Are you an e-commerce seller looking to streamline business operations and maximize profits? Then you won’t want to miss this! In today’s fast-paced online marketplace, efficient Amazon warehousing distribution is vital to staying ahead of the competition. And when it comes to efficient warehousing, only some companies can match Amazon’s expertise.
With over 175 fulfillment centers worldwide and a staggering 8,00,000 average square feet(2021) of warehouse space, Amazon is a powerhouse in the world of e-commerce logistics. But how exactly do they keep their operations running smoothly and efficiently? What are the secrets to their success?
The foundation of Amazon’s warehousing success lies in its cutting-edge technologies, such as robotics, automation, and an advanced inventory distribution network. This allows them to keep up with the ever-growing demands of their customers and contributes to their ability to minimize errors in the distribution process.
In this blog post, we’ll reflect on the inner workings of these Amazon warehouses and what makes them unique in the eCommerce world. So grab a cup of coffee and get ready to unlock the secrets of e-commerce efficiency with Amazon warehousing!
Amazon Warehousing Distribution (AWD) Program Explained
The Basics: What is the Amazon Warehousing and Distribution Program?
AWD is a program offered by Amazon that provides sellers with warehousing, inventory management, and shipping services. This allows sellers to focus on growing their business instead of handling the logistical aspects.
Relying heavily on Amazon’s fulfillment services poses a risk of critical supply chain challenges for sellers.
To manage these possible drawbacks, it’s crucial to maintain optimal inventory turnover, regularly track inventory levels, and proactively take measures to avoid possible risks.
How Does AWD Work? A Look at the Standard Shipping Process and Guidelines:
When enrolling in AWD, Amazon is responsible for storing, packing, and shipping your products. The shipping process is simple:
Products must not be hazardous or restricted per Amazon’s guidelines
By meeting these prerequisites, sellers can enjoy the benefits of AWD and focus on other aspects of their business. The program is accessible to all, including brick-and-mortar stores, regardless of their scale or experience in the eCommerce industry.
Amazon Warehousing and Distribution Pricing: What to Expect
As an e-commerce business owner, understanding Amazon’s Warehousing and Distribution (AWD) pricing is essential for making informed decisions about your inventory management. Let’s look at the cost structure and what you can expect.
Understanding the Cost Structure: An Overview of AWD Pricing
Amazon’s AWD pricing structure includes storage, fulfillment, and removal fees. Each fee varies based on factors such as item size and storage duration.
Storage fees are charged based on the time of year. Because of higher demand in certain months, fees tend to increase during peak season (October-December).
Here’s an example of a storage fees breakdown:
Standard size: $0.75 per cubic foot (January-September), $2.40 per cubic foot (October-December)
Oversize: $0.56 per cubic foot (January-September), $1.40per cubic foot (October-December)
Fulfillment fees are calculated based on the size and weight of items, and they cover the cost of picking, packing, and shipping the products.
Here’s a simplified example of fulfillment fees:
Size tier
Shipping Weight
Fulfillment fee per unit
Small standard-size
4 oz or less
$3.22
Large standard-size
4 oz or less
$3.86
Oversize
70 lb or less
$9.73 + $0.42/lb above the first lb
Removal order fees breakdown:
Removal Type
Fee (per unit)
Considerations
Disposal
$0.15 – $0.50.
Ideal for low-value or damaged items.
Return to Seller
$0.50 – $0.60
Suitable for items you want to retain and redistribute elsewhere.
Finally, removal fees apply when you request your inventory be removed from the Amazon fulfillment network, either by returning it to you or disposing of it. These fees vary based on the item’s size and the removal method.
To give you an idea, here’s a removal fees example:
Standard size: $0.50 per item (return), $0.15 per item (dispose)
Oversize: $0.60 per item (return), $0.30 per item (dispose)
Enrolling in Amazon Warehousing and Distribution (AWD) program provides businesses with a streamlined process for managing inventory, shipping, and returns. This section will teach you the enrollment process and steps to start with AWD.
The Enrollment Process: Steps to Get Started with AWD
Once you have confirmed your eligibility, follow these steps to enroll in the AWD program:
Step 1: Visit the AWD website: Head to the official Amazon AWD website and navigate to the enrollment page. (OR)
Sign in to your Seller account:Use your Professional Seller account credentials to sign in and navigate through explore programs and storage and distribution to access the AWD enrollment form.
Step 2: Complete the enrollment form: Provide the required business and shipping information on the form, including your warehouse location and preferred shipping carriers.
Step 3: Submit your application: After completing the form, click the “enroll” button to send your application for review.
Step 4: Wait for approval: Amazon will assess your application, and if approved, they will notify you via email with further instructions on how to proceed.
Once you receive your approval email, follow the instructions to integrate AWD with your Seller account and set up your warehouse settings. This will allow you to manage your inventory and streamline your fulfillment process effectively.
The Future of Amazon AWD
As an e-commerce seller, you may wonder what the future holds for Amazon and its Amazon Warehousing and Distribution (AWD). This section explores the upcoming changes and initiatives to give you a quick, insightful view of Amazon’s future plans.
Seller Storage Service Expansion in 2023: What’s Ahead for Amazon and AWD?
Amazon continues to innovate in the warehousing space, offering improved storage services to its sellers. This year, they plan to expand their storage capabilities to accommodate even more products and ensure seamless operations.
By embracing innovation, such as automation, robotics, and advanced data analytics, Amazon warehousing can streamline operations, cut costs, and improve customer satisfaction and loyalty. With suitable investments and strategies, businesses can thrive in this ever-evolving industry by taking advantage of the opportunities Amazon warehousing provides.
E-commerce is a rapidly evolving industry; staying informed about the latest developments can help you have a competitive edge. Keep an eye on the progress of leaders like Amazon, and learn from their successes and shortcomings to make informed decisions for your organization.
Frequently Asked Questions
Q. How does Amazon Warehousing differ from Fulfillment by Amazon (FBA)?
A. Amazon Warehousing focuses on storage and inventory management. In contrast, Fulfillment by Amazon (FBA) provides complete end-to-end fulfillment solutions, including shipping and customer service.
While FBA takes care of all aspects, from storage to delivery, Amazon Warehousing allows you more control over your logistics and order fulfillment process.
Q. Can I use Amazon Warehousing for non-Amazon sales channels?
A. Yes, you can use Amazon Warehousing for non-Amazon sales channels. By choosing Multi-Channel Fulfillment (MCF), you can have an Amazon store and fulfill orders from various sales platforms, such as your website or other online marketplaces. This flexibility allows you to manage inventory seamlessly across multiple channels.
Q. Are there any product restrictions in the AWD program?
Q. How does AWD affect my Amazon Prime eligibility?
A. Amazon Warehousing Distribution does not directly impact your Amazon Prime eligibility. However, using Fulfillment by Amazon (FBA) lets FBA sellers list their products as Prime-eligible, providing retail & wholesale customers with faster shipping options. If you want to leverage the benefits of Prime membership, consider opting for FBA instead.
Q. What are the costs for Amazon Warehousing?
A. Amazon charges for inventory storage, fulfillment, and removal. The fees vary depending on the size and weight of the products, the length of storage, and other considerations. However, Amazon Warehousing can be less expensive than maintaining and transporting goods independently.
8-figure Amazon seller and serial online entrepreneur since 2015. Research and practice various online business models, and apply his in-depth learnings to further expand and grow his businesses as well as help others to achieve greater successes. Ex-VP of a high tech VC in Vancouver and a Management Consultant with over a decade of experience in the industry. Master's Degree from HEC Paris.
