What is AWD Amazon?
For sellers on the Amazon marketplace, navigating the ever-evolving fulfillment landscape is critical for optimizing their operations and maintaining a competitive edge. AWD Amazon (Warehousing and Distribution) has emerged as a new program offering an alternative to the established Fulfillment by Amazon (FBA) service.
While fba has long been the go-to solution for many sellers, AWD caters to a specific need – the ability to manage bulk inventory storage and fulfillment independently.
Understanding the core functionalities of both programs is necessary for sellers to make informed decisions about their fulfillment strategy.
What is AWD?
Amazon Warehouse Distribution (AWD) is a warehousing and distribution program designed to provide sellers with long-term, bulk storage solutions for their inventory.
Unlike FBA, which focuses on pick, pack, and ship fulfillment for individual customer orders, AWD Amazon centers on storing large quantities of goods.
Sellers leverage AWD to manage their inventory independently, handling picking, packing, and shipping logistics themselves.
How Does Amazon AWD Work?
Sellers initiate the process by sending bulk shipments of their inventory to designated AWD fulfillment centers.
Once received, Amazon stores and manages the inventory within their facilities, providing sellers with real-time inventory level visibility and storage usage tracking through their Seller Central account.
The AWD Ecosystem
- Inventory Inbound: Sellers send their inventory in bulk quantities to designated AWD fulfillment centers.
- Storage and Management: Amazon stores and manages seller’s inventory within their AWD facilities. Sellers can monitor inventory levels and track storage usage through their Seller Central account.
- Outbound Fulfillment: When a seller receives an order, they utilize their chosen fulfillment provider or in-house logistics to pick, pack, and ship the order directly to the customer. AWD itself does not handle individual order fulfillment.
Inventory Management in AWD
Sellers have complete control over their inventory stored in AWD. This includes the ability to:
Track inventory levels in real-time
Through their Seller Central account, sellers can monitor current inventory levels for each item stored in AWD facilities. This allows them to maintain optimal stock levels and avoid stock outs that can lead to lost sales and frustrated customers.
Request inventory transfers between AWD facilities or to FBA fulfillment centers (subject to Amazon’s approval).
AWD offers flexibility in managing inventory placement. Sellers can request transfers between AWD locations to balance stock levels across different regions or move inventory to FBA centers for items that require faster fulfillment speeds, particularly for Prime customers.
However, it’s necessary to note that Amazon may have restrictions or approval processes in place for certain inventory transfers.
Manage stock replenishment strategies.
Sellers can leverage real-time inventory data and sales history to inform their stock replenishment decisions. By setting reorder points and lead times, they can ensure a steady flow of inventory into AWD facilities to meet customer demand without leading to unnecessary storage costs or excess stock.
Fulfillment by Amazon (FBA) Integration
AWD can be integrated with FBA to create a hybrid fulfillment strategy.
Sellers can store slower-moving or bulk inventory in AWD while keeping high-demand items in FBA fulfillment centers for faster Prime delivery options.
Amazon AWD and Amazon FBA
| Feature | Amazon AWD | Amazon FBA |
| Fulfillment Model | Seller-managed fulfillment | Amazon-managed fulfillment |
| Inventory Storage | Bulk storage for long-term inventory | Individual item storage for faster fulfillment |
| Order Fulfillment | Seller-managed picking, packing, and shipping | Amazon-managed picking, packing, and shipping |
| Fees | Storage fees, processing fees, transportation fees | Per-item fulfillment fees, storage fees |
| Benefits | Lower storage costs, control over inventory | Faster fulfillment, Prime delivery eligibility |
| Challenges | Requires independent fulfillment infrastructure | Potentially higher per-item fulfillment costs |
Omnichannel Fulfillment
AWD can be a valuable tool for sellers implementing an omnichannel fulfillment strategy.
Inventory stored in AWD can be used to fulfill orders not just on Amazon but also on other sales channels the seller operates.
This allows sellers to reach a wider audience and potentially increase sales without needing to hold separate inventory for each channel.
For instance, a seller might leverage AWD to store bulk inventory and fulfill orders on their own company website, other online marketplaces like eBay, or even brick-and-mortar retail locations.
By centralizing inventory storage in AWD, sellers can streamline their operations, reduce fulfillment costs, and ensure consistent product availability across all their sales channels.
How Much Does AWD Cost? AWD Pricing and Fees
Here is how to best understand how much does AWD cost. Unlike Fulfillment by Amazon’s (FBA) per-item fulfillment fees, AWD operates with a different cost structure.
Here’s a breakdown of the key cost components:
Storage Fees
These fees are charged monthly and directly correlate to the cubic footage of space your inventory occupies within AWD facilities.
Storage costs typically fluctuate based on seasonality. During peak shopping season like Q4, storage rates may increase due to higher overall Amazon warehouse and distribution utilization.
Processing Fees
These fees cover the cost of handling your inventory upon arrival and departure from AWD fulfillment centers.
