Inventory Performance Index: Maximize Amazon Sales

March 13, 2024
By The Badger

Are you trying to get a handle on Amazon’s inventory management? Well, the Inventory Performance Index (IPI) is key to unlocking your success. In this article, we delve into why aiming for a score above 400 is crucial. Not only does a higher score mirror the well-being of your inventory, but we’ll also guide you through practical steps to enhance it.

Key Takeaways

The Amazon Inventory Performance Index (IPI) affects storage limits and fees. It rates a seller’s inventory efficiency. A score above 400 is good.
Boosting your IPI score means taking care of a few important things. First, you need to get rid of extra stock. Next, sell your products faster through FBA.
It’s a good idea to keep checking your IPI score on the Inventory Dashboard. Use smart plans like keeping just enough stock, setting good prices, and having sales.

What does understanding Amazon’s Inventory Performance Index (IPI) mean

The Amazon Inventory Performance Index, or IPI for short, helps track how well you’re managing your stock, including both too little and too much of it. It’s a win-win for both you and Amazon. This score is figured out by looking at sales, how much stock you have, and costs over the past three months, and it gets updated every week.

Now, there are a few important things that can change your IPI score.

Maintaining a balance between sold and available inventory, without excess stock
Avoiding long-term storage fees
Resolving problems with your listings
Keeping popular products in stock to meet customer demand

The IPI score spans from 1 to 1000.

It steers Amazon sellers toward better fulfillment. Typically, maintaining an index score over 400 signals sound inventory management practices.

What is the purpose of Inventory Performance Index

The Inventory Performance Index Score is super important. It’s like a helper for sellers to figure out the right amount of stuff to have on hand, which also helps decide how much they can keep in storage. It’s super handy for keeping your inventory in check.

It ensures that sellers always have just the right amount of items for their buyers, without ending up with too much.

The IPI provides benefits for new Amazon merchants:

Identifying ideal inventory quantities
Boosting fulfillment process productivity
Effective management of FBA inventory as gauged by the performance index
Curtailment of storage fees alongside reducing overall costs associated with maintaining inventory
Influencing seller profit margins directly

What is the range of Inventory Performance Index scores

The way Amazon looks at how you handle your stock is hugely shaped by your IPI score. If you’ve got a score over 550, it shows you’re doing a great job at keeping your inventory balanced and sorting out any listing problems.

But if your score dips below 450, Amazon might put limits on how much you can store.

Getting to grips with this scoring range is crucial. It reflects how well you’re managing your inventory and influences key aspects of your business, like how much you can store and what you pay for it.

So, keeping your IPI score high is super important for Amazon sellers.

What are the key factors that influence your IPI score

The IPI score is a measured value, not just an arbitrary figure. It’s derived from essential factors such as:

Surplus inventory
The rate at which FBA inventory sells (sell-through rate)
Inventory that’s stuck in storage without being listed for sale (stranded inventory)
Levels of available stock within the FBA program

These elements are critical.

Every part plays a different role in shaping your overall IPI score.

For example, having too much stock, or what Amazon calls surplus inventory, really impacts your score. This means having more items than you can sell in 90 days, based on how things are currently going.

How quickly your FBA products are selling, known as the sell-through rate, is also super important. It looks at your sales over the last 90 days compared to how much you have stored with FBA.

When products don’t sell and just sit around in Amazon’s warehouses, we call that “stranded inventory.”

This can happen for lots of reasons, but it’s not good because it messes with your scores by taking up space with items that aren’t moving. Also, it’s really important to make sure you have just the right amount of stock with FBA. You don’t want too much because you could end up paying a lot for storage.

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Excess Inventory Management

Handling too much stock well is super important for keeping your IPI (Inventory Performance Index) score healthy.

When you have a lot of extra items, it usually means things aren’t being managed right. This can make your IPI score drop because you’ll have higher storage costs.

Luckily, Amazon has some cool tools to help, like the FBA Liquidations Program.

