Amazon Warehousing and Distribution Explained: What U.S. Sellers Need to Know in 2025

Are the rising 3PL bills squeezing your margins? Well, you’re not alone. A lot of U.S. sellers are going through the same thing. That’s why more people are talking about Amazon Warehousing and Distribution (AWD), which is essentially Amazon’s attempt to step in and handle the bulk storage, replenishment, and distribution side of the business.

Are you wondering if this is the same thing as an Amazon fulfillment center? No, Amazon Warehousing and Distribution doesn’t ship to customers. Instead, think of the Amazon Warehousing and Distribution program as a middleman. 

You send your products straight there, Amazon holds your stock, and when your FBA inventory starts running low, Amazon Warehousing and Distribution automatically pushes more units into the network. It’s like having Amazon as your upstream 3PL, except you’re following their rules.

Amazon Warehousing and Distribution reviews are mixed. Many sellers appreciate the convenience and freedom from FBA restock limits, while others are wary of the costs. AWD fees are based on cubic-foot or pallet storage, plus transfer charges into FBA.

 In 2025, those numbers are competitive compared to U.S. 3PL averages.

Shall we begin with the blog where you get to know everything you need to know about Amazon warehousing and distribution, from how it works, its key features, benefits, etc., to how you can easily access and start using the program?

What is the Amazon Warehousing and Distribution program?

If you’re confused about Amazon Warehousing and Distribution, the explanation is more straightforward than it might seem.

In plain terms, Amazon Warehousing and Distribution (AWD) is Amazon’s bulk storage and distribution system that feeds directly into FBA. 

Instead of shipping pallets to a third-party warehouse and drip-feeding them into Amazon, you can send inventory straight into AWD. 

Amazon holds it, manages it, and automatically transfers stock into FBA when your listings run low.

Why does this matter? Because sending inventory directly into FBA comes with limits. Storage space is capped, long-term fees are steep, and restock restrictions can choke sales during peak demand. AWD bypasses those constraints by acting as your upstream warehouse. 

It offers per-pallet or cubic-foot pricing, often cheaper than paying long-term FBA storage, and gives you predictable transfers into FBA without the manual back-and-forth.

Compared to a 3PL, AWD isn’t always the lowest-cost option, but the convenience is unmatched. You’re already in Amazon’s ecosystem, replenishment is automated, and you eliminate the lag between your external warehouse and FBA check-in.

For many U.S. sellers, that speed and simplicity outweigh the marginal savings a 3PL might offer.

The 2025 Update on Amazon Warehousing and Distribution

As of 2025, the Amazon Warehousing and Distribution program has rolled out nationwide with major improvements:

Per-pallet pricing

As of 2025, Amazon Warehousing and Distribution charges a flat per-pallet, per-month fee (around $7-$9 depending on region) rather than only cubic-foot rates. For U.S. sellers, this makes it far easier to compare AWD directly against domestic 3PL warehouses, where pallet storage often runs $12-$18 per month plus handling fees.

Automated transfers

AWD now uses Amazon’s internal demand forecasting to move inventory into FBA automatically. That means no creating restock shipments, no coordinating with freight, and fewer delays at receiving. 

The system triggers replenishment before your ASINs hit critical low stock, keeping you Prime-eligible with minimal intervention.

Broader access

Initially a limited program, AWD is now open to nearly all U.S. sellers in 2025, not just enterprise brands. Even small and mid-sized businesses can use AWD as their primary inbound landing point when importing goods into the U.S., bypassing the need to contract separate 3PLs for storage and drip-feeding into FBA.

Some Amazon Warehousing and Distribution reviews highlight how it saves time and eliminates restock limits, while others point out hidden costs and the risk of depending too heavily on Amazon’s system.

Take a U.S. home goods seller who imports container loads of kitchenware from China. Before Amazon’s Warehousing and Distribution, the sellers had to pay for a 3PL near the port, handle transfers manually, and then watch FBA restock limits hold up their growth in Q4. 

