EcommerceBytes-NewsFlash, Number 2659 - October 25, 2011     2 of 3

Why Your Amazon Inventory May Go to Multiple Warehouses

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Amazon spreads inventory around the country to enable it to shave hours off delivery time and to hedge against local natural disasters, and it is now applying this approach to third-party sellers who use its FBA fulfillment service. The strategy could increase shipping costs for those sellers who are affected, but Amazon said it will make sellers' items available for last-minute orders, "which is especially critical for holiday shoppers."

Beginning next month, Amazon will begin requiring some sellers to split inventory between multiple warehouses. In a letter to sellers, Amazon said it recognized that the change could affect their transportation processes and costs and said it has tried to minimize the impact on sellers. "This change allows us to continue to offer the benefits of FBA at low rates, and we believe both you and your customers can benefit from product placement in multiple regions."

In June, many booksellers reported that Amazon was requiring them to ship all FBA book inventory to a single warehouse in Pennsylvania. And FBA sellers are now reporting changes to where they must send their inventory - this time, Amazon switched many of them to a warehouse in Hebron, Kentucky instead of Phoenix, Arizona.

Sellers were initially upset when they found they would be forced to send shipments to warehouses farther away, since it would cost more to ship. But splitting shipments to be sent to different destinations could be even more costly.

Spokesperson Ty Rogers provided a letter Amazon had sent FBA sellers recently informing them that their inventory might be assigned to multiple fulfillment centers in future shipments, which explained the reason for the new policy:

  • "Your products can gain a competitive advantage over products located in a single fulfillment center. Order cut-off times for Prime and expedited shipping can be extended by as much as three hours with inventory placed in multiple fulfillment centers, so your offers will more likely be available for last-minute orders, which is especially critical for holiday shoppers."
  • "Products can be available for fulfillment to customers sooner than if you shipped to one fulfillment center, and we then transported your products to another fulfillment center."
  • "The impact from regional and local events on your products will be minimized. Events such as snowstorms, flooding, and earthquakes can disrupt transportation in a region or a local fulfillment center. Having your inventory in multiple locations during these disruptions increases our ability to ship orders to customers on time."

Some sellers have also reported long delays in getting inventory checked in to FBA warehouses, particularly those sent to the Kentucky warehouse. The delay is creating a cash-flow headache for sellers, they say, as they've got inventory tied up for 1-2 weeks in the receiving department (that's not including transit time.) Sellers also expressed concern over potentially missing out on holiday sales as the season ramps up.

In September, a seller wrote, "Don't know what happening at Amazon, the only time our shipments go into receiving immediately is when it is sent by UPS. If we use any other carrier the shipment stay in the Delivered mode for days before its even checked in." (For small parcel deliveries consisting of units packed in individual boxes and individually labeled for delivery, Amazon has partnered with UPS to offer discounted rates.)

Rogers said if sellers were experiencing delays, it was most likely the result of their inbound shipments "not being prepared quite right." He said Amazon had been reaching out to sellers to help them prepare for the holidays through its newsletter for FBA sellers and through email communications. Amazon provides shipping best practices and Packaging and Prep Requirements to its FBA sellers, for example.


About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.


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