The Amazon Inventory Performance Index (Amazon IPI) is the measure of an Amazon FBA seller’s inventory management effectiveness using FBA. As an experienced seller, you may have encountered Amazon IPI if you have limited restock and are unable to send in Amazon FBA inventory, or because you received an error stating you have reached the Amazon maximum inventory level for a SKU in your catalog. The Amazon IPI metric is based on how well a seller keeps popular products in stock, maintains healthy FBA Inventory levels, and fixes listing issues that need to be addressed. It is important for Amazon Sellers to understand and leverage the Amazon Inventory Performance Index (Amazon IPI) as a tool to decrease cost and improve inventory efficiency in their Amazon supply chain.
Why Should Amazon Sellers Improve the Amazon Inventory Performance Index (IPI)
If sellers do not meet the minimum Amazon Inventory Performance Index scores, restock limits will be set and sellers may not be able to send in desired inventory to Amazon fulfillment centers. This year’s COVID-19 pandemic has put a massive strain on Amazon’s Fulfillment Center Network. Even as Amazon pledged to invest over $4 Billion into its Fulfillment Operations in Q2 alone, Amazon has struggled to keep up with the growing demand for its Fulfillment by Amazon (FBA) Service. In 2020, Amazon has twice raised the minimum IPI Score, which is now 500. For an IPI score below 500, a Seller’s Storage Limits will be impacted (negatively).
Storage Limits are determined using several factors
Sales Volume
Historical IPI Scores
Available Fulfillment Center Capacity
Where can I find my Amazon Inventory Performance Index (Amazon IPI) in Seller Central?
The Amazon Performance Index is displayed both on the Inventory Dashboard and the Inventory Performance Dashboard in the Inventory Planning section of Seller Central. Sellers that are utilizing the Fulfillment by Amazon (FBA) Service should be reviewing the Inventory Dashboard daily. In addition to the Inventory Performance Index, Sellers can find information about products impacted by Re-Stock Limits, FBA Inventory Age, and information about FBA Returns. It should be noted the Inventory Performance Index is available only for Professional Selling Accounts with FBA Inventory and recent account activity. If you are new to FBA or have not been active in the past 13 weeks, you may not have an IPI score until more data is logged.
How do I improve my Seller Central Amazon Inventory Performance Index (IPI)?
Amazon sellers can improve the Seller Central Amazon Performance Index (Amazon IPI) by efficiently managing FBA Inventory over time through reducing excess inventory, increasing SKU sell-through rate, correcting stranded inventory, and ensuring SKUs are in stock. Currently, Amazon uses four categories of recommendations to help improve your Inventory Performance Index (IPI):
Excess Inventory Percentage
Amazon has (a growing) but finite capacity in their warehouses and want sellers to manage their inventory at appropriate levels so there is room for more sellers inventory.
Carrying too much inventory decreases your FBA Business’s Profitability due to storage fees and holding costs. Clicking the Show More Details associated with the Excess Inventory Percentage will take you to three inventory management tools, which provide recommendations for improving your excess inventory percentage.
Excess Units: This metric represents the number of units for which the cost of holding the inventory, will likely exceed the cost of taking action (reducing price to improve sell-through or removing the inventory from the FC Network.)
Total Estimated Storage Costs: Amazon estimates the sum of costs that will incur if you take no action to improve your Excess Inventory Percentage.
Manage Excess Inventory Button: This box will indicate how many SKUs have recommended actions to sell through inventory more quickly. Clicking this button will take you directly to the Manage Excess Inventory Page.
FBA Sell-Through Rate
Amazon tracks the ratio between your units sold and how much inventory you hold in the FC Network. This metric can be a good indicator of your inventory health over time. Amazon calculates Sell-Through Rate by tracking your account’s units sold and shipped over the past 90 days divided by the average number of units available in the FC Network during that time period.
Sellers can improve their sell-through rate by advertising with Sponsored Products, Improving Keywords on their listing, or creating a sale. Each situation is unique and may call for a different approach. Clicking the Show More Details associated with the FBA Sell-Through Rate will show you two related metrics.
Units Sold (Past 90 Days): This is Provided for each FBA SKU.
Improve Sell-Through Button: This is the number of ASINs that have an opportunity to improve sell-through. Clicking this button will take you directly to the Inventory Age Page to see recommendations for each FBA SKU
Stranded Inventory Percentage
Issues on product detail pages can lead to units of inventory being stranded in the Fulfillment Center Network. When inventory is Stranded, it’s not available for sale, which results in lost sales and higher storage costs. Amazon IPI tracks how many FBA Inventory units are currently not available for purchase.
It is important for sellers to be checking the Account Health Dashboard and their Performance Notifications daily to keep track of Potential Listing Issues before SKUs become Stranded. Clicking the Show More Details button associated with Stranded Inventory Percentage will show you two related metrics:
Stranded Units: The total count of units in a fulfillment center without an active offer.
Fix-Listings Button: The total number of listings that have Stranded Inventory. Clicking this button will take you directly to the Fix Stranded Inventory Page.
FBA In-Stock Rates
Amazon wants Sellers to keep popular, replenishable products in stock. Amazon IPI measures FBA In-Stock rate as the percent of the time your replenishable FBA ASINs have been in stock during the last 30 days. This metric is weighted by the number of units sold for each SKU in the last 60 days.
It is important to indicate if an SKU is non-replenishable, so that it will be excluded from your selling account’s FBA in-stock percentage and estimated FBA Lost Sales. Sellers can mark SKU’s as non-replenishable using the Restock Inventory dashboard. Clicking the Show More Details button associated with Stranded Inventory Percentage will show you two related metrics
Estimated FBA lost sales in the last 30 days: The forecasted unit sales on days your products were out of stock, multiplied by the average sales price.
Restock Today Button: The count of SKUs where the days of supply is less than the restock lead time.
Amazon Inventory Performance Index (IPI) Final Thoughts
Sellers have the responsibility to effectively manage FBA Inventory so that the Fulfillment Center Network continues to run smoothly. Keeping a close eye on the Amazon IPI is a great first step towards improving FBA inventory management. If you have questions about the Amazon Inventory Performance Index (IPI) such as:
How do I improve my Amazon Inventory Performance Index?
Why can’t I send in more inventory to Amazon FBA?
Why do I have Stranded FBA Inventory?
How can I determine the restock limits for each of my SKUs?
I encourage you to reach out to Goat Consulting. We have seen many common FBA Issues and can help resolve your problems. The best way to contact us is to fill out a contact form: