Dive Brief:
- A new Amazon service will allow third-party sellers to use its distribution centers for long-term inventory storage, the company announced in a blog post Wednesday.
- Through Amazon Warehousing & Distribution (AWD), sellers can use new company facilities for bulk storage and automated distribution, according to the post written by Gopal Pillai, vice president of Amazon Distribution and Fulfillment Solutions. AWD is available now for sellers using Fulfillment by Amazon and will expand in 2023 to send inventory anywhere, including to wholesale customers and brick-and-mortar stores.
- Storing inventory at distribution centers will allow sellers to "seamlessly replenish" their inventory in Amazon's fulfillment network, Pillai said. They will also be able to consolidate their global inventory to manage on the Amazon Seller Central platform.
Dive Insight:
AWD allows Amazon to capture more value from its fulfillment network, which has grappled with excess capacity this year after aggressively expanding its warehouse footprint in 2021 to meet heightened e-commerce demand. At the same time, other businesses have been scrambling to secure more U.S. warehouse real estate — at elevated prices — to bolster their safety stocks and account for spending growth.
Integrating storage operations with Amazon's fulfillment network will help sellers reduce costs while ensuring they have the necessary items in stock at the right place and time, said Pillai.
"With this simple pay-as-you-go service, sellers are free from the time-consuming, cumbersome process of moving inventory from upstream facilities to Amazon fulfillment centers," he said.
The service's announcement comes as competitors like Shopify, American Eagle and Maersk nip at Amazon's heels in various aspects of the supply chain, said Rick Watson, founder and CEO of RMW Commerce Consulting, in a LinkedIn post.
"This removes some oxygen from the room in this space," Watson said. "At this point, no one carries more parcels than Amazon, ensuring they continue to extend their lead rather than rest on their laurels to leverage their volume and tremendous investments."
Amazon will likely have lower storage rates than competitors as it leverages the high volume already flowing in its network to drive down cost per square foot, Watson added.
Amazon will share more information about AWD at the company's annual seller conference, Amazon Accelerate, taking place Sept. 14 to Sept. 15, according to Pillai.
