How to Use Amazon Warehousing and Distribution (AWD) to Cut 3PL Costs

For years, the standard supply chain for a scaling Amazon seller has been a complex dance. You ship inventory from your factory to a third-party logistics (3PL) warehouse for long-term storage, and then your team manually creates smaller shipments from that 3PL to Amazon's FBA fulfillment centers to stay within your restock limits.

What if you could simplify that entire upstream process and keep your inventory within Amazon's ecosystem from start to finish? That is the promise of Amazon Warehousing and Distribution (AWD), Amazon's strategic solution to bulk inventory management. This guide will explain what AWD is, how it works, and how it can be used to streamline your supply chain and potentially reduce costs.

1. What is Amazon Warehousing & Distribution (AWD)?

Amazon Warehousing and Distribution is Amazon's dedicated long-term, bulk storage solution. It is a network of separate "distribution centers" designed specifically to hold your inventory before it is needed in the "fulfillment centers" where it is picked, packed, and shipped to customers.

Think of it as Amazon's version of a 3PL. It combines the low-cost, bulk storage of a traditional warehouse with the powerful integration of being inside the Amazon ecosystem.

2. The Core Feature: Automated FBA Replenishment

The true power of AWD lies in its "set it and forget it" automation.

1. Inbound to AWD: You send your bulk inventory (pallets or containers) directly from your manufacturer to a designated Amazon Distribution Center.
2. Long-Term Storage: Your inventory is stored at simple, predictable rates. Crucially, AWD facilities do not charge FBA's punitive aged inventory surcharges, making it ideal for long-term storage.
3. Automated FBA Replenishment: This is the magic. Amazon's systems constantly monitor your sales velocity and inventory levels in the FBA fulfillment centers. When your FBA stock for a product runs low, AWD automatically creates and sends the optimal amount of inventory from the distribution center to the fulfillment centers to replenish it.

This automated replenishment ensures your FBA inventory stays at the perfect level, helping you avoid costly stockouts and FBA storage overage fees, all while keeping your Inventory Performance Index (IPI) score healthy.

3. The Key Benefits of AWD vs. a Traditional 3PL

For sellers currently using a 3PL to manage their FBA inventory, AWD offers several compelling advantages.

• A Simplified Supply Chain: You have a single partner—Amazon—managing your entire inventory journey, from bulk storage to final customer delivery. This eliminates the complexity and communication overhead of managing a separate 3PL provider.
• Automated Operations: The auto-replenishment feature removes the weekly manual task of creating FBA shipping plans from your 3PL. This saves significant time and labour, and reduces the risk of human error.
• Integrated Inventory View: You can see your upstream bulk inventory in AWD and your "ready-to-sell" FBA inventory within the same Seller Central ecosystem, providing a single source of truth.
• Potentially Lower Costs:
  
  • Storage: AWD's monthly storage fees are designed to be competitive with 3PL rates.
  • Transportation: The cost of moving inventory from an AWD center to an FBA center (the "inbound placement") is often lower and faster than shipping from an external 3PL, as it's all handled within Amazon's own optimized network.

4. Who is AWD For?

AWD is a strategic solution designed for a specific type of seller:

• High-volume FBA sellers who are already using a 3PL to manage their inventory flow.
• Sellers who are consistently constrained by FBA restock limits and need an upstream storage solution.
• Brands looking to simplify their supply chain and reduce the number of partners and software systems they have to manage.

Whether you're leveraging the new Amazon Warehousing & Distribution program or managing a network of 3PLs, your global supply chain is the engine of your business. As a full-service agency, Sitruna provides the strategic oversight and expert management to design the most efficient and cost-effective logistics network for your brand.

Useful Resources

• The Official Amazon Warehousing & Distribution Homepage
• Amazon Seller Central: FBA Restock Limits (to understand the problem AWD solves)

Conclusion: The Future of FBA Inventory Management

Amazon Warehousing & Distribution is Amazon's ambitious play to manage a seller's entire supply chain, offering powerful automation and simplification. It represents a fundamental shift from the traditional, fragmented 3PL model to a single, integrated ecosystem. For any large FBA seller, it is a strategic alternative that deserves a serious evaluation.

Ready to optimize your entire supply chain? Schedule a free discovery call with the Sitruna team at www.sitruna.com/meet to design a more efficient and profitable logistics strategy for your brand.

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