With Amazon Warehousing and Distribution, that same seller will ship containers straight into Amazon’s warehouse. The system holds its bulk stock and keeps FBA replenished automatically. This results in less juggling of 3PL contracts or paying premium freight just to stay in stock.

How does Amazon Warehousing and Distribution Work                   (From Supplier to Customer)

AWD streamlines the path from supplier to customer by handling bulk storage and automatically replenishing FBA as demand requires.

At a surface level, Amazon Warehousing and Distribution looks like a clean supply chain:

1. Manufacturer or Supplier: Inventory leaves the factory, either overseas or domestic.
   
2. AWD Inbound: Instead of shipping pallets to a third-party warehouse, you send them directly into an Amazon Warehousing and Distribution facility.
   
3. AWD Bulk Storage: Your inventory sits in Amazon’s pooled storage network, outside FBA restock limits.
   
4. FBA Replenishment: When your FBA levels get low, AWD automatically pushes stock into Amazon fulfillment centers.
   
5. Customer Delivery: From FBA, Amazon handles last-mile fulfillment straight to the buyer.

That’s the technical flow. 

But the real value of Amazon Warehousing and Distribution lies in automation and Amazon’s data-driven ecosystem. Instead of guessing when to restock or tying up cash in too much FBA storage, sellers benefit from predictive replenishment based on Amazon’s demand signals. 

This shifts AWD from being just a logistics solution to a cash-flow management tool. 

Meaning, you pay for storage only when needed, avoid FBA long-term storage fees, and keep products in stock without over-investing upfront. 

In practice, it means more liquidity, less operational firefighting, and a supply chain that moves at Amazon’s pace, not yours. 

Sending a container straight into Amazon Warehousing and Distribution ties up working capital in bulk storage for months at a time. For cash-tight sellers, that can be painful. 

On the other hand, it virtually guarantees that your FBA listings stay stocked, which for many brands is worth more than saving a few cents per cubic foot with a 3PL. 

You also have to consider the data angle. By storing inventory in Amazon Warehousing and Distribution, Amazon sees your entire source, not just what sits in FBA. 

Some sellers lean on this as an advantage because Amazon’s forecasting models are better than their spreadsheets. Others worry it gives Amazon even more leverage over their category.

Take the example of a toy brand importing containers of action figures from Vietnam. In past holiday seasons, they relied on a Los Angeles 3PL to hold stock and drip-feed FBA manually. The process was slow, expensive, and stressful. This year, they sent half their container directly into AWD. 

Amazon took over replenishment into FBA, which meant no more buy box risk in November when demand spiked. The other half of their inventory stayed with their 3PL to service Walmart and Shopify orders. By splitting their inventory between Amazon Warehousing and Distribution and a 3PL, the brand gained both stability and flexibility.

Amazon Warehousing and Distribution Pricing

The Cost of AWD Storage

Amazon Warehousing and Distribution charges $0.48 per cubic foot per month at the base level. That might sound small, but once you scale to container volumes, it adds up quickly. 

For sellers who commit to Amazon’s Smart Storage program, the rate drops to $0.43 per cubic foot, and for those using the Managed Service tier, it falls further to around $0.384 per cubic foot. 

The discount isn’t charity; it’s Amazon’s way of rewarding sellers who allow its algorithms to fully manage replenishment into FBA. In short, the more control you give Amazon, the cheaper your storage becomes.

What Processing Actually Costs

Transportation is calculated on volume rather than boxes. In 2025, AWD charges $1.15 per cubic foot to move inventory into FBA, with a 10% discount under their Managed Services. This line item can be the most painful for sellers constantly drip-feeding inventory, which is why seasoned operators let AWD push bigger batches less frequently to bring their effective per-unit transfer costs down.

The Price of Moving Inventory Into FBA

Transportation is calculated on volume rather than boxes. In 2025, AWD charges $1.15 per cubic foot to move inventory into FBA, with a 10% discount under their Managed Services. This line item can be the most painful for sellers constantly drip-feeding inventory, which is why seasoned operators let AWD push bigger batches less frequently to bring their effective per-unit transfer costs down.

