Amazon's Warehousing & Distribution Program: The Breakdown
When it comes to online selling, there are many steps in the supply chain that products must go through before making it to the customer’s doorstep. One of these is warehouse storage and distribution. When selling on Amazon, business owners normally store their products in upstream facilities and warehouses and then ship them to an Amazon fulfillment center. But now, there is another option. Amazon’s new program, dubbed the Amazon Warehousing and Distribution service, allows sellers to store their inventory in Amazon distribution warehouses long-term before the products go to fulfillment centers. Here we’re evaluating the program and laying out the benefits it can have for your business.
What is it?
The warehousing and distribution service allows sellers to store their inventory in Amazon distribution centers on a pay-as-you-go basis. The program is available to all Amazon sellers who are currently using fulfillment by Amazon or FBA. The program gives sellers access to bulk storage for their products, and they only have to pay for the amount of space they need. The service is meant to replace the need for separate inventory storage and distribution, allowing sellers to work exclusively with Amazon for storage, distribution, and fulfillment.
how does it work?
Using the warehousing and distribution program is simple:
- Send your inventory in bulk to Amazon’s network of distribution center
- Store your inventory in one of Amazon’s distribution center warehouses and pay as you go
- Integrate your AWD storage services with the Amazon fulfillment network (FBA)
- Consolidate your inventory from other operations
simplify the supply chain
The warehousing and distribution program simplifies the supply chain for sellers because every step of the process will be done with Amazon, from selling online, to inventory storage, to fulfillment. This can ease a lot of the burden for sellers because tackling supply chain issues can often be difficult, especially when there are various parties involved. And in recent years during the pandemic, many businesses suffered from supply chain challenges like inventory backups and delayed shipments. According to Statista, in a 2021 survey, more than half of supply chain professionals stated that they found supply chain shortages and disruptions extremely or very challenging. Similar to the FBA program, the warehousing and distribution service puts these challenges into Amazon’s hands, and with Amazon running multiple services in the supply chain, they are more equipped to deal with them.
integrate with FBA
The AWD program was created to be integrated with fulfillment by Amazon. This makes the process of selling easier because sellers are using one company for all of their needs. Using the AWD program allows storage, distribution, and fulfillment in your business to be integrated by combining the AWD program with Fulfillment by Amazon. The program is only available to sellers who are already within the FBA network, and for good reason. This allows sellers to reap the most benefit from the new warehousing service. By integrating with FBA, Amazon can strategically position your inventory within the fulfillment network to deliver it faster and at lower costs for customers. Combining distribution and fulfillment makes it easier to solve problems as well. For instance, if a seller’s product is out-of-stock in the Prime-ready FBA center, customers can still search for and purchase it as long as it is in stock in the distribution warehouse.
Cut costs
A major selling point of the new program is that it will cut costs for sellers, according to Amazon. With the AWD program, sellers only pay for the amount of space they require in the distribution warehouse. Storage costs are significantly less than those of storing inventory in FBA warehouses. Additionally, Amazon boasts that there are no hidden fees or long-term contracts involved in the program. Thus, sellers do not have to fear getting stuck in a long-term storage contract, which can happen when using third-party logistics providers for storage and distribution services. Sellers can also save money by consolidating their inventory from various selling operations using the warehousing and distribution service.
key benefits
There are several key benefits of the warehousing and distribution program that will help sellers. One major pro of the service is automated replenishment. Amazon will monitor your inventory in the FBA warehouse and when supplies fall under a certain amount, they will automatically replenish the products from the distribution (AWD) warehouse. This way, sellers will not have to worry about going out of stock of any products.
Another great benefit of the AWD program is inventory tracking. Sellers can track the movement of their inventory from the distribution center to the fulfillment center using the Global Inventory Browser or GIV. Sellers can also give feedback to Amazon on the GIV so both parties can work together more efficiently.
A third benefit of the distribution and warehousing service is that if business owners are selling globally, they can consolidate their global inventory. This simplifies things for sellers by giving them one pool of inventory for all of their operations that they can use to fulfill orders across different sales and distribution channels. By consolidating their inventory, sellers can fulfill orders both from Amazon and from their other sales channels using Multi-channel Fulfillment. This option significantly simplifies things for sellers who are fulfilling orders across multiple eCommerce channels. Sellers can have all of their inventory from different operations in one place and save money in doing so.
And finally, a fourth benefit of the AWD program is that beginning in 2023, sellers will be able to send their inventory anywhere they like, not just the FBA warehouse. This includes locations like wholesale customers and brick-and-mortar shops.
All in all, the Amazon Warehousing and Distribution program is a cool new way for sellers to ease some of the supply chain burden on their businesses and get all of their services from one place. Just like with fulfillment by Amazon, this program makes things a lot less complicated for sellers who want to focus on building their brand and increasing sales rather than supply chain issues. If you’re looking to simplify and optimize your selling operations and potentially cut costs, give the AWD program a try and see what it can do for your business. Happy selling!