Amazon Supply Chain Optimization: Reducing Costs While Scaling

FBA fees went up again. Storage fees went up again. Inbound placement fees are now a permanent fixture. If you're selling on Amazon in 2026 and you haven't revisited your Amazon supply chain optimization strategy recently, your margins are probably thinner than they need to be.

Where Amazon Sellers Lose Money on Supply Chain

We see the same cost leaks across dozens of brands:

Aged inventory storage fees. Inventory sitting in FBA longer than 180 days gets hit with aged inventory surcharges. Past 365 days, you're paying $6.90 per cubic foot per month on top of regular storage. For bulky products, this can exceed the product's wholesale cost.

Inbound placement service fees. Amazon now charges for distributing your inventory across its fulfillment network. Shipping everything to a single warehouse is cheaper upfront but triggers higher placement fees. Splitting shipments to multiple destinations saves on fees but increases your logistics complexity.

Oversized and overweight misclassifications. Amazon's cubiscan measurements don't always match reality. If your product is classified as oversized when it should be standard-size, you're overpaying on every single unit. We've seen brands save $1-3 per unit just by getting dimensions corrected.

Stockout costs. Running out of inventory doesn't just mean lost sales today. It means lost organic ranking, lost Buy Box momentum, and 2-4 weeks of recovery once you're back in stock. The hidden cost of a stockout is often 3-5x the revenue you missed.

The Optimization Playbook

Right-Size Your FBA Inventory

The goal is 30-60 days of FBA inventory at any given time. Enough to avoid stockouts. Not so much that you're paying for long-term storage. Use Amazon's FBA Inventory Planning tool and supplement it with your own demand forecasting that accounts for seasonality, promotions, and advertising spend changes.

Reduce Product Dimensions

This sounds obvious, but we've helped brands save six figures annually by redesigning packaging to fit within standard-size tier thresholds. Shaving half an inch off a box dimension can move you from oversized to standard-size, cutting fulfillment fees by 30-50%.

Use Amazon Warehousing and Distribution (AWD)

AWD serves as an upstream storage solution with lower per-unit costs than FBA long-term storage. You store bulk inventory in AWD, and Amazon automatically replenishes your FBA inventory as needed. For brands with large SKU counts or seasonal demand patterns, AWD can cut total storage costs by 25-40%.

Optimize Your Inbound Shipping

Consolidate shipments where possible to reduce per-unit freight costs. Use Amazon's partnered carrier program (UPS/FedEx) for small parcel and their partnered LTL rates for palletized shipments. Compare against your own 3PL rates — sometimes Amazon's rates win, sometimes they don't.

Supply Chain as Competitive Advantage

The brands that dominate Amazon long-term aren't just the ones with the best products or the most ad spend. They're the ones with the tightest operations. A 5% improvement in supply chain costs drops straight to your bottom line — no additional revenue required.

Our Amazon operations team audits supply chain costs as part of every engagement, because Amazon supply chain optimization is where we consistently find the easiest margin improvements for brands that have been on the platform for a while.

Stop treating supply chain as a cost center. Start treating it as a profit lever.