America’s most prolific marketplace is continuing its push to monopolize its sellers’ entire supply chains. Amazon this week announced a new service that will grant sellers access to its massive warehousing and distribution network. Amazon Warehousing and Distribution (AWD) makes the promise of supply chain as a service a reality and is specifically designed to solve inventory management challenges and deliver operational efficiencies.
AWD will let sellers ship inventory to what the company describes as “new, purpose-built facilities for bulk inventory storage and automated distribution.” Sellers will have the option to integrate their upstream inventory storage into Amazon’s fulfillment network. In doing so, sellers can essentially outsource inventory distribution to Amazon, which will ensure that the right products are in the right places, at the right times.
‘Pay as you go’
AWD addresses critical supply chain challenges and helps sellers grow and manage their business while significantly cutting costs,” wrote Gopal Pillai, vice president of Amazon distribution and fulfillment solutions. “With this simple pay-as-you-go service,” Pillai added, “sellers are free from the time-consuming, cumbersome process of moving inventory from upstream facilities to Amazon fulfillment centers.”
Amazon didn’t provide many details about the new service. But a quote from one of the platform’s sellers revealed that it will include automated replenishment and “master case handling.” It will also include an option for sellers to consolidate their global inventory.
Once AWD is up and running, there won’t be many areas of the supply chain that Amazon hasn’t touched. The e-commerce behemoth provides omnichannel fulfillment, nationwide shipping, last-mile delivery, procurement services, reverse logistics services — the list goes on and on. Tack on warehousing and distribution and there isn’t much else to be added.
AWD is slated to launch in 2023, the company said in it’s news release. It will share more details about AWD at its annual seller conference, Amazon Accelerate, on Sept. 14-15.
In flux
Interestingly, the announcement of AWD comes at a time when Amazon’s warehouse situation is in flux. So far this year, the company has closed or canceled the opening of 37 U.S. facilities and delayed the openings of another 20, according to supply chain consultancy MWPVL. Marc Wulfraat, founder and president of MWPVL, said that’s an unusually high number. “This is not ordinary. This is a direct result of the overbuild that took place in 2020 and 2021,” Wulfraat explained to Modern Shipper. “When COVID struck in 2020, there was a huge ramp-up of space that Amazon added to its network.”
“This is not ordinary. This is a direct result of the overbuild that took place in 2020 and 2021,” Wulfraat explained to Modern Shipper. “When COVID struck in 2020, there was a huge ramp-up of space that Amazon added to its network.” In fact, between the beginning of the pandemic and the middle of 2021, Amazon doubled the size of its U.S. fulfillment network to 930 facilities. According to MWPVL, as of Thursday, it had more than 1,200 active U.S. facilities. That’s nearly 400 million square feet and more than the company needed, as evidenced by the wave of cancellations and closures.
However, Wulfraat said that the situation isn’t as severe as it may seem to the outside observer. He noted that the 20 facilities Amazon delayed have already been built — only the openings were pushed back. He predicted that Amazon will begin to open some of those delayed facilities over the next year or two, when demand swings back up. Backing Wulfraat’s perspective is the fact that Amazon is currently building a trio of multimillion-square-foot megawarehouses. One of them, a five-story, 4.1 million-square-foot project in Ontario, California, would be the largest facility in Amazon’s network once completed.
