Since the launch of Amazon Warehousing and Distribution (AWD), Amazon has increased several fees to the traditional Fulfillment by Amazon (FBA) service, prompting many sellers to question whether Amazon is trying to force the switch to AWD.
While traditional FBA offers a more complete fulfillment service, AWD’s significantly lower bulk storage costs make it a tempting option for retailers. But is it really better than traditional FBA?
In this guide, we’ll explore the differences between Amazon AWD vs. FBA, break down which service is better, and investigate real reviews from AWD users.
TL;DR:
Key takeaways
Amazon AWD is a bulk storage solution that helps retailers save on storage and distribution costs.
FBA is a more comprehensive fulfillment solution that provides third-party storage, picking and packing, and customer service for Amazon sellers.
AWD can help Amazon sellers avoid high peak season surcharges and inbound placement fees while reducing their bulk storage costs.
AWD reviews are largely negative, with many users complaining about replenishment delays and missing items affecting their business.
FBA may be a better option for businesses with fast sell-through rates and minimal storage requirements.
What you’ll learn
The main differences between Amazon AWD and FBA, including fees, reliability, and services provided.
Which option is better for specific common scenarios faced by Amazon sellers.
What existing customers are saying about their experience using Amazon AWD.
Looking for an alternative to FBA or AWD? Red Stag Fulfillment offers a complete suite of Amazon fulfillment services, including FBA prep, Seller Fulfilled Prime, and FBM.
What is Fulfillment by Amazon?
Fulfillment by Amazon (FBA) is a storage and fulfillment service that allows sellers to store inventory in one of Amazon’s fulfillment centers.
Under the traditional FBA model, a seller sends their products to a dedicated FBA location, and Amazon takes care of inventory management, order fulfillment, and customer service on their behalf.
Whenever a customer places an order, Amazon picks, packs, and ships the goods directly to the customer. They also handle customer service tasks, such as managing returns and responding to inquiries.
Read More: Amazon FBM vs. FBA: A complete comparison
What is Amazon Warehousing and Distribution?
Amazon Warehousing and Distribution (AWD) is a bulk storage and distribution service designed to assist sellers with managing bulk inventory and sending it to different distribution channels when needed, including to FBA locations. AWD helps businesses outsource warehousing operations, avoid running out of stock, and automate replenishment directly into Amazon’s FBA fulfillment centers.
The AWD service comprises four main components:
01
Bulk storage
02
Free FBA inbound placement
03
Auto-replenishment
04
Multichannel distribution
Bulk storage
Sellers who sign up for Amazon AWD receive a dedicated storage space in an Amazon AWD warehouse. You ship your inventory directly to this location, where it will be organized and stored until it’s ready for distribution.
Free FBA inbound placement
If you’re enrolled in Amazon AWD, you won’t have to pay the recently introduced FBA inbound placement service fee—the cost of shipping inventory to other fulfillment centers for faster delivery. This fee normally ranges from $0.16–$3.32 per unit, which can significantly inflate your total fulfillment costs.
Auto-replenishment
If you’re using Amazon FBA as a distribution channel, Amazon’s warehouse management system will track and monitor your stock levels in real time. If you turn on auto-replenishment, Amazon AWD will automatically ship inventory to an Amazon fulfillment center whenever stock gets low to ensure customer orders are fulfilled on time.
Multichannel distribution
Multichannel fulfillment enables sellers to expand their reach while maintaining fewer operational hubs. Amazon AWD will distribute your stored inventory to FBA fulfillment centers and independent distribution channels, such as your third-party fulfillment provider’s warehouse or a retail shop you sell from.
Amazon AWD vs. FBA: What’s the difference?
Before we launch into the specifics, let’s get clear on what sets Amazon AWD apart from FBA—and what they have in common.
Amazon AWD is primarily built for storing large quantities of inventory and distributing stock across multiple sales channels. On the other hand, FBA offers a more comprehensive fulfillment service that includes storage, picking and packing, customer service, branded packaging, and custom inserts.
AWD and FBA use different fee structures. Because AWD offers cheaper storage per cubic foot, it’s more suitable for sellers with long-term storage requirements. Likewise, since FBA offers more fulfillment services than AWD, it’s typically more affordable and better suited for sellers with low inventory volumes, faster inventory turnover, and/or more complex fulfillment needs.
NOTE: Enrolling for Amazon AWD does not negate the use of FBA services. Sellers can store inventory at an AWD warehouse and continue using FBA as a distribution channel.
How much does Amazon AWD cost vs. FBA? Comparing fees
AWD and FBA offer different pricing structures with fees for specific services provided.
In both cases, factors such as product type and sales velocity affect which fees you pay and how much they cost. That means there’s no definitive “cheaper” option—it’s entirely dependent on your unique requirements.
However, understanding how these fee structures work will help you determine which option is better for you—and which products are better suited for each solution.
Here’s a quick summary of the cost differences between AWD and FBA:
Amazon AWD is about 66% cheaper than FBA for inventory storage.
FBA typically has cheaper base fulfillment fees, but it includes hidden costs like low-inventory-level fees, peak season surcharges, and inbound placement fees.
You can save a further 20% on AWD storage fees when you use Amazon Global Logistics (AGL) or the Amazon Partner Carrier Program (PCP) to send inventory to AWD.
You can save a further 10% on AWD processing and transportation fees when you use AGL or PCP to send inventory to AWD.
Storage fees
Amazon AWD offers significantly cheaper bulk storage compared with FBA. Unlike FBA, there are no additional costs for storing inventory during peak seasons and no separate charge for the FBA inbound placement service.
AWD storage and transportation fees are calculated based on cubic feet of storage space. Amazon offers three AWD rate types:
- Base rate.
The base rate applies when you manually replenish inventory to FBA fulfillment centers. - Smart storage rate.
This applies when you use AWD auto-replenishment to move inventory from AWD to FBA. SKUs must meet specific criteria to be eligible for the smart storage rate. - Amazon Managed Service rate.
You’ll pay this rate when you select the Amazon Managed Service shipping option when you create a shipment to AWD. SKUs must meet specific criteria to be eligible.
Here are the exact storage fees for Amazon AWD and FBA:
| Service Type | Monthly Storage Fee |
|---|---|
| AWD base rate | $0.48/cubic foot |
| AWD smart storage rate | $0.43/cubic foot |
| AWD Amazon Managed Service rate | $0.38/cubic foot |
| FBA January–September (standard size) rate | $0.78/cubic foot |
| FBA January–September (oversized) rate | $0.56/cubic foot |
| FBA October–December (standard size) rate | $2.40/cubic foot |
| FBA October–December (oversized) rate | $1.40/cubic foot |
For traditional FBA users and AWD users not using the Amazon Managed Service, two extra charges are associated with storage utilization. These are: the low-level-inventory fee and the aged inventory surcharge (previously known as the long-term storage fee).
However, there are exceptions to these fees.
To avoid them, SKUs must be shipped to AWD using the Amazon Managed Service and auto-replenished to FBA. Furthermore:
The aged inventory surcharge does not apply for products stored between 181-365 days when you auto-replenish 70% or more units of that SKU to FBA through AWD over the previous 90 days.
The low-level inventory fee does not apply if you limit the maximum number of SKUs that can be auto-replenished to FBA (unless the inventory level for that SKU falls below the required days of supply in FBA).
Aged inventory surcharge
For qualifying SKUs, these are the current surcharges for aged inventory:
| Age of Items | Aged Inventory Surcharge |
|---|---|
| 181-210 days | $0.50/cubic foot* |
| 211-240 days | $1.00/cubic foot* |
| 241-270 days | $1.50/cubic foot* |
| 271-300 days | $5.45/cubic foot |
| 301-330 days | $5.70/cubic foot |
| 331-365 days | $5.90/cubic foot |
| 365 days or more | $6.90/cubic foot or $0.15/unit (whichever is greater) |
Low-inventory-level fees
Low-inventory-level fees are determined based on the historical days of supply—the ratio of average daily sellable units stored in Amazon’s fulfillment network to the average daily shipped units. As such, the value of each low-level-inventory fee varies on a per-SKU basis.
To find your low-inventory-level fee for a specific product:
Navigate to Seller Central > Manage All Inventory.
Under filters, select Low-inventory-level fee and click the box that says Fee will be applied.
Click on the link in the column Estimated fee per unit sold for the product you wish to learn about.
When the Revenue Calculator box pops up, scroll down to the section titled FBA fulfillment fees to find your low-inventory-level fee for that SKU.
Transportation fees
AWD charges transportation fees that cover the cost of moving your inventory from an AWD warehouse to Amazon’s fulfillment network. Unlike traditional FBA, there’s no additional inbound placement fee for splitting a shipment between multiple fulfillment centers.
Here’s how transportation fees work for AWD:
| Service Type | Transportation Fee |
|---|---|
| AWD base rate | $1.15/cubic foot |
| AWD smart storage rate | $1.15/cubic foot |
| AWD Amazon Managed Service rate | $1.04/cubic foot |
Since inventory stored at an FBA location is already in the Amazon Fulfillment Network, there’s no transportation fee for traditional FBA sellers. However, you may have to pay the inbound placement fee to split shipments between different locations.
For example, let’s say you wanted to send three pallets of identical shoes to an Eastern FBA location and have Amazon decide how to place the inventory across their network.
If there’s significant customer demand in the West for your shoes, it makes sense for Amazon to split the shipment and send one of the pallets to a Western location. This enables faster delivery speed for customer orders in the West. Traditional FBA sellers will be charged an inbound placement fee to transfer your pallet, whereas AWD users will not.
Here’s how the inbound placement fee structure works for traditional FBA:
Multichannel distribution outbound transportation fees
For multichannel distribution, Amazon AWD outbound transportation fees are determined based on distance, shipping weight, and shipping method.
You may choose between a palletized load and a box load (also known as a small parcel delivery). Box loads are delivered directly, while the palletized load option combines boxes into a pallet for delivery.
Here’s how the pricing works for each option:
Box Load / Small Parcel Delivery
| Distance (miles) | Fee per pound |
|---|---|
| 0-150 | $0.43 |
| 151-300 | $0.49 |
| 301-600 | $0.53 |
| 601-1000 | $0.65 |
| 1001-1400 | $0.80 |
| 1401-1800 | $0.95 |
| 1801+ | $1.07 |
Palletized Load
| Distance (miles) | Fee per pound |
|---|---|
| 0-250 | $0.11 |
| 251-500 | $0.15 |
| 501-1000 | $0.21 |
| 1001-1500 | $0.27 |
| 1501-2000 | $0.32 |
| 2001+ | $0.36 |
NOTE: When calculating outbound transportation fees for AWD, the distance is always rounded to the nearest whole number.
Processing fees
Inbound and outbound processing fees are $1.35/box (charged separately).
Amazon AWD charges an inbound processing fee when inventory is received in the distribution center and an outbound processing fee when a replenishment order is delivered to Amazon’s Fulfillment Network or an independent sales channel.
Once inventory moves from an AWD warehouse to an FBA location, standard FBA fulfillment fees still apply.
Let’s say you send five cartons of sweatbands to an AWD warehouse for long-term storage. When the inventory arrives at the warehouse, you’ll be charged an inbound processing fee of $6.75 ($1.35/carton).
Later, when your stock is about to run out at an FBA location, two of those cartons are sent from the AWD warehouse to Amazon’s Fulfillment Network to replenish the inventory. When those cartons are delivered, you’ll be charged an outbound processing fee of $2.70 ($1.35/carton).
Fees that only apply to FBA
One of the biggest benefits of AWD compared to traditional FBA is that you avoid certain fees and surcharges. With AWD, there are no peak season penalties. That means you’ll pay the same amount for storing inventory in Q4 as you would in Q1, Q2, and Q3.
You’ll also avoid surprise expenses such as:
Inbound placement fees
Low-inventory-level fees
FBA aged inventory surcharge
Costs associated with maintaining your own bulk storage warehouse
Read More: 7 pitfalls of Fulfillment by Amazon
Who is Amazon AWD best for? AWD vs. FBA summary
The complexity of Amazon’s fee structures can make it difficult to work out which option will be more beneficial in the long run. However, we can make some assumptions based on the information available.
Let’s look at a few common scenarios to compare which service is better suited under specific circumstances.
| AWD | FBA |
|---|---|
| You’re uncertain about sales velocity. | You’re confident you’ll sell through your inventory quickly (30-60 days). |
| You want to avoid inbound placement fees, low-inventory-level fees, and aged inventory surcharges. | You wish to customize your packaging. |
| You want to avoid peak season surcharges. | You want a more comprehensive fulfillment service that includes customer service. |
| You require long-term storage for bulk inventory. | You want all your products to be automatically eligible for Prime shipping. |
| You don’t want to use your own warehouse for storing bulk inventory. |
FBA storage fees are significantly higher during peak season. Add to this the recently introduced inbound placement fees, and your costs are likely to increase exponentially during this period—especially if they’re sitting in storage for a long time.
If you’re confident your products will sell out quickly, these peak season surcharges might not be an issue. But if you’re selling in larger quantities or unable to predict sales velocity, then FBA storage fees could seriously hurt your profit margins.
For sellers that want stable storage rates or expect a slow turnover (60+ days), AWD can shield you from a lot of extra costs and allow you to focus on capitalizing on sales rather than managing inventory levels.
PRO TIP: AWD users have voiced complaints about the reliability of AWD’s auto-replenishment service during peak seasons—resulting in slow deliveries and stockouts. Keep an eye on your inventory levels during high-traffic sales periods and consider manually managing replenishment for critical SKUs.
What real sellers are saying about Amazon AWD
Amazon’s marketing campaigns may paint a more positive picture of the AWD service than the reality experienced by sellers. AWD’s primary selling point is that it offers significantly cheaper storage fees than FBA. But how do service quality and reliability compare?
While some users have praised AWD as an affordable alternative to traditional FBA, there’s also been some negative feedback.
Let’s look at what AWD users have to say about their experience.
Amazon AWD reviews
Unfortunately, there aren’t many positive reviews floating around online for Amazon AWD.
This may be partly due to the fact people are generally more inclined to write negative reviews than positive ones. But where there’s smoke, there’s usually fire.
However, AWD customers seem happy with the financial benefits. For example, one user recently shared that they were able to reduce their per-unit costs, get rid of their warehouse space, and save time on shipping products to FBA with AWD.
The most common criticism you’ll find online for AWD pertains to shipping delays.
A quick search in the Amazon Seller Central forums, Reddit’s r/FulfillmentByAmazon, and r/AmazonSeller subreddits turns up dozens of reviews that mention slow receiving times and delayed FBA replenishments.
While some users are optimistic about the service when things are running smoothly, others have been completely turned off AWD by their experience.
Another common criticism of AWD is that some packages are not just delayed; they’re lost forever. To make matters worse, sellers have claimed Amazon refused to reimburse them for missing items.
In summary, Amazon Warehousing and Distribution may not be as glamorous as purported by Amazon’s marketing team. While the service helps sellers avoid some of the new FBA fees and save on storage costs, a generally negative sentiment is shared by AWD sellers regarding the quality and reliability of the service.
Simplify Amazon logistics with Red Stag Fulfillment
The good news is that as flawed as Amazon AWD may be, it’s not the only way to avoid inflated FBA storage costs and the hassle of managing your own warehouse.
The expert team at Red Stag Fulfillment helps Amazon retailers store, manage, and distribute inventory while avoiding hidden fees and shipping delays. With over 50 years of combined experience, we bring a dedicated and compassionate approach to supporting your business, helping you outsource your Amazon operations without sacrificing quality, timeliness, or customer satisfaction.
To learn more about Red Stag Fulfillment’s logistics services for Amazon sellers, reach out today.
