What upstream storage solves
Upstream storage solves the mismatch between how inventory arrives and how Amazon wants to receive it. Containers and truckloads arrive in large batches, while FBA rewards steady inbound that keeps a few weeks of cover on hand. Holding the bulk upstream lets you buy and ship efficiently without overloading FBA capacity limits or paying Amazon storage rates on months of supply.
There are two main ways to do it. Amazon Warehousing and Distribution (AWD) is Amazon's own bulk storage service that feeds FBA. A third-party logistics provider (3PL) is an independent warehouse that stores your inventory and sends replenishment to Amazon and other destinations. Many sellers use one; some use both.
How Amazon AWD works
AWD stores inventory in Amazon-operated distribution centers, typically by the pallet or case, and can automatically replenish your FBA inventory as it sells. You send inventory to AWD through Send to Amazon, and Amazon's systems decide when and where to move it into fulfillment centers.
The main appeal is integration. AWD inventory is visible in Seller Central, auto-replenishment reduces the number of FBA shipments you create, and Amazon has offered fee incentives for inventory that flows into FBA through AWD. AWD storage rates are generally lower than FBA storage rates, and AWD inventory sits outside your FBA capacity limits until it is moved in.
Amazon has also added options to send AWD inventory to some non-Amazon channels. Terms, fees and eligibility change, so review the current AWD fee schedule and program rules before deciding.
How a 3PL works for FBA
A 3PL stores your inventory in its own operations and ships to wherever you tell it to. For FBA, that means building replenishment shipments in Send to Amazon on your behalf or with you, prepping units to Amazon's requirements and booking small-parcel or LTL freight into the destinations Amazon assigns.
The same inventory can ship Shopify, Walmart and TikTok Shop orders, wholesale purchase orders and retail replenishment, often with branded packaging and custom inserts. A 3PL can also perform prep, kitting, bundling, relabeling and inspection work that a bulk storage program does not offer, and it can receive removal orders from FBA for grading and re-prep.
Key differences side by side
The core differences come down to control, flexibility and integration.
- Prep: AWD expects inventory to arrive ready for Amazon; a 3PL can perform prep, labeling and kitting upstream.
- Replenishment logic: AWD automates replenishment using Amazon's own signals; a 3PL replenishes on a plan you approve, which you can adjust for promotions, launches or margin goals.
- Channel flexibility: AWD is built primarily to feed Amazon; a 3PL can ship any channel, in any packaging.
- Visibility: AWD lives inside Seller Central; a 3PL provides its own inventory system and reporting.
- Inspection and quality control: a 3PL can inspect, count and photograph inbound goods before they reach Amazon.
- Concentration risk: AWD keeps all inventory inside Amazon's network; a 3PL keeps it independent of your seller account.
Neither is better in every case. The best fit depends on your channel mix and how much hands-on control you want.
When AWD makes sense
AWD tends to fit sellers who are almost entirely on Amazon, whose products arrive from the factory already prepped and labeled, and who value automation over control. If your catalog is simple, your SKUs turn steadily and you do not need branded packaging or wholesale shipping, AWD's integration can remove a lot of manual shipment work.
It also suits sellers who are comfortable letting Amazon's systems decide replenishment timing. Auto-replenishment works best when demand is predictable and your margins can absorb occasional misjudgments in inventory placement.
When a 3PL makes sense
A 3PL tends to fit sellers who sell on more than one channel, need prep or kitting done in the U.S., or want an inventory position that does not depend on a single marketplace account. It also fits brands with products that need special handling: dated goods with lot control, dangerous goods, oversize items or anything that benefits from inspection before it reaches Amazon.
A 3PL is also the better tool when you want to manage replenishment deliberately, for example holding back stock ahead of a price change, routing short-dated lots to other channels or staging bundles for a promotion. Those decisions are hard to make when the replenishment logic belongs to someone else.
Using both together
Some brands combine the two: a 3PL receives containers, inspects and preps units and ships DTC and wholesale orders, while part of the inventory moves into AWD for automated FBA replenishment. This hybrid can make sense when Amazon fee incentives for AWD are attractive and the brand still needs a flexible inventory position for everything else.
The trade-off is complexity. Inventory sits in more places, and you need clear rules for how much goes to each. If you try a hybrid, track total landed cost per unit sold on Amazon, including every storage, handling, transfer and placement charge, so you can see whether the split is actually saving money.
How to decide
Start by mapping your current monthly costs and pain points: FBA storage and surcharges, placement fees, prep labor, stockouts and channel demands. Then model a typical month under AWD, a 3PL and a hybrid using current published rates and real quotes.
Weigh qualitative factors too. How much is it worth to keep inventory independent of your seller account? How often do you need custom work such as kitting or relabeling? How much do you sell outside Amazon today, and how much do you plan to in two years? The answer is often clearer once those questions are on paper.
Frequently asked questions
Is AWD cheaper than a 3PL?
It depends on your products and channels. AWD storage can be competitive for Amazon-only sellers, while a 3PL can cost less overall when you need prep, other channels or more control. Compare total cost per unit sold.
Can AWD prep my inventory?
AWD is designed for inventory that is already prepared for Amazon. Sellers who need prep, labeling or kitting usually handle it at the factory or with a 3PL before sending inventory to AWD.
Can I use AWD and a 3PL at the same time?
Yes. Some brands keep part of their stock with a 3PL for prep and other channels and send part into AWD for automated FBA replenishment.