All About Amazon Warehousing and Distribution

Last updated on September 15th, 2023

Written by Himanshi Raj

Numerous components must seamlessly work together to thrive in the Amazon marketplace. At the heart of this puzzle is the efficient management of warehousing and fulfillment. Not only are they crucial for meeting customer expectations, but also for nurturing your business's growth. Fortunately, help is available with Amazon warehousing.

From the nitty-gritty of its operations to its transformative impact, find out how Amazon warehousing has the potential to reshape the path of your ecommerce venture.

What is Amazon Warehousing?

Amazon warehousing refers to the storage and distribution centers where Amazon stores and manages its products. They are crucial to logistics, optimizing inventory management and speeding up deliveries.

A Closer Look at the Amazon Warehousing & Distribution Program

As a global leader, Amazon aims to help sellers manage their substantial inventory while sidestepping supply chain issues and workforce challenges. Among the most prominent concerns are as follows:

  • FBA Storage Fees
  • FBA Inventory
  • Restocking Constraints
  • FBA Storage Space
  • Product Prep and Labeling Requirements
  • Overstock Handling
  • In a bid to provide more support, the ecommerce giant launched the Amazon Warehousing & Distribution (AWD) Program in 2022. This third-party logistics platform was made to confront pressing supply chain problems, helping sellers expand and oversee their stores easier and cheaper. 

    Amazon has even bigger plans this year. They want to diversify their inventory distribution to broader channels: wholesale customers and brick-and-mortar stores.

    How Amazon Warehousing and Distribution Works?

    Curious about how Amazon Warehousing and Distribution operates? Does it function similarly to how normal sellers handle their inventory and storage? 

    Here’s a breakdown of Amazon warehousing’s function and why it simplifies the lives of businesses.

    Product ShipmentSellers initiate the process by shipping their products to an Amazon fulfillment center.
    These centers are important hubs in the distribution network, strategically situated to maintain prompt and systematic delivery of products to customers.
    Inventory ManagementBy sending the bulk inventory to Amazon distribution centers, participating sellers can tap into Amazon Fulfillment Network, which spans various regions and allows for streamlined inventory management and order fulfillment.
    Inventory ReplenishmentAmazon’s watchful system constantly keeps tabs on your product quantities. Should stocks run low, the AWD is programmed to initiate automatic replenishment procedures.
    The automated monitoring and replenishing cycle guarantees you're never caught off guard. It ensures smooth business operations and timely order fulfillment.

    The Benefits of Amazon’s Warehousing Service

    Amazon’s warehousing solution isn’t just about convenience but a medium designed to help your business grow amidst the competitive landscape. Here are the advantages offered by joining the Amazon warehousing program.

    1. Bypass FBA Storage Limits

    Insufficient storage capacity is one of the hindrances online sellers frequently encounter. Maintaining adequate stock levels is daunting, particularly during high-traffic sales events or promotional windows.

    You can effectively circumvent these FBA storage restrictions by leveraging Amazon's warehousing solutions. This approach prevents stock shortages and saves you from incurring excessive storage costs.

    2. Scalability Without Infrastructure Investment

    Amazon Warehousing can change to fit your needs as your business grows. You can expand or reduce based on demand to eliminate the need for upfront investments. This flexibility supports efficient resource allocation.

    3. Cost Efficiency

    This year, two notable news articles highlighted significant changes within Amazon. The first discussed the rise in FBA storage rates, while the second introduced the new prime fee for sellers not utilizing Amazon's fulfillment network.

    Such fees can be a source of concern. Luckily, AWD offers a more adaptable approach. Sellers are billed for storage and services based on their actual usage, saving costs for maintaining physical warehouses. This pay-as-you-go model optimizes the budget and reduces fixed expenses.

    4. Enhanced Tools for Monitoring

    Monitor your stock levels using the Global Inventory Viewer. No matter the location of your stored products, this tool enables a side-by-side comparison of stock quantities and sales metrics across diverse regions. You can gain insights into specific regional markets, understand local demand, and adjust your strategy accordingly.

    This tool is open to all US sellers and can be found within the Seller Central account.

    5. Faster Shipping and Delivery

    Thanks to expansive Amazon fulfillment centers, products are often stored closer to end customers. Proximity means that once an order is placed, the time taken from the warehouse to the customer's doorstep is minimized.

    Faster shipping and delivery are advantageous during peak sales periods. These result in happier customers, higher seller ratings, positive reviews, and boosted sales and reputation in the competitive marketplace.

