by Shannon Curley
PROVIDENCE, R.I. – Peak season is always a pressure test for Amazon sellers, but Q4 2025 is shaping up to be a different beast entirely. Between record demand, higher tariffs on imports, the elimination of the de minimis exemption, and mounting congestion across Amazon’s network, inventory management is now a make-or-break factor for profitability.
“Have a buffer for availability inventory at a 3PL so you have a faster option to go direct to FBA if AWD lets you down,” says Ephraim Ausch, chief logistics officer, Tactical Logistic Solutions. “It can be your basement, it can be your own warehouse, just have something so you’re not 100% reliant on AWD.”
Amazon Warehousing & Distribution (AWD) has been marketed as a cost-saving alternative for storage and replenishment, but during Q4 it exposes sellers to major risks including delayed restocks, lost units, and limited flexibility. For many brands, relying exclusively on AWD in peak season is sure to result in lost revenue, diverted goods, and missed Black Friday or holiday windows. Here’s what sellers need to know heading into this year’s holiday season, and how to mitigate AWD’s pitfalls.
Capacity Limits and Delayed Replenishment
AWD and cross-dock facilities, especially on the West Coast, are already reporting capacity strain heading into Q4. The situation has deteriorated significantly from previous years; during peak 2024, some sellers saw transfers delayed by 45+ days, and 2025 is trending worse due to reduced FBA capacity and heightened import congestion. More concerning is that inventory physically sitting in AWD can experience unpredictable transfer delays to FBA, causing stockouts precisely when sales matter most.
Flexibility and Control Challenges
Once inventory is placed in AWD, sellers essentially surrender direct access and routing flexibility. The system creates a “lock-in” effect where pulling stock back out to another 3PL or FBM channel becomes both slow and costly. In practice, this means sellers are unable to pivot if AWD bottlenecks appear mid-season, leaving them helpless during critical sales periods.
Tracking, Transparency, and Loss Risk
AWD inventory visibility remains frustratingly opaque compared to FBA, leaving sellers uncertain about what stock is available for transfer at any given time. Lost or unaccounted-for units are not uncommon, with resolution timelines that often outlast peak season entirely. Compounding these issues, automated replenishment systems frequently fail to recognize holiday-driven surges, leaving sellers either overstocked or out of stock when demand spikes unexpectedly.
Communication and Escalation Barriers
Perhaps most frustrating for sellers is that AWD-specific support queues are notoriously slower than traditional FBA channels. Sellers consistently report difficulty escalating urgent Q4 issues, and by the time tickets are addressed, the opportunity window has often closed. This communication gap can be devastating during time-sensitive peak season operations.
Financial Trade-Offs
While AWD’s storage rates appear dramatically cheaper than FBA during October–December, the cost advantage can vanish quickly when factoring in processing fees, transfer costs, and lost sales opportunities.
Sellers initially attracted to AWD’s predictable $0.48/cu. ft. storage fee often find that they’re paying significantly more in per-box handling charges ($1.35–$2.50) and FBA placement surcharges once inventory gets rerouted at the last minute.
Storage Fees: AWD vs. FBA (Oct–Dec 2025)
- FBA: $2.40 (standard) / $1.40 (oversized) per cu. ft./month — rates spike 3–5x in peak
- AWD: $0.48 (all sizes) per cu. ft./month — flat year-round, ~80% lower in Q4
AWD is attractive for bulk storage, but hidden transfer fees and the risk of stuck inventory mean sellers can’t view it as a complete solution. FBA remains the best route for fast-turn SKUs, but at a much higher storage premium if goods don’t sell quickly.
Why Q4 2025 Will Be Different
This year, AWD risks are amplified by significant macro and policy shifts that create a more challenging environment than sellers have previously encountered.
Tariffs and de minimis changes have fundamentally altered the cost structure for imports. Import costs have surged with new U.S. tariff schedules and the removal of the $800 de minimis exemption, meaning stranded inventory isn’t just lost revenue, it also carries higher landed costs than in previous years. This makes inventory flexibility more critical than ever.
Amazon has also imposed reduced FBA capacity limits, tightening inbound restrictions to roughly five months of forecasted sales. This represents a capacity cut of as much as 75% year-over-year for some sellers, forcing greater reliance on alternative storage solutions precisely when those alternatives are most strained.
Perhaps most telling are the increasing seller reports of AWD failures. Recent cases highlight brands losing millions from AWD delays and stockouts, and these cautionary tales are becoming increasingly common as we enter the busiest season.
The net effect is clear: Q4 2025 is shaping up to be less forgiving than prior years, and sellers can no longer afford a “set it and forget it” approach with AWD.
Proven Tactics for Q4 Delay Mitigation
Smart sellers are adopting comprehensive strategies that treat AWD as one component of a diversified approach rather than a complete solution.
Diversify and hybridize fulfillment by splitting inventory between AWD, FBA, and a backup 3PL to avoid single-point failure. Maintaining East Coast 3PL capacity as a contingency enables fast reroutes if West Coast AWD facilities become congested.
Adjust inbound and transfer timing by shipping 60–90 days in advance to beat bottlenecks and building in an extra 30-day buffer specifically for AWD-to-FBA transfers. This extended timeline accounts for the increasing delays sellers are experiencing.
Optimize routing by avoiding West Coast AWD facilities where possible and prioritizing Central or East Coast nodes. For urgent SKUs, consider air freight or SPD direct to FBA to ensure holiday availability.
Monitor and manage actively by tracking inventory daily with tools like SoStocked or Amazon’s inventory reports. Don’t rely on auto-replenish systems—manually override transfers when demand surges to maintain control over critical inventory movements.
Communicate and escalate early because if inventory becomes stuck, immediate escalation and documentation of all cases becomes essential. Sellers who wait passively risk losing the season entirely.
Why Sellers Must Expand Beyond AWD in Q4
The sellers who will succeed this holiday season are those who embrace diversification across AWD, FBA, and 3PLs, inbound early with adequate buffer time, and maintain flexibility through backup capacity and routing options.
AWD offers undeniable savings on Q4 storage, but it comes with hidden costs and major operational risks. For 2025, when tariffs, capacity cuts, and de minimis changes are already squeezing margins, sellers cannot afford to bet their entire Q4 strategy on AWD.
The most successful approach treats AWD as a valuable component of a broader, more resilient inventory management strategy rather than a standalone solution.
Shannon Curley is director of Marketing and Growth at Prosper exhibitor Tactical Logistic Solutions and head of her own consulting business.
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