Amazon AWD explained: Is it worth it for sellers?

Amazon Warehousing and Distribution (AWD) is a multichannel storage and distribution service launched in 2022 to help sellers save on Fulfillment by Amazon (FBA) inventory and transportation costs.

If you’re already familiar with FBA, you might be wondering whether Amazon AWD is a viable option for your inventory needs. More importantly, is it reliable and will it save you money?

In this guide, we’ll cover what Amazon AWD is, how much it costs to use the service, and what existing AWD users are saying about it. (Spoiler alert: Reviews range from tepid to terrible.)

What you’ll learn

What is Amazon Warehousing and Distribution (AWD)?

Amazon Warehousing and Distribution (AWD) is a third-party bulk storage and distribution service designed to help sellers manage inventory before it’s distributed to Amazon’s Fulfillment Network or independent sales channels.

AWD allows sellers to avoid the high storage fees associated with Fulfillment by Amazon (FBA) and maintain large volumes of inventory without leasing or purchasing a warehouse. Unlike FBA, AWD does not offer third-party customer service or direct-to-consumer (DTC) fulfillment services.

If you use FBA to manage DTC fulfillment, you can continue storing inventory at an Amazon fulfillment center while maintaining larger inventory volumes at an AWD warehouse. When your stock gets low at the FBA location, you can manually or automatically replenish inventory directly from AWD to FBA to avoid stockouts.

Read More: Amazon AWD vs. FBA: Which option is best for you?

Amazon AWD product eligibility

Not all products qualify for Amazon AWD services. Before you enroll, it’s important to check that your products meet the AWD product eligibility requirements.

Products that don’t qualify for Amazon AWD include:

In addition to these, items classified as dangerous goods, boxes larger than 25” on any side that weigh more than 50 lb, and products larger than 25” X 25” X 25” that weigh more than 49 lb are also ineligible.

Features and benefits of AWD

AWD’s primary purpose is to provide a storage and distribution solution for sellers that’s more affordable than maintaining large volumes of inventory at an Amazon fulfillment center.

Let’s quickly break down what you get when you enroll with AWD.

Bulk storage

Amazon AWD gives sellers dedicated space at an AWD warehouse for storing bulk inventory. Sellers send inventory directly to the AWD warehouse to be organized, stored, and managed until it’s needed at an FBA location or independent distribution channel.

Inventory management

While in storage, inventory at an Amazon AWD warehouse is managed by Amazon personnel on behalf of the seller. Amazon provides sellers with real-time visibility across inventory levels and storage usage, which can be tracked in their Seller Central account.

Auto-replenishment

Auto-replenishment is an optional, free-of-charge Amazon AWD service that automatically sends inventory from a seller’s AWD warehouse to an Amazon fulfillment center when stock gets low.

AWD uses predictive analytics to forecast how much inventory will be needed at FBA locations to meet demand. When stock levels reach a minimum threshold, the auto-replenishment function triggers replenishment shipments from AWD to FBA.

You can manage your auto-replenishment settings for specific SKUs and set custom quantity limits in FBA.

FBA inbound placement

The FBA inbound placement service fee is a charge traditional FBA sellers must pay to split inventory shipments between multiple fulfillment centers for faster customer deliveries.

For example, if a traditional FBA seller wants to split a shipment between an Amazon fulfillment center in Los Angeles and another in New York, they would be charged a fee based on the weight and size of the shipment.

With Amazon AWD, this fee is waived.

Multichannel distribution

In addition to sending inventory to FBA locations, AWD’s multichannel distribution service allows sellers to replenish inventory to their own warehouses or retail stores and third-party locations, such as a wholesaler’s warehouse, directly from AWD.

How Amazon AWD works

To give you a better understanding of what happens when you enroll in Amazon AWD, here’s how the process works:

Let’s say you’re a retail business with multiple sales channels: Amazon FBA and a retail store. 

You send 900 products with the same SKU to an AWD warehouse for long-term storage. 

After one month, your FBA inventory is running low. Amazon AWD automatically ships 200 products to an FBA location to replenish your stock. A month later, your retail store is nearly out of stock, so AWD sends 300 products directly to your shop for the same reason.

In this way, you’ve avoided space limitations and high long-term inventory storage costs by keeping the bulk of your inventory at an AWD warehouse until it’s needed elsewhere.

How much does Amazon AWD cost? Fees explained

Amazon Warehousing and Distribution fees are the charges you pay for each of the services provided. They’re split into four categories:

Here’s a quick summary of the base rates for AWD fees:

Storage fees

Storage fees are the costs you pay to store inventory in an Amazon AWD warehouse. They’re calculated based on the volume (in cubic feet) of storage space utilized.

The base rate for AWD storage fees is $0.48/cubic foot per month. That means that if you require 100 cubic feet of storage space, your monthly storage fee would be $48 (0.48 ⨉ 100).

In addition to the base rate, you may also be charged an aged inventory surcharge for products stored longer than 180 days and a low-inventory-level fee for SKU quantities below a certain minimum (calculated on a per-SKU basis).

Aged inventory surcharge costs:

Low-inventory-level fees are calculated for each SKU based on the ratio of average daily sellable units in Amazon’s fulfillment network to the average daily units shipped.

To find a SKU’s low-inventory-level fee:

Transportation fees

AWD transportation fees are the charges associated with moving your inventory from an AWD warehouse to an FBA location.

The base rate for AWD transportation fees is $1.15/cubic foot. So if you needed to send 50 units with a total volume of 30 cubic feet from an AWD warehouse to an FBA fulfillment center, your transportation fee for that shipment would be $34.50 (1.15 ⨉ 30).

Multichannel transportation fees

Multichannel transportation fees are the charges associated with sending your inventory from an AWD location to an independent (non-FBA) distribution channel.

These fees are calculated based on shipping distance (in miles, rounded to the nearest whole number), shipment weight, and shipping method. Shipping method refers to the way inventory is packed and delivered—box load (also called a small parcel delivery) or palletized load.

Box loads are delivered directly to your distribution channel, while palletized loads combine boxes into a pallet for delivery.

Here’s how AWD multichannel transportation fee pricing works:

Inbound and outbound processing fees

Processing fees are the charges you pay when inventory is received in an AWD warehouse (inbound processing fees) or delivered to a distribution channel (outbound processing fees).

Inbound and outbound processing fees are charged separately, and they equal $1.35/box.

If you send 10 boxes of inventory to an AWD warehouse, you’ll be charged an inbound processing fee of $13.50 (1.35 ⨉ 10) when it is received by the warehouse. If you replenish 12 boxes of inventory to a distribution channel, you’ll be charged an outbound processing fee of $15.70 (1.35 ⨉ 12) when the boxes have been delivered.

Amazon AWD fees example

To give you a clearer understanding of how the Amazon AWD fee structure works as a whole, let’s look at an example.

Sam’s Sneakers is a shoe retailer that uses three main distribution channels: FBA, a pop-up retail store, and a third-party distributor. 

Sam, the owner-operator of Sam’s Sneakers, sends 750 products in 15 separate boxes to an Amazon AWD warehouse for long-term storage. The total volume for this shipment is 255 cubic feet. 

Sam is charged the per-box inbound processing fee of $1.35, totaling $20.25. The inventory remains unsold in the AWD warehouse for one month, so Sam also pays the per-cubic-foot storage fee of $0.48 per month, totaling $122.40.

Sam’s inventory levels at all three locations are running low, so he replenishes 300 products to an FBA location, 300 products to his distributor’s warehouse, and the remaining 150 products to his pop-up store.

Each box contains 50 products, so his outbound processing fees are:

Sam is charged the $1.15/cubic foot transportation fee for replenishing the FBA location, totaling $103.50.

Each box of products weighs about two pounds. Sam’s distributor is located 30 miles from the AWD warehouse, and his pop-up shop is located 150 miles from the AWD warehouse. He chooses the box-load shipping method for both deliveries and pays a multichannel transportation fee for each shipment.

The distributor delivery costs $0.43/pound because it falls within the 0-150 miles price bracket, totaling $258, while the pop-up shop delivery costs $0.49/pound because it falls within the 151-300 miles price bracket, totaling $147.

Here’s a summary of Sam’s AWD storage, processing, and distribution fees for 750 products:

Using Amazon Global Logistics and the Amazon Partner Carrier Program with AWD

Amazon Global Logistics (AGL) is a door-to-door ocean freight transportation service for international sellers. The Amazon Partner Carrier Program (PCP) is a discounted transportation service for sellers sending inventory to Amazon fulfillment centers using Amazon-partnered carriers.

When you use AGL or PCP to send inventory to an AWD warehouse, you save:

These discounts are known as the Amazon Managed Service rate.

How to enroll for the Amazon Warehousing and Distribution program

To enroll in the Amazon Warehousing and Distribution program, follow these steps:

Downsides of Amazon AWD

Amazon AWD has been heralded (by Amazon) as a “seamless replenishment” and “low-cost bulk storage” solution. But is it all it’s cracked up to be?

Maybe not. The feedback from AWD users has been largely negative since the service was launched in 2022.

Although FBA fee increases have driven many traditional FBA sellers to try AWD, numerous complaints have surfaced online concerning lost items, frustrating customer service, and painful replenishment delays.

Risk of delays and lost items during peak seasons

The most common problem we’re seeing with Amazon AWD is reports of inventory being delayed or lost on its way to FBA locations during peak seasons.

We don’t need to tell you why that’s a serious issue for retailers. But to make matters worse, Amazon’s approach to resolving these challenges appears to be disappointing at best—downright non-existent at worst.

Check out some of these reviews from the Seller Central Forums:

Limited customization

Unlike traditional FBA, AWD users don’t have access to the Amazon Custom platform where sellers can offer customers different ways to customize their products. That means inventory stored in an AWD warehouse cannot be personalized with text or images before it’s distributed.

Customer service must be self-managed

Amazon AWD users are responsible for all customer interactions relating to inventory stored at an AWD location. This includes handling:

For traditional FBA sellers, these services are included at no extra charge.

Streamline Amazon fulfillment with Red Stag Fulfillment

If you’re looking for a more reliable third-party storage and fulfillment solution for your Amazon FBA needs, you’re in the right place.

At Red Stag Fulfillment, we help U.S.-based Amazon retailers tackle inventory storage, order fulfillment, and distribution without charging you hidden fees that dig into your profit margins. Our expert team leverages a combined 50 years of experience to deliver a reliable, efficient third-party fulfillment (3PL) service that puts the seller’s needs first.
Reach out to our team today to learn more about our logistics solutions for Amazon retailers.