Monthly Breakdown for Sellers

Here’s a crazy example:100 cubic feet of stock sits in AWD for one month. The storage runs $48. If that shipment arrived in 10 cartons, inbound fees add $13.50. 

Now, let’s say half of that stock, 50 cubic feet, needs to be replenished into FBA. You’ll pay $57.50 in transport plus $6.75 in outbound processing. 

The total bill: about $125 for the month. That’s still far less punishing than paying long-term storage penalties in FBA during Q4, where fees spike after 365 days.

Imagine, you’ve got 100 cubic feet of inventory sitting in AWD for a month. At 48 cents per cubic foot, you’re looking at about $48 for storage. If those goods arrived in 10 cartons, inbound processing adds another $13.50. Now, say half that stock, 50 cubic feet, needs to be moved into FBA. You’d pay around $57.50 for transport and $6.75 for outbound processing, bringing the total to roughly $125 for the whole month.

Now compare that to FBA. Storing the same 100 cubic feet there would cost about $78 in normal months. But if some of that stock sat around for over a year, long-term storage fees could balloon to $345 for just 50 cubic feet. Altogether, you’d be paying close to $423, more than three times what you’d spend with AWD.

This is exactly why so many sellers lean on AWD, to avoid the kind of penalties that sneak up during peak seasons or when products don’t sell as fast as expected. It’s not always the cheapest option, but the flexibility and peace of mind it offers can be a real lifesaver, especially when you’re juggling between inventory across multiple channels.

The Trend Line Today

Costs aren’t static. Compared to last year, storage rates are up between 13% and 26%, processing fees have risen roughly 8%, and transport is up about 15%. Amazon isn’t alone here; 3PLs across the U.S. are passing on higher labor and trucking costs. 

The difference is that Amazon offsets some of it with negotiated carrier rates, especially for container freight moving directly from ports to inland AWD hubs. For sellers used to paying drayage plus short-term storage near ports, AWD’s all-in costs can still come out ahead.

Drayage here refers to the short-distance transportation of goods, usually from a port, rail terminal, or airport to a nearby warehouse or distribution center. For Amazon sellers importing products into the U.S., drayage is the cost of moving containers from where they arrive (like the Port of Los Angeles) to a logistics facility such as a 3PL warehouse or an Amazon hub.

Where AWD Fits Into Seller Strategy

On paper, AWD is competitive with U.S. 3PLs that charge between $10 and $30 per pallet per month. But the tradeoff isn’t just dollars and cents; it’s flexibility. A 3PL can kit, bundle, and ship to Walmart or Shopify alongside Amazon. AWD can’t. 

Every fee in its structure exists to keep your inventory feeding into FBA. If Amazon is your sole channel, AWD’s pricing feels efficient and predictable. If you’re multichannel, the smarter move is often a blended approach: AWD as seasonal overflow or insurance against FBA restock limits, and 3PLs as the backbone of your wider e-commerce strategy.

Advantages of AWD for U.S. Sellers

The strongest selling point of AWD for American sellers isn’t just lower costs; it’s the breathing room it gives in a system where storage limits and restock caps often feel like a constant squeeze.

Take restock limits, for example. Any seller who has lived through the last few Q4 cycles knows how brutal FBA’s restock caps can be. 

AWD solves this by sitting outside the FBA limit structure. You can land 5,000 units in AWD today, even if Amazon only lets you hold 800 in FBA. Then, as orders come in, AWD drip-feeds FBA without you lifting a finger. It’s the closest thing to a convenience Amazon has ever given sellers at the inventory level.

This process becomes incredibly important in Q4. Instead of juggling containers between 3PLs, paying for last-minute trucking, and praying your FBA shipments get checked in before Black Friday and Christmas, AWD creates a smoother runway. You park your inventory upstream, and Amazon automatically handles the timing of replenishment based on actual demand forecasts.

For many U.S. sellers, that’s the difference between winning peak season and watching competitors outrank you because you ran out of stock.

Cost structure is also quietly seller-friendly. Traditional 3PL contracts often tie you into fixed monthly minimums, handling fees, and service retainers. AWD’s pay-as-you-go model is much closer to utility pricing. You pay for the pallets you use and the transfers you need, without getting locked into a year-long commitment. That flexibility matters a lot for U.S. sellers whose sales fluctuate with seasonality or who are still testing new SKUs.

Finally, AWD gives sellers a front-row seat to Amazon’s bigger distribution ambitions. In 2025, Amazon will be expanding its Multi-Channel Distribution (MCD) pilot, which lets AWD inventory feed not just FBA but also Shopify, Walmart, or even your own website orders. It’s still early, but U.S. sellers using AWD today are often the first to be invited into these cross-channel pilots.

Risks, Tradeoffs, and Hidden Challenges

AWD can take a lot off your plate, but with strings attached. The convenience is real, yet sellers often find themselves trading control and flexibility for ease and sometimes paying more than expected once the fees stack up.

Cost Creep and Fee Compounding

AWD looks cheap at first glance, with off-season rates around $0.48 per cubic foot. But fees stack quickly. Replenishment into FBA isn’t free, and if you send frequent, small shipments, costs can spiral beyond what you’d pay with a traditional 3PL. Sellers who don’t carefully manage replenishment cycles often see their margins shrink unexpectedly.

Losing Control Over Storage Location

With AWD, Amazon decides where your goods live. That’s fine if you only sell on Amazon, but if you also sell through Shopify or Walmart, you may find your inventory stored far from those fulfillment needs. Compare this to a 3PL near a major port, where you can flex inventory across multiple channels and minimize transit costs.

Increased Dependency on Amazon

Every pallet stored in AWD increases your reliance on Amazon. This dependency means you’re exposed to fee hikes, new policies, and seasonal surcharges. A 3PL often lets you lock in contracts, but AWD operates at Amazon’s discretion, making it harder to predict long-term costs.

Limited Customization for Brands

AWD’s standardized handling is suitable for common products, but if you require unique packing, branded inserts, or eco-friendly preparation, you will have difficulties. A 3PL allows you to differentiate; AWD stresses efficiency over brand experience.

Data Asymmetry

By running your entire upstream pipeline through AWD, Amazon gains more visibility into your demand patterns, seasonality, and sell-through rates. For some sellers, that’s harmless. For others, it raises concerns about Amazon using that intelligence for category strategies or private-label competition.

A Real Example for Sellers 

Think about a mid-sized exercise equipment firm that transitioned to AWD in 2024. Initially, the firm reduced storage by 20% compared to their New Jersey 3PL. But when Q4 surcharges arrived, those savings vanished. The worst part is when they opened a Shopify channel, they experienced fulfillment delays because AWD wasn’t yet intended to handle non-Amazon purchases. Their takeaway is AWD alleviated Amazon’s short-term issues while intentionally boxing them in.

Who Should Use Amazon Warehousing and Distribution, and Who Shouldn’t

AWD isn’t a one-size-fits-all solution. For some sellers, it’s a growth unlock that keeps inventory flowing without the headaches of restock limits or juggling multiple warehouses. The key is knowing where your business sits.

Best Fit Sellers

For American sellers who have outgrown office or garage storage and require a larger, more dependable system, AWD excels. AWD provides the necessary buffer if your demand is consistent but peaks seasonally, such as for toys in Q4 or outdoor goods in the spring. 

It’s also a wise move for foreign vendors bringing their goods to the United States. By offering a single landing point, AWD streamlines inbound freight and distribution by eliminating the need to manage several 3PLs and freight forwarders.

Not Ideal for Specialized Needs

If your brand relies heavily on custom prep bundling, kitting, eco-friendly packaging, or branded inserts, AWD won’t deliver. Amazon’s infrastructure is standardized and doesn’t leave room for creative fulfillment touches.

When AWD May Cost You More

Sellers who already have cost-effective 3PL contracts in place often find AWD adds layers of expense rather than reducing them. Replenishment fees, per-pallet storage, and surcharges can eat into margins if you’re not careful.

Why New Sellers Should Be Cautious

AWD can turn out to be a financial trap for new sellers who are short on funds. The expenses rises rapidly, and it’s simple to overspend on unnecessary storage if there isn’t enough volume to warrant it.

AWD Action Plan for Sellers

AWD can simplify your supply chain, but only if you approach it strategically. Think of it less as a replacement for 3PLs and more as another convenient lever in your logistics mix. 

The following steps will help you figure out if AWD makes sense for your catalog, and how to use it without losing control over costs

Step 1 – A Real Cost Benchmark

Before committing, compare AWD’s pallet storage, replenishment, and inbound shipping fees against your current 3PL setup. Many U.S. sellers find AWD competitive for medium-term storage (3-6 months), but costs often outpace 3PLs for long-term holds. 

Factor in hidden items like transfer fees into FBA and peak-season surcharges. If you don’t run this math, you’ll be flying blind.

Step 2 – Match AWD to Your Product Seasonality

AWD shines for fast-moving or seasonal products where you need quick replenishment, like toys in Q4 or patio furniture in spring. But it’s a poor fit for inventory that sits idle most of the year. Map your catalog’s sales calendar to AWD’s per-pallet structure. 

If your profit margins can’t absorb nine months of storage fees, those SKUs belong elsewhere.

Step 3 – Factor in Restock Limit Relief

Inventory in AWD doesn’t count against your FBA restock limits, which is a huge advantage for sellers who constantly hit caps. During Q4, this can mean the difference between staying in stock or losing the Buy Box. Don’t treat this as a side benefit; it should be part of your ROI model. Ask yourself: what’s the value of having 20% more inventory in FBA during peak season?

Step 4: Before Committing, Make Sure…

Don’t push your entire catalog into AWD. Start with a controlled test, steady movers, or products where seasonality spikes are predictable. Keep slower sellers in your 3PL or direct-to-FBA pipeline. This hybrid approach lets you evaluate real-world costs while preserving leverage and supply chain flexibility.

Step 5 – Build Your AWD Reports

AWD’s weekly replenishment reports show transfer volumes, forecast accuracy, and storage balances. Treat these like your P&L; review them consistently. Amazon’s automation is powerful, but if it over-replenishes a slow SKU, you’ll be paying for storage you don’t need. A 10-minute weekly check can prevent costly surprises.

Step 6 – Keep 3PLs in Your Back Pocket

Even if AWD works well, it shouldn’t be your only option. Maintain ties with 3PLs and continue to negotiate rates. Sellers who maintain dual alliances gain influence when Amazon alters its price or policy. Furthermore, 3PLs frequently provide flexibility for non-Amazon channels such as Walmart, Shopify, and TikTok Shop, which AWD is not designed for.

Final thoughts

Amazon Warehousing and Distribution (AWD) is not just another logistics business; it’s Amazon’s attempt to invite sellers further into its ecosystem while promising efficiency in exchange. The appeal for U.S. firms is obvious, with no restock limitations, faster replenishment during peak seasons, and AI-driven demand forecasting that sends stock precisely where it is required.

Charges, however, usually surpass those of typical 3PLs if inventory builds up. Additionally, you lose control when you let Amazon manage your bulk inventory. This includes choosing how aggressively to refill slower SKUs, negotiating prices with different suppliers, and routing things to other channels like Walmart or Shopify.

In actuality, AWD functions best when incorporated within a mixed logistics model rather than serving as a substitute for third-party warehousing or FBA. For instance, AWD maintained bestsellers in stock when FBA restock constraints would have suffocated them, according to a mid-sized toy business that evaluated the technology in Q4 2024. To prevent skyrocketing pallet costs, they retained their slower-moving SKUs in a 3PL. Overall, they saved an estimated 12% on logistical expenses, all credit to their hybrid model, while also preventing three weeks of stockouts during peak season.

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