    3 Considerations Before Implementing Amazon Warehousing

    Amazon Warehousing may offer benefits like better storage or quicker shipping, but it's important to understand how it fits your business. 

    Every business operates differently. What's beneficial for one might not be for another. Before making the switch, it's crucial to think about what you need and how Amazon Warehousing can meet those needs.

    1. Product Eligibility

    Amazon has strict criteria for the types of products you can store in their warehouses. Determine whether your products meet these eligibility requirements. Some items—due to their size, nature, or the regulations governing them—might not be suitable for the service.

    products that aren’t allowed under Amazon warehousing and distribution

    2. Transportation Costs

    If you use Amazon Warehousing and Distribution, you must handle and pay for moving your products to AWD centers. These costs are in addition to Amazon's storage and handling fees.

    Amazon Global Logistics can be a useful resource for those shipping exclusively from overseas. So, it’s a good idea to work with trustworthy shipping companies, know their rates, and plan your shipments smartly to keep costs down.

    3. Separation of Inventories

    If you're shipping products for both services, AWD and FBA inventories must be kept separate and cannot be sent on the same truck. 

    Each service has distinct inventory management, tracking systems, and processing protocols. Mixing the two can lead to complications in inventory tracking, misplacements, and delays in order fulfillment. 

    Furthermore, Amazon has set up specific warehousing zones for each service. By keeping AWD and FBA shipments separate, Amazon aims to maintain the accuracy of its vast logistical operations.

    Is AWD The Right Choice?

    Whether AWD is right for you means looking closely at your business needs and goals. 

    See these points below to make the right decision:

    1. Business Size and Volume

    Take a look at the number of orders you manage daily. You’ll get a clearer understanding of your demand patterns. 

    AWD works for all business sizes, from small businesses to booming enterprises. They can keep up with the market buzz, holiday seasons, or promotional events. The system can manage increased order volumes, upholding service quality and consistency.

    2. Cost-Benefit Analysis

    Review the total costs of using AWD, including storage, handling, and transportation. These costs are a vital part of the picture. Weigh these against the potential benefits like faster shipping times, reduced overheads, and minimized logistical hassles.

    3. Geographical Reach

    Warehouses and distribution centers are everywhere with Amazon. Instead of exploring the challenging path of various regional shipping norms and customs regulations, you can leave it to the AWD’s service. 

    Amazon is extensively experienced in global markets. Using AWD could streamline international shipments depending on Amazon's reach in your target regions.

    4. Integration and Compatibility

    If your business already uses particular inventory management tools or software, compatibility with AWD becomes paramount. You wouldn't want to face technical challenges or mismatches that could lead to operational inefficiencies. 

    It's wise to check beforehand—through pilot testing or consultation—to confirm that AWD can work with your existing tools. This foresight shows that your inventory management remains simplified, even as you adopt new warehousing solutions.

    💡 Seller Reminder 💡
    Test before transition. Your decision should prioritize both immediate gains and long-term growth.

    Speed Up Success With Seller Interactive’s Expert Account Managers

    Full account management involves juggling various tasks: inventory, order fulfillment, shipping, and customer service. Balancing all these responsibilities can be tricky when aiming for efficiency and growth.

    Having someone who knows the ropes of Amazon can be a game-changer. Lucky for you, Seller Interactive is here. You’re not just getting an account manager for your business; you’re gaining a partner dedicated to fast-track your progress in the ecommerce world.
    Book a call now!

    Go from surviving to thriving on Amazon.

    Use the power and influence of advertising to increase sales. Learn more about how you can benefit from our management expertise.
    Book a Call

    Read More

    Landing Page for Amazon Products: A Professional Guide

    Last updated on December 18th, 2023 Written by Mohamed Aden For Amazon sellers, having a strong marketing strategy is crucial for boosting sales. Having a landing page for Amazon products is a strategy many successful sellers apply, and you can also do. This article will explain what a landing page is and how it can […]

    Amazon Best Seller Rank: A Concise Guide to Boosting Sales

    Last updated on December 13th, 2023 Written by Mohamed Aden The Amazon Best Seller Rank (BSR) is a crucial metric sellers like you should understand to maximize your success on the platform. This ranking system reflects a product's popularity and sales performance against other products in the same category. By grasping the intricacies of BSR, […]

    Amazon Seller Names: Essential Guide for Choosing a Winning Identity

    Last updated on December 11th, 2023 Written by Himanshi Raj In a bustling marketplace like Amazon, every aspect of your online presence matters, and thoughtfully chosen Amazon seller names can be one of the first steps toward building a solid brand. However, coming up with an Amazon seller name is considered trivial for most sellers. […]