This includes activities like receiving, palletizing, and potentially value-added services like labeling or kitting (combining multiple products into a single unit).
Processing fees are typically assessed per unit received or shipped.
Transportation Fees
While AWD itself doesn’t handle individual order fulfillment, transportation fees may apply in specific situations. these can include:
- Inbound Transportation: If you don’t have your own transportation network to move inventory to AWD facilities, Amazon may offer inbound transportation services for an additional fee.
- Inter-Facility Transfers: There may be fees associated with transferring inventory between different AWD locations, particularly if the transfer is outside a specific geographic range.
- Transfers to FBA Centers: In some cases, Amazon may allow transfers of inventory from AWD to FBA fulfillment centers. However, these transfers may be subject to additional transportation fees and may require prior approval from Amazon.
How to Enroll in Amazon AWD
Enrollment in the AWD program is currently by invitation only.
Amazon invites sellers who meet specific criteria, such as having a proven track record of high sales volume and a history of responsible inventory management practices.
If you’re interested in participating in AWD, it’s recommended to maintain a strong selling performance on Amazon and demonstrate a consistent ability to meet customer demand efficiently.
Benefits of Amazon AWD for Sellers
Lower Storage Costs: Compared to FBA’s per-item fulfillment fees, AWD can offer potentially lower storage costs, particularly for sellers with bulk inventory or slow-moving items.
Inventory Control: Sellers have complete control over their inventory stored in AWD, allowing them to manage stock levels, set reorder points, and make informed replenishment decisions.
Flexibility for Omnichannel Fulfillment: Inventory stored in AWD can be used to fulfill orders across various sales channels, not just on Amazon. This enables sellers to implement a more comprehensive omnichannel fulfillment strategy.
Potential for Cost Savings on Inbound Transportation: If sellers have established relationships with reliable and cost-effective freight carriers, they can potentially save on inbound transportation costs compared to relying on Amazon’s services.
Challenges of Amazon AWD for Sellers
While AWD offers potential benefits for specific sellers, it’s necessary to understand the inherent challenges associated with the program before making a decision.
Unlike FBA, where Amazon handles picking, packing, and shipping individual orders. Sellers may need to establish their own in-house fulfillment center with the necessary equipment, manpower, and technology to handle order fulfillment efficiently. This can be a significant upfront investment for businesses that don’t already have such a system in place.
Alternatively, sellers can outsource order fulfillment activities to a third-party logistics (3PL) provider.
While this eliminates the need for in-house infrastructure investment, it adds another layer of complexity and introduces additional costs associated with 3PL service fees.
Proper integration between your inventory management system and the fulfillment provider (whether in-house or 3PL) is essential.
Increased Complexity
Managing inventory across multiple locations can introduce complexities to your fulfillment operations.
You’ll need robust inventory management systems and processes to track inventory levels across both your AWD storage location (s) and any additional warehouses you might use. This includes maintaining accurate stock counts, setting reorder points for timely replenishment, and ensuring clear communication between different fulfillment locations to avoid stock discrepancies.
The process of picking, packing, and shipping order becomes more intricate when managing inventory in multiple locations. Efficient coordination is crucial to ensure timely order fulfillment and accurate product selection.
Limited Scalability
If your sales volume experiences significant growth, scaling your fulfillment operations under AWD can pose challenges.
If you rely on an in-house fulfillment center, you may face limitations in terms of storage space, labor resources, and overall capacity to handle a sudden surge in order volume. Scaling up your in-house infrastructure might require significant investments in additional space, equipment, and manpower.
Your chosen 3PL provider might also have limitations in terms of scalability to accommodate a rapid increase in your order volume.
Frequently Asked Questions
How does Amazon Warehousing and Distribution differ from Fulfillment by Amazon (FBA)?
The key difference lies in fulfillment responsibility.
With FBA, Amazon handles the entire fulfillment process, including receiving your inventory, storing it in their fulfillment centers, picking and packing individual orders, and shipping them directly to customers.
In essence, FBA is a complete fulfillment solution offered by Amazon.
On the other hand, AWD focuses solely on warehousing and storage. Sellers are responsible for managing all aspects of order fulfillment, from picking and packing to shipping the orders to customers.
What are the typical fees associated with using Amazon’s Warehousing and Distribution services?
Unlike FBA’s per-item fulfillment fees, AWD uses a different fee structure.
Storage Fees: These are monthly fees based on the cubic footage of space your inventory occupies in AWD facilities. Costs can fluctuate based on seasonality and storage utilization. Strategies to potentially minimize storage fees include optimization inventory packaging, implementing accurate inventory forecasting, and right-sizing your AWD storage needs.
Processing Fees: These cover the cost of handling your inventory upon arrival and departure from AWD centers, including receiving, palletizing, and potentially value-added services. Fees are typically assessed per unit received or shipped.
Transportation Fees: If you don’t have your own transportation network, Amazon may offer inbound transportation services for an additional fee. Fees might be associated with transferring inventory between AWD locations, particularly for longer distances.