Beyond FBA: How Amazon Sellers Use AWD to Slash Fees and Prevent Stockouts

A new era of supply chain optimisation is here, and for Amazon sellers, understanding the distinction between Amazon Warehouse Distribution (AWD) and Fulfillment by Amazon (FBA) is critical to scaling your business efficiently. With the constant pressure of storage fees and the need for fast delivery, leveraging these systems in tandem is the key to protecting your profitability.

Key Definitions to Know:

• Amazon Warehouse Distribution (AWD): Is a bulk, upstream product storage reservoir. It enables you to cost effectively hold stock reserves within the Amazon ecosystem and automate the replenishment of inventory to Fulfilment Centres.

• Fulfilment by Amazon (FBA): The downstream fulfilment engine. It handles storage, packing, shipping, and customer service for individual customer orders.

A Strategic Supply Chain Framework

For all inventory based sellers, logistics can make or break your business. To build a resilient and cost-effective operation, a strategic and phased approach is essential.

1. Master the FBA Foundation:

Treat FBA as the non-negotiable core of your customer-facing operations. It provides the Prime badge and hands-free fulfilment that customers expect. Amazon rewards you for your FBA presence with preferential treatment that you will not see with an FBM listing.

• Analyse the Value Breakdown: FBA fees are applied to storage and fulfilment. Understand that the cost is not just for storage but for the immense value of Prime eligibility and the FBA “algorithm bump”which directly drives sales velocity.

• Identifying Incremental Efficiencies: Even a small reduction in storage fees through better inventory management can add up to substantial savings across your entire catalogue.

2. Integrate AWD for Scale and Resilience:

AWD will help you simplify and optimize your upstream logistics.

Begin by doing a transparent analysis of your FBA fulfilment to date. If you are struggling with inventory ceilings and/or continual stock outs, then AWD may provide you with a practical management solution.

AWD is a powerful tool for in-country storage and automating bulk FBA replenishment, but it comes with an additional system to learn, understand and manage so ensure you have mastered the FBA workflows before stepping into the AWD space.

In the longer term AWD can help you to effectively reduce long-term storage costs, simplify inventory management and prevent stockouts.

Stock management for first time inventory based businesses can be challenging and complex. , However, proactive sellers can turn this challenge into a competitive advantage by understanding available systems, monitoring growth, tracking seasonal patterns and then implementing strategies suitable for the age and stage of their business.