more than 50 lb.
- Products that are larger than 25 inches long x 25 inches wide x 25 inches high, and that weigh more than 49 lb.
If your products fall into any of these categories, you’ll need to find another longer-term storage solution that funnels in to FBA.
An important note: Items must be Case-Packed when they are sent to AWD. While FBA allows you to send any number of units, and those units can be commingled across SKUs in the same box, AWD requires each box to only contain a case-packed quantity of the same SKU. In other words, one box cannot contain more than 1 SKU.
How to Access AWD
Because AWD is new, Amazon is still building out the functionality in Seller Central and APIs. So, even if you use Seller Central, you’ll need to be aware that AWD lives in a different area. Here’s how to access AWD:
- Log in to Seller Central.
- Under the Inventory menu, select Warehousing and Distribution.
- To create and send a shipment, go to the Manage Services tab.
Managing your Amazon inventory is no small feat — so many Sellers opt to use AWD to make things a little easier on themselves. The automatic FBA restocks make it a great choice for brands who are facing consistent low-inventory fees.
If you’re looking for additional ways to manage your inventory, sign up for a free Kapoq demo. Kapoq can help you minimize out-of-stock situations with SKU-specific, supplier-specific lead times, safety stock, and reorder rules.
If you’re interested in learning more about selling via Amazon Business, watch our webinar with Carolyn Lowe of ROI Swift.
