Amazon Optimizes Warehouse Space

Amazon Optimizes Warehouse Space

December 22, 2019

As the holiday buying season is underway, Amazon is revising its warehousing system.

As we previously shared, in an effort to cut Prime shipping time from two days to one day the company invested heavily in 2nd quarter 2019 to improve transportation and warehousing. Part of the warehousing problem relates to independent merchants that are using Amazon for fulfillment.  Over half of Amazon sales are from these independent merchants.

Amazon has raised the fees charged to these independent merchants to encourage a reduction in inventory, trying to keep slow-moving items out of their distribution centers.  Because many of these merchants are concerned about the fees, Amazon may not have enough inventory on-hand with holiday sales looming.

Thus, Amazon is implementing Amazon Storage and Replenishment.  Merchants can now store products to replenish Amazon’s distribution centers from nearby warehouses.  The hope is to allow merchants a cheaper storage option in order to keep inventory low in Amazon’s distribution center, but yet not run-out of merchandise that might result in lost sales.

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This post is based on the Bloomberg article, Amazon Tests Cheap Warehouses to Make Continue reading