Understanding the Upcoming Changes to Amazon Warehousing and Distribution (AWD) Fees

Businesses selling through Amazon must stay updated about logistical updates within Amazon’s warehouse operations since these developments affect operational efficiency and profitability. From April 1, 2025, Amazon Warehousing and Distribution (AWD) fees will undergo major changes. The changes added through updates will modify how sellers manage inventory replenishment and storage and processing operations to discover new possibilities for reducing logistics expenses. The following section explains the current changes which affect Amazon sellers in their operations and profitability levels.

1. What’s New: The Upcoming Changes to AWD Fees

Starting on April 1, 2025, Amazon will update its AWD fee structure in several important ways. These changes involve new smart storage rates, Amazon managed rates, and adjustments to the processing fees. Here’s a closer look at the details:

New Fee Tiers

• Base Rate: This will now apply when sellers manually manage their replenishment to fulfillment centers, rather than being determined by the method used to ship inventory.
• Smart Storage Rate: This rate applies to SKUs that use AWD auto-replenishment to move inventory from AWD to FBA. To qualify, your SKU must meet certain criteria, including:
• Amazon Managed Rate: For those using Supply Chain by Amazon Managed Service, this rate applies to SKUs with a 20% discount on AWD storage fees and a 10% discount on transportation fees from AWD to FBA.

Fee Breakdown (Current vs. New)

Here’s a comparison of the fees before and after April 1, 2025:

2. Key Changes in Fee Applicability:

In addition to these new rates, Amazon is also changing the applicability of certain FBA fees for sellers using AWD auto-replenishment or Amazon Managed Services:

• Low-Inventory-Level Fees: If you auto-replenish 70% or more of a SKU to FBA, the low-inventory-level fee will not apply. However, if you limit the number of units eligible for auto-replenishment, this fee could still apply.
• Aged Inventory Surcharge: The aged inventory surcharge for SKUs stored for more than 181 days will not apply if the SKU qualifies for auto-replenishment.

3. Important Tools and Reports:

To help manage these changes and monitor your eligibility for the new smart storage and Amazon managed rates, Amazon will provide additional reporting tools:

• AWD Fee Metrics: Starting February 15, 2025, you can access the AWD Fee Metrics report and the AWD Inventory dashboard. These tools will help you track the eligibility and application of new rates for your SKUs.
• AWD Reports: Amazon will update its AWD Monthly Storage, Processing, and Transportation Fee Reports, which you can use to keep track of your charges.

4. Impact of These Changes:

These changes are significant and will have a major impact on how you manage your inventory and replenishment strategies on Amazon:

• Cost Savings: Sellers who qualify for the smart storage rate or the Amazon managed rate can save up to 20% on storage and transportation fees. This is especially helpful for sellers with high inventory turnover who rely on fast replenishment to keep up with demand.
• Optimized Inventory Management: By meeting the auto-replenishment ratio and days of supply criteria, sellers can ensure their inventory levels are optimized for both AWD and FBA, reducing the risk of stockouts and minimizing storage costs.
• Easier Fee Tracking: The new reporting tools will allow you to track your eligibility for these new rates in real time, helping you make better decisions about your inventory strategy.

5. How to Prepare for the Changes:

As these changes are effective April 1, 2025, it’s important to review your current inventory and replenishment strategies. Here are a few steps you can take to ensure a smooth transition:

1. Assess Your Auto-Replenishment Strategy: If you’re not already using AWD auto-replenishment, now is the time to start planning. This will ensure you qualify for the smart storage rate and avoid any unnecessary fees.
2. Monitor Inventory Levels: Ensure that your SKUs meet the 70 days of supply criteria. You may need to adjust your stock levels to qualify for the smart storage rate.
3. Stay Informed: Keep an eye on the AWD Fee Metrics and AWD Inventory dashboard for updates on your SKUs’ eligibility for different rates.

Conclusion:

The upcoming modification of theретs will generate substantial saving opportunities for proactive sellers who adapt their operational methods. Through smart storage rate implementation alongside Amazon managed service use and inventory monitoring your business will maintain competitiveness as expenses decrease.

Examine your existing replenishment plans because the new alternative options should be implemented immediately. The necessary preparations in advance will transform your operations into more efficient processes that enhance your Amazon business profitability.