Amazon Warehousing & Distribution Cost Analysis

Selling on Amazon
1

Was looking into AWD a little today and trying to ascertain costs.

So the per cubic feet storage fee seems like it’s very reasonable at $0.42 peak/off peak

AWD Storage Costs
AWD Storage Costs1617×263 61.9 KB

What I want to confirm is the processing fee and transportation fees and want to ascertain if I’m reading those right.

AWD Processing and Transportation
AWD Processing and Transportation1635×310 62.7 KB

In my case, an average container load contains about 600 boxes so I would be paying a one time transportation fee of $1.00 per box and a processing fee of $2.00 per box

= (600 * 1) + (600 * 2) = $600 + $1200 = per container, one time and that would include all processing and transportation charges from AWD facilities to FBA FC’s

Of course, this is sans storage

So if 1 Cubic Meter = 35.3147 Cubic Feet and if a container load is about 76.5 Cubic Meters = 2701.57 Cubic Feet and it took an average of 2.5 months to sell through, I would be paying

Month 1 = $1134.66 (Full Container @ 2701.57 Cubic Ft)
Month 2 = $680.79 (Assuming 1620.94 Cubic Ft)
Month 2.5 = $226.93 (Assuming 540.31 Cubic Ft)

And then at month 2.5 I would have another container go into AWD

What other variables should I consider besides extremely long receiving times as a possible risk? There are no FBA capacity limits if using AWD?

SAS = Sounding Board

Thanks in Advance

T_T

2

I would read the unbelievable number of nightmarish stories on the NSFE about AWD.

I wouldn’t touch it with a ten foot pole. You have no control over anything in terms of when it goes to FBA. Chances are they won’t keep the right inventory levels for the best conversion.

I don’t think anyone on this forum uses AWD to get the real truth from but I haven’t read anything positive about it.

Proceed with caution if you decide to do this.

3

Sample post for those interested.

AWD inventory not shipping to FBA on a Timely manner

4

I think you misunderstood the transportation fee.

It’s $1 per FOOT, not box, and it’s AWD → FBA

I’m going to assume that inbound shipping from You → AWD will be similar as inbound from You → FBA.

Looks like this is a new offering by Amazon so it seems like it has some kinks in it. I would suggest letting other suckers be Amazon’s guinea pigs and MAYBE using it later on after all the problems have been fixed (or they abandon the program).

5

Yeah, that’s one of the many textbook examples in the NSFE that Steve was speaking of.

There are some more doozies which first appeared in the OSFE, immediately after Amazon first began pushing Upstream Storage when, during the COVID-19 Crisis scare, it began building & acquiring facilities which wound up putting the Cali-Zona-Vada ‘Shadow Warehouses’ that @Skeeter used to post about, which had previously had the lion’s share of that lucrative market, out of business.

It will not surprise me if complaints of a lack of proper performance from the AWD Program continue for years to come…

6

You’re right so the transportation charge per container would be

2701.57 Cubic Ft * $1 = $2701.57

Per container, one time.

Yes?

7

Again, that’s AWD → FBA

So it would be in addition to your inbound shipping costs from YOU → AWD

8

Right, but I’m assuming that we can ship directly to AWD so we’re ignoring the container shipping charge and isolating costs thereafter - from my POV the inbound charge doesn’t change and is held constant unless the AWD facility is in Timbuktu and the Inbound costs vary drastically, say if the AWD warehouse was Mid-West or East Coast etc. As opposed to containers being shipped to the West Coast currently. I’m more concerned with comparing costs in: container unloading, warehousing, outbound shipping from warehouse to FC and comparing those with AWD

9

In that case I would work the math this way:

You’re saving about half of FBA storage fees (which are going down btw). Let’s say that’s 40 cents / foot per month in savings by having it at AWD instead of FBA.

Processing fee is $2 / box, and based on what you said so far each box is around 5 feet, so processing is about 40 cents / foot. Transit from AWD → FBA is $1 / foot. So AWD fixed costs are $1.40 / foot.

$1.40 / $0.40 (your monthly savings) means your inventory needs to be sitting at AWD for over 3.5 months in order to start saving money on storage fees. This is not counting the holidays or LTSF.

Basically having your inventory sit at FBA for 3 months longer is cheaper (And probably less problems) than using AWD.

10

I was sort of hoping it would be months as opposed to years. This is what bothers me as my current facility will run its course by 2025 and so I have to plan now and have no clue as to do as real-estate prices are insane on the west coast.

11

For 600 boxes its $2 per box

The conversion I did for $1 per cubic foot was take the container size in CBM and converted it to the CBF - which per container = 2701.57 CBF

When doing the math on the Transportation charge why did you do it per box (Avg box/carton size holding multiple units ~ 23" x 20" x 17" or slightly smaller so I wouldn’t think the dimensions would change at the box/carton level (case packs of x units) - or do you think they charge this at the unit level?

12

You should normalize all calculations to cost per foot, which is what I did.

