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Understanding Amazon Warehousing and Distribution (AWD)

Amazon Warehousing and Distribution 

Managing a large inventory can be a difficult undertaking, especially when you’re trying to manage costs and efficiency. Third-party logistics (3PL) suppliers frequently charge expensive fees that can cut into your revenues. But what if you could take advantage of a solution that offers optimized inventory management, efficient order fulfillment, and cost savings, all within a single ecosystem? Amazon Warehousing & Distribution (AWD) is an all-inclusive third-party logistics (3PL) solution. Amazon AWD stores and ships your products within the Amazon fulfillment network even if you are not selling on Amazon.

In this blog, we will cover what AWD is, how it works, the benefits, the costs, how to apply, and the eligibility criteria for Amazon Warehousing and Distribution.

What is Amazon Warehousing and Distribution (AWD)?

Amazon Warehousing and Distribution (AWD), which launched in 2022, seeks to streamline inventory management and lower sellers’ shipping expenses. AWD is a service from Amazon that provides sellers with comprehensive warehouse and delivery solutions. AWD simplifies inventory management and logistics by offering various storage options, tracking inventory in real time, automating replenishment, and efficiently distributing to numerous sales channels. These channels include Amazon fulfillment centers and direct customer deliveries. AWD seeks to improve operational efficiency, save costs, and facilitate scalability for enterprises of all sizes.

FBA and AWD differ as Fulfillment by Amazon (FBA) manages storage, packing, shipping, and customer care for sellers, making their products eligible for Amazon Prime. Amazon Warehousing and Distribution (AWD) specializes in flexible storage solutions and effective distribution across numerous sales channels, with a focus on inventory control and cost savings.

How Does AWD Work?

Amazon Warehousing and Distribution (AWD) provides sellers with a comprehensive logistical solution. First, sellers ship products to Amazon fulfillment centers, where they are securely stored. Then, AWD uses real-time tracking and automated replenishment to maintain optimal stock levels. When customers place orders, AWD handles picking, packing, and shipping, ensuring timely delivery across multiple sales channels. Consequently, this leverages Amazon’s logistics network for cost-effective storage and efficient distribution, improving operational efficiency and reducing logistics costs.

Benefits of Amazon Warehousing and Distribution

  • Efficiency: AWD provides optimized processes from storage to shipping, resulting in smooth and efficient operations.
  • Cost Savings: By leveraging Amazon’s warehouse capabilities, sellers can drastically decrease storage and delivery expenses.
  • Scalability: AWD can readily accommodate fluctuations in demand, offering adaptable solutions that expand alongside your company.
  • Reliability: AWD’s fast and accurate order fulfillment guarantees that consumers receive their products on time, increasing satisfaction.
  • Focus: By outsourcing warehousing and delivery to AWD, sellers can concentrate on expanding their business, developing new products, and marketing.

AWD Fee Structure

One of the key advantages of AWD is the transparency of its prices. It emphasizes straightforward, pay- as-you-go pricing with “no hidden fees or long-term contracts.”

When considering using Amazon Warehousing and Distribution (AWD) for your business, understanding the fee structure is compulsory. Here’s a detailed breakdown of the various fees associated with AWD:

1. Storage Fees

Amazon charges storage fees based on the volume of inventory stored in their fulfillment centers. These fees, depending on the time of year, during peak seasons (October through December) the rates of FBA are high but the rates AWD standard size are the same.

Monthly Storage Fees For Standard Size Items:

    • January to September: $0.48 per cubic foot ($0.78 for FBA)
    • October to December: $0.48 per cubic foot ($2.40 for FBA)

Inbound Transportation Fees

  • There are no inbound transportation charges for AWD, which save a huge amount of sellers and helps to generate healthy revenue.

2. Processing fees

Amazon charges processing fees when successfully delivering a replenishment order to the fulfillment network. They calculate the fee by multiplying the applicable processing rate by the number of boxes delivered in the replenishment order. This fee is applied once when the box arrives at the warehouse.

  • Processing fee is $2.5 per box; if you are sending 10 boxes then it will be $25 for the whole.

3. Transportation fees

Amazon charges transportation fees when successfully delivering a replenishment order to the fulfillment network. They calculate the fee by multiplying the applicable transportation rate by the total volume of boxes in cubic feet delivered in the replenishment.

  • Transportation fee is $1 per cubic feet.

Amazon Warehousing & Distribution (AWD) Rate Card

Starting March 1, 2024, Amazon Warehousing and Distribution has two tiers of charges:

Base Rate: If you are using your own transportation/carrier service for shipments sent to AWD.

Integrated Rate: If you are using Amazon Global Logistics or the Partnered Carrier Program as the upstream transportation/carrier service provider. Integrated rates are much cheaper then the base rates.

      • 25% off on storage fee.
      • 15% off on Processing fee.
      • 15% off on Transportation fee. (FBA)

For more details on the latest fee structure, Amazon provides comprehensive guidelines here.

How to Get Started with Amazon Warehousing and Distribution

If you wants to get started with AWD? Here’s a step-by-step guideline:

Firstly, navigate to the AWD program website. Secondly, you can reach the enrollment page through Seller Central by going to Growth > Explore Programs > Warehousing and Distribution. If you have any queries concerning the AWD program, this website will answer them. If you’re ready to go, simply click the “Enroll” button in the top-right corner.

Keep in mind that you will need to authorize secondary users access for inbound shipments. This can be done in the user permissions section of your Seller Central settings.

Eligible Products for AWD

Amazon Warehousing and Distribution service is not applicable for all products; some products are excluded from this service:

  • Non-sortable products
  • Perishables
  • Shoes and footwear
  • Jewelry
  • Case packs with one unique SKU each
  • Heavy, bulky, or large products
  • Hazardous products or those requiring temperature control

If you sell these kinds of items, AWD is not a good fit for you. Additionally, AWD does not allow small parcel delivery.

Conclusion

Amazon Warehousing and Distribution (AWD) is a game changer for businesses that want to handle large inventory without paying the hefty costs charged by traditional 3PL suppliers. You can streamline your operations, decrease costs, and focus on growing your business by utilizing Amazon’s enormous logistics network and superior inventory management capabilities.

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