Once you’ve decided to keep some inventory outside Amazon’s fulfillment centers, the next step is deciding where it should live. Most established sellers choose between Amazon Warehousing and Distribution (AWD), pallet storage at a third-party logistics provider (3PL), and their own warehouse space. Many use more than one.
Each option fits a different kind of business, so I’ll walk through all three. I’ll also cover what to compare beyond the monthly storage rate, because that number rarely tells you how well the arrangement will actually work.
Option 1: Amazon Warehousing and Distribution (AWD)
AWD is Amazon’s bulk storage program, and it sits upstream of FBA. You send case-packed inventory to an AWD facility on pallets, and AWD can automatically replenish your FBA inventory as units sell.
There’s a lot to like. AWD’s storage rates are lower than FBA’s, and according to Amazon, AWD has no seasonal surcharges or long-term storage costs, while FBA storage fees go up from October through December. AWD pricing also covers FBA inbound placement, so you don’t pay a separate placement charge, and Amazon now supports sending AWD inventory to channels outside the Amazon store. If most of your business is on Amazon, AWD can be a simple setup with one vendor and one set of dashboards.
It’s worth understanding the trade-offs before you commit. AWD’s fees come in several parts: a monthly storage fee per cubic foot (higher in the West region), a transportation fee per cubic foot to move inventory into FBA, and processing fees per box on both inbound and outbound. On a slow-moving SKU, storage can end up being the smallest part of the bill. Your inventory also has to meet AWD’s requirements, which are built around case-packed goods. And if you sell heavily on other channels, compare what AWD charges to ship there with what a 3PL would charge.
Option 2: Pallet storage at a 3PL
A 3PL with pallet storage receives your freight, stores it by the pallet position, and ships it out when and where you need it. That might mean forwarding cartons to FBA or AWD, shipping to Walmart or wholesale buyers, or fulfilling orders for your own customers.
The biggest advantage is flexibility. Your inventory isn’t tied to any one channel, so it stays in your control no matter what happens on a marketplace. A good 3PL also gives you a team you can reach when something needs fixing, which matters most when a shipment arrives short or a buyer needs an order moved up.
The trade-off is that you’re choosing a partner, and 3PLs vary widely in how they track inventory, handle problems, and structure pricing. That’s why it’s important to compare total cost and not just the storage rate.
Option 3: Your own warehouse space
Leasing your own space gives you complete control, and for some brands at higher volumes, it’s the right call. That’s especially true if you already have the staff and systems in place.
It’s also the biggest commitment. You’re looking at a lease, equipment, and insurance, and the lease often locks you in for years. Keeping turnaround times consistent may mean hiring staff. On top of that, you’ll need to set up a warehouse management system and build carrier relationships. Those costs don’t go away when inventory levels drop, so run the numbers carefully before signing.
What to compare beyond the monthly rate
Whichever option you’re leaning toward, these are the questions I’d ask.
How is inventory received? Find out how pallets and cartons are counted when they arrive, how quickly received inventory shows up in your counts, and what happens when a delivery doesn’t match your paperwork.
How is inventory tracked? You should be able to see a count and a location for every pallet and carton, not just a unit total for each SKU. That level of detail is what makes it quick to pull a specific lot or send specific cartons to FBA.
Where can it ship? Make sure the provider can ship everywhere you sell, whether that’s FBA, AWD, Walmart, wholesale buyers, or your own customers. It’s also worth asking about carton forwarding for case-packed goods that are already prepped, since that’s often the lowest-cost way to replenish Amazon.
Who handles problems? Ask who you’ll talk to when something goes wrong and how quickly they fix it. Having a named person who knows your account is very different from waiting in a ticket queue.
What’s the total cost? Add up receiving, storage, outbound handling, transportation, and any prep your inventory still needs, then compare that total per unit sold across your options. Our replenishment planner can help you estimate how many pallet positions you’ll actually need.
Why the Inland Empire works for importers
Many importers bring freight in through the ports of Los Angeles and Long Beach, and storing reserve inventory in the Inland Empire keeps drayage from those ports short. The region is also home to many Amazon fulfillment and distribution facilities, which helps inventory you’re forwarding to FBA get there quickly.
How pallet storage works at PrepIt Logistics
Our warehouse is in Colton, California, right in the Inland Empire. When your palletized freight arrives, we count every pallet and carton and record each one’s location, so you can see exactly what you have and where it is.
When it’s time to move inventory, we handle it on your schedule. We forward cartons to FBA or AWD, ship to Walmart and wholesale buyers, fulfill orders for your own customers, and even ship internationally.
You work with the same people every time, and they get to know your account, your products, and your shipping patterns. When something needs fixing, you’re talking to someone who can actually fix it.
Figure out how much space you need
Before you talk to any provider, it helps to know roughly how many pallet positions you’ll need. Our free overflow inventory and replenishment planner breaks down how much of your inventory belongs at Amazon and how much belongs in reserve, SKU by SKU.
Download the overflow inventory and replenishment planner
If you’re planning an inbound shipment and want to talk through pallet storage, request a quote, and let us know what you need. We’ll walk through your options and help you find the setup that works best for you.