They also give personalized tips for your FBA inventory and ways to make outlet deals. These tools are great for helping you reduce extra stock and steer clear of those pesky long-term storage fees.

The dashboard shows key metrics. They include the quantity of surplus units and the cost of storing them. It also shows Amazon’s strategies for dealing with them. These strategies are based on expected demand beyond 90 days of supply. Facing long storage fees hurts profits. It also signals planning or popularity problems. These hurt a seller’s IPI score.

Optimizing FBA Sell-Through Rate

Your IPI score tells you how good you are at handling your stock. If you’re selling your FBA items quickly, it means you’re doing a great job at matching what you have with what customers want. This takes smart planning and guessing what will sell.

But, if things aren’t selling fast, your IPI score can drop. This happens because it looks like your items are just sitting there, which can cost more for storage and take up valuable space.

The sell-through rate is found by dividing the units sold by the average available units. Both are calculated over 90 days. The units are in Amazon’s fulfillment centers during that time. This metric offers insights into how effectively products are moving through sales channels.

Amazon characterizes varying ranges of selling efficiency as excellent (above 7), good (between 3 to 7), fair (from 1 to 2), or poor (less than one).

To do well on Amazon, sellers need to keep their FBA sell-through rates high. This boosts their Inventory Performance Index (IPI) score. Simply put, you want those rates to be in the ‘green zone’ on Amazon’s charts for every three-month period.

Resolving Stranded Inventory Issues

Items stuck in Amazon’s warehouse without being listed for sale are called stranded inventory. This usually happens because there’s an issue with the listings.

If you have stranded inventory, it can lower your IPI scores because those items aren’t selling and just take up space. So, it’s really important to keep an eye on how much stranded inventory you have.

Amazon helps sellers with its ‘Fix Stranded Inventory’ tool.

It provides a list of items lacking active offers and suggested actions for fixing any listing problems.

Maintaining In-Stock Inventory

Amazon vendors must carefully manage their inventory levels. Having too much stuff can backfire, leaving you with excess inventory that can drag down your IPI score.

So, balancing your stock is super important.

Amazon analyzes lost FBA sales from the past 30 days.

They compare them to predicted sales on days when products were unavailable. This shows that proper inventory management is about more than just quantity.

The IPI assesses how well sellers manage their stock. It emphasizes the need to have popular products available consistently.

How can you improve your IPI score with practical tips?

Getting your IPI score up means knowing what affects it and then taking smart, clear steps to boost it. Start with always having what customers want in stock and keeping extra stuff to a minimum.

Here’s the gist for keeping your stock just right:

Cut down on extra stock you don’t need,
Keep enough on hand so you don’t miss out on sales,
Aim for steady sales over 90 days,
Deal with too much stock to avoid long-term storage fees,
And work to lift your IPI score

Amazon endorses these methods. They are part of an effective approach to improving inventory management.

For sellers wanting to improve their IPI scores, they should:

Keep a close eye on their product listings,
Plan shipments early to avoid running out of space,
Adjust prices to focus on selling higher-value items,
And aim to sell their products faster.

Consider switching inexpensive items over to fulfillment by merchant if possible.

What does efficient inventory planning involve

Planning your inventory well is super important for doing well on Amazon. Tools like Amazon’s Inventory Planning Dashboard are here to help. They make it easy to figure out how much stock you need and let you know when it’s time to order more. This way, you can always have just the right amount of items on hand.

To make sure you’ve got enough items, regularly look at your inventory dashboards. Try to have enough products to last about 30-60 days, based on how things are selling. Plan your restocking schedule so you have what customers want throughout the year. This helps avoid having too much stuff and keeps your profits healthy.

What are some effective pricing strategies

Using smart pricing strategies can significantly boost your Inventory Performance Index (IPI) score. By leveraging Amazon’s own tools to monitor competitor pricing, you can adjust your prices strategically to stay ahead.

Amazon’s Automated Pricing tool lets you set rules to automatically adjust your prices in response to competitor changes. This ensures your prices remain competitive without constant manual updates.