13

Fair

14

Sent [email protected] a long a$$ email

Fully expecting a detailed response :joy: Just figured since I already posted a majority of this stuff here why not send it to AWD themselves.

I’m a genius.

Hi AWD,

I move quite a bit of inventory via Amazon FBA (Merchant ID)

  1. Currently, use my own warehousing and send everything based on restock recommendations or my own assessment when those are incorrect (usually).

  2. I have a few questions and concerns.

  3. Currently on the Amazon forums there are horror stories of delayed Inbound receipt of inventory going to AWD. There are also horror stories of restocks not initiating and that time between AWD centers and FBA Fulfillment centers often face delays. When will you streamline this process?

For eg. Here:

https://sellercentral.amazon.com/seller-forums/discussions/t/63a51b0d-b93b-42df-ad6e-b94f83aace88

https://sellercentral.amazon.com/seller-forums/discussions/t/8905fb3c-0aaf-4a20-a453-9f5d6a2fcced

https://sellercentral.amazon.com/seller-forums/discussions/t/d4afe187-6be6-41b6-9e13-0473a18834df

  1. On pricing

In my case, an average container load contains about 600 boxes so I would be paying a one time transportation fee of $1.00 per cubic foot and a processing fee of $2.00 per box? Assuming 600 boxes (40-50 units per box) per container and 2701.57 Cubic Ft per container.

= (600 * 1) + (2701.57 * 2) = $600 + $5403.14 = per container, one time and that would include all processing and transportation charges from AWD facilities to FBA FC’s. I understand this would not include inbound transportation to AWD facility.

Of course, this is sans storage

So if 1 Cubic Meter = 35.3147 Cubic Feet and if a container load is about 76.5 Cubic Meters = 2701.57 Cubic Feet and it took an average of 2.5 months to sell through, I would be paying

Month 1 = $1134.66 (Full Container @ 2701.57 Cubic Ft)
Month 2 = $680.79 (Assuming 1620.94 Cubic Ft)
Month 2.5 = $226.93 (Assuming 540.31 Cubic Ft)

And then at month 2.5 I would have another container go into AWD

  1. Is my above assessment correct?

  2. Are we given an AWD rep to work with if you enroll in AWD? How about guaranteeing shipment receipt and replenishment to FBA FC’s?

Thanks in advance.

Yours,
( . )( . )

15

I predict that you’ll get something like this as a response:

Hi [Sender’s Name],

Thank you for reaching out and sharing your concerns about the Amazon Warehouse Distribution (AWD) process. I appreciate your detailed breakdown of the potential costs and your inquiries about the reliability of the service.

I understand the importance of a seamless inventory management process, and I want to address your questions to the best of my ability.

Regarding the delays mentioned in the Amazon forums, I can assure you that we are continually working to streamline the inbound receipt of inventory and restocking processes. While unforeseen issues can arise, our team is dedicated to minimizing delays and ensuring efficient operations between AWD centers and FBA Fulfillment centers. We take feedback seriously, and your concerns will be forwarded to the relevant team for further consideration and improvement.

Now, onto your pricing breakdown:

Your assessment appears accurate, considering a one-time transportation fee of $1.00 per cubic foot and a processing fee of $2.00 per box. I appreciate your thorough calculations for a container load and the breakdown by months. Keep in mind that your evaluation does not include inbound transportation to the AWD facility.

To clarify, your cost breakdown would be as follows:

  • Month 1: $1134.66 (Full Container @ 2701.57 Cubic Ft)
  • Month 2: $680.79 (Assuming 1620.94 Cubic Ft)
  • Month 2.5: $226.93 (Assuming 540.31 Cubic Ft)

Your understanding is correct. However, it’s important to note that these are estimations, and actual costs may vary based on factors such as storage duration and any additional services requested.

Regarding the presence of an AWD representative, yes, when you enroll in AWD, you will be assigned a dedicated representative to assist you with any inquiries and ensure a smooth experience. While we cannot guarantee absolute shipment receipt and replenishment timelines, we are committed to providing the best possible service and addressing any issues promptly.

If you have any more questions or if there’s anything else I can assist you with, please feel free to let me know.

Thank you for choosing Amazon Warehouse Distribution.

Best regards,

[Your Full Name] [Your Position] Amazon Warehouse Distribution Team

16

Hey I found our amazon insider :stuck_out_tongue:

17

I think you are way off. It’s going to be something like this:

"Thanks for reaching out to your support team. My name is Subhash Muthre and I am here to help.

I understand that you are writing about your seller account because it has been suspended. I can surely help you with that."

LOL

18

+13 days since an email was sent to AWD - [email protected] with no response. So much confidence in it thus far (sarcasm)!

:joy:

19

Told ya… Don’t Do It!

20

My guess is they’re gonna make it such that we almost must.

I think AWD is a future play regardless of our personal sentiments - how to mitigate the risk of amazon’s idiocy and mismanagement is now the question.

I re-sent the email.