Amazon Sellers Grapple with Capacity Constraints

Ahead of the coming holiday shopping rush, e-commerce businesses are prepared to pay premium rates to prevent bottlenecks at West Coast warehouses. Amazon sellers are evaluating alternative shipping and storage plans to counter capacity constraints in the e-commerce giant's logistics network as the holiday season approaches.

\n

Capacity issues that arose during Amazon's innovations in inbound order processing have caused processing delays for seller inventory at some West Coast facilities. The company redirected goods to other regions and reduced fees for shipments heading to East US locations to address the situation. An Amazon spokesperson stated, "We are actively working to mitigate these delays and expect to return to normal processing times within the coming weeks."

\n

\n

However, experts note that resolving current capacity constraints could prove difficult until 2025. This forces sellers to make difficult decisions ahead of the holiday season: either avoid bottlenecks through more expensive restocking methods or risk low inventory if demand surges.

\n

\n

Joe Stefani, founder and president of Desert Cactus, noted that much of his inventory is stuck in Amazon Warehousing & Distribution (AWD) service. AWD is a storage service designed to enable sellers to more easily replenish inventory to end customers using the Fulfillment by Amazon (FBA) service. Although Amazon quadrupled storage space for AWD users this year, high demand has caused delays of several days at some locations.

\n

\n

Because many Amazon sellers source from Asia, the West Coast has become the natural location for storing imports. However, the flow of inventory into a limited number of facilities in the region, compounded by the concentration of sellers adopting "minimal shipment splits" strategies, has strained capacity. Rob Hahn, COO of Pattern, said, "This cannot continue because the number of sellers leaving the platform will increase."

\n

\n

The congestion in inventory flow has extended processing and delivery times for products in AWD through FBA to customers. Stefani noted that some products have only 50 units in stock through FBA, while thousands of units sit in AWD. Emphasizing that Amazon must resolve this issue, Stefani said, "If this continues, more sellers will abandon the platform."

\n

\n

According to experts, sellers dealing with current capacity challenges prefer to pay higher storage fees rather than face potential inventory shortages during the holiday period. Jon Elder, founder and CEO of Black Label Advisor, noted that sellers prefer to use air cargo to gain faster control of critical inventory and maintain backup inventory in 3PL warehouses rather than relying entirely on Amazon's network.

\n

\n

For Desert Cactus, the company is routing some shipments directly to FBA rather than through AWD, accepting the higher storage fees as a result. Stefani said, "I'm comfortable covering monthly storage expenses of $10,000. At least the inventory is under control and available."

\n

\n

Key Points:

\n

\n

• Amazon is experiencing capacity constraints at West Coast warehouses.

\n

• AWD (Amazon Warehousing & Distribution) service is experiencing delays due to high demand.

\n

• Sellers are resorting to more expensive methods for faster inventory processing.

\n

• Current issues are expected to be resolved by 2025.

\n

• Some sellers are redirecting inventory to different regions or using air cargo.

\n

• Small businesses may prefer consolidated shipping to ease capacity constraints.

\n

\n

\n

---

\n

\n

News Link: https://www.supplychaindive.com/news/amazon-inbound-fulfillment-AWD-capacity-issues/732189/

\n

\n

-------------------

\n

!!! ANNOUNCEMENT !!!

\n

How to Procure an ERP? Our book has been published on Google Play Books.

\n

#What is ERP?

\n

https://www.sedatonat.com/erpnasilalinirYou can download and read it for free through this link.

\n

We would be delighted to receive your feedback.

\n

Wishing you good reading from the start.