America’s most prolific marketplace is continuing its push to monopolize its sellers’ entire supply chains.
Amazon (NASDAQ: AMZN) this week announced a new service that will grant sellers access to its massive warehousing and distribution network.
The pay-as-you-go offering, called Amazon Warehousing & Distribution (AWD), allows sellers to ship inventory to what the company describes as “new, purpose-built facilities for bulk inventory storage and automated distribution.”
Sellers will also have the option to integrate their upstream inventory storage into Amazon’s fulfillment network. In doing so, they can essentially outsource inventory distribution to Amazon, which will ensure that the right products are in the right places, at the right times.
AWD is now live for sellers to store and distribute inventory within the Amazon fulfillment network. But the company said in a news release that customers will be able to send inventory to “any location,” including wholesale customers and brick-and-mortar stores, beginning in 2023.
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“Amazon Warehousing & Distribution 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.
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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.”
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.
“I think there’s a misunderstanding or a misinterpretation of what’s going on. I think a lot of people think that Amazon is slamming on the brakes and cutting expenses,” Wulfraat said. “That’s not true at all — all they are doing is easing their foot off the accelerator pedal.”
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.
The company will share more details about AWD at its annual seller conference, Amazon Accelerate, on Sept. 14-15.
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