The Manage Inventory Health page is a goldmine for keeping your stock in check. It provides data on your inventory age, helping you identify slow-moving products. If you have too much stock, slightly lowering prices can help clear out excess inventory while keeping an eye on your profit margins.

Using the FBA Inventory Age page, you can get detailed insights and advice on products that aren’t selling quickly. This page helps you decide which items might benefit from a price reduction or a promotional push to improve sales velocity and your IPI score.

Common Misconceptions About Inventory Performance Index Scores

There are a few myths about IPI (Inventory Performance Index) scores we need to clear up for a better understanding.

First off, your IPI score has no impact on the number of each product (ASIN) you can send to Amazon, even during restocking limits. Secondly, introducing new products doesn’t lower your IPI score since Amazon only considers the sales history after 90 days.

For new sellers, it’s important to note that an IPI score won’t appear until about 15 weeks after your first shipment reaches Amazon’s warehouses. Additionally, improving your IPI score significantly is a gradual process, reflecting both recent and past sales and storage activities.

Lastly, marking items as non-replenishable doesn’t boost your IPI score. Understanding these truths can help you manage your inventory on Amazon more effectively.

How can you monitor and track your IPI score

Keeping an eye on your IPI score is just as important as working to improve it. In Seller Central, you can check your IPI score using the Inventory Dashboard.

This dashboard is full of useful information. It tells you how to get rid of extra stock, when to restock, and what to do with items that aren’t selling. Monitoring your stock and making sure it matches up with what you’re selling is key to keeping your business running smoothly.

What are the consequences of a low Inventory Performance Index

If your IPI score is low, Amazon might limit how much you can store and charge you more for storage. This can also stop you from sending more goods to Amazon. Amazon checks your score during two specific weeks to decide how much you can store.

Make sure your score meets their needs during these checks to avoid limits. Only sellers with a professional account and goods in Amazon’s warehouses can see their IPI scores. If you’re an Amazon FBA seller and want to keep track of all your items, you can get help from Refund Retriever.

In short, they’ll help you manage your inventory from start to finish.

What benefits come with a high IPI score

Amazon sellers benefit greatly from a high IPI score. It shields them from overage charges and tight storage limits. These limits apply when their score is too low.

Sellers can boost their earnings by staying away from penalties, like storage limits and extra fees that come with low IPI scores. By having a high IPI score, they benefit from lower storage costs, more room for their goods, and overall better performance of their FBA inventory.

Bottom line

In short, the Amazon Inventory Performance Index (IPI) is super important for anyone selling on Amazon. Getting what it’s all about, including its main bits and how to make it better, can really help your Amazon business grow. To pump up your IPI score and make more money, focus on having just the right amount of stock. Manage any extra goods smartly. Quickly sort out any issues with items that aren’t selling. And always keep your best-sellers in stock.

Frequently Asked Questions

What is inventory performance index in Amazon

In Amazon, the Inventory Performance Index (IPI) is a metric. It assesses your inventory’s quality. It affects the limits on your FBA storage.

How do I find my Amazon IPI score

To view your Amazon IPI score, first sign into Seller Central. After logging in, go to the Inventory section. Then, select the Inventory Planning option. Once there, proceed to open the Performance tab which will display your current score.

Next, you can click on the Expand Storage Monitor tab located at the bottom of that page to see more details.

What is a good IPI score

An IPI (Inventory Performance Index) score is good if it lies between 400 and 800. The best score is around 550. It’s recommended to avoid an IPI score under 350. It may limit your storage.

What is the Inventory Index

Amazon assigns an Inventory Performance Index (IPI) score to rate your inventory management. It affects the limits on your FBA storage.

How does the IPI score influence my Amazon business

Your Amazon business is greatly influenced by the IPI score. It sets your inventory limits and affects FBA costs.

To ensure smooth operations for your business, you must manage your IPI score well.

Resources & Links

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