What Is the Amazon IPI Score and How to Improve It?
Are you an Amazon seller wondering what the IPI score is and how it affects your business? Look no further! In this blog post, we’ll dive into the Amazon IPI score, understanding what it is, why it matters, and how you can improve it.
What is the Inventory Performance Index score?
The Inventory Performance Index (IPI) score measures the efficiency of your inventory management practices within Amazon’s fulfillment centers. The score ranges from 0 to 1,000, with a higher score indicating more effective FBA inventory management. Amazon typically sets a minimum threshold (around 400) that sellers must meet to avoid inventory restrictions and additional storage fees. If your IPI score falls below this threshold, Amazon may limit the amount of inventory you can send to its fulfillment centers, making it more challenging to maintain healthy inventory levels and meet customer demand.
Key Factors Influencing Your Amazon IPI Score:
Excess Inventory Percentage
Excess inventory refers to products with a supply lasting more than 90 days, indicating they are overstocked relative to their sales rate. A high excess inventory percentage means that you are holding too much inventory compared to what is being sold. This can lead to increased storage costs and lower Inventory Performance Index (IPI) scores.
FBA Sell-Through Rate
The sell-through rate measures how quickly you sell your FBA inventory relative to the amount you have in stock. It is calculated by dividing the number of units sold in a 90-day period by the average number of units available during that period. A higher sell-through rate indicates that your FBA inventory is selling well, positively impacting your IPI score.
Stranded Inventory Percentage
Stranded inventory consists of items stored in Amazon’s fulfillment centers that are not available for sale due to listing errors or other issues. This inventory takes up valuable storage space without contributing to sales, negatively affecting your IPI score. Regularly checking for and resolving stranded FBA inventory issues can help improve your score.
FBA In-Stock Rate
This measures the percentage of time your best-selling products are in stock and available for purchase. Maintaining a high in-stock rate ensures that you are meeting customer demand, leading to higher sales and a better IPI score.
Why is the Amazon IPI Score Important?
The IPI score plays a crucial role in determining your success as an Amazon seller. Here’s why:
Storage Limits
A low IPI score can result in reduced storage space at Amazon’s fulfillment centers, limiting your ability to stock popular items and fulfill orders. By maintaining a high IPI score, you ensure sufficient storage space to meet customer demand.
FBA Storage Fees
Poor inventory management can lead to higher FBA storage fees. For example, long-term storage fees are charged for inventory that remains in Amazon’s fulfillment centers for more than 365 days. By optimizing your IPI score, you can reduce these fees and lower your overall storage costs.
Seller Performance
A high IPI score reflects effective inventory management, contributing to better overall seller performance. This can help you maintain a healthy account status and build a positive reputation on Amazon.
How to Check Your Amazon IPI Score?
Checking your Amazon Inventory Performance Index (IPI) score is easy and can help you manage your inventory better. Follow these simple steps:
1. Log in to Seller Central
Open your web browser and go to Amazon Seller Central. Log in using your account credentials.
2. Go to the Inventory Section
Once you’re logged in, look at the top menu. Click on the “Inventory” tab to see the dropdown options.
3. Select Inventory Planning
From the dropdown menu, click on “Inventory Planning.” This will take you to the Inventory Performance Dashboard.
4. Find Your IPI Score
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5. Check the Score Details
Look at the factors that affect your IPI score, like excess inventory, sell-through rate, stranded inventory, and in-stock inventory. This information is also available on the dashboard.
6. Review Recommendations
Amazon provides recommendations to help improve your IPI score. Look for these suggestions on the dashboard. They might advise you on reducing excess inventory or fixing stranded inventory.
7. Monitor Your Score Regularly
Make it a habit to check your IPI score weekly. The score updates regularly, and keeping track of changes can help you stay on top of your inventory handling.
8. Set Up Alerts
To stay informed, set up notifications in Seller Central. This way, you will get alerts if your IPI score changes or if there are issues with your inventory.
How to Improve Your Amazon IPI Score
Improving your IPI score requires a proactive approach to inventory handling. Below are some practical strategies to help you boost your score:
1. Manage Excess Inventory
Excess inventory is one of the main reasons for a low IPI score. Here’s how to manage it effectively:
Use Amazon’s Inventory Dashboard: Regularly check the Inventory Dashboard in Seller Central to identify overstocked items. The dashboard provides insights into your excess inventory levels and recommends actions to reduce them.
Run Promotions or Discounts: If you have excess inventory, consider running promotions or offering discounts to move these products quickly. This can improve your sell-through rate and reduce storage costs.
Create Removal Orders: For products unlikely to sell, create a removal order to clear out excess stock. Removing unproductive inventory can free up storage space and improve your IPI score.
Participate in FBA Liquidations: Amazon’s FBA Liquidations program allows you to sell excess inventory to liquidators, reducing storage fees and helping you manage excess units effectively.
2. Optimize Your Sell-Through Rate
A high sell-through rate is crucial for a strong IPI score. Here’s how to optimize it:
Accurately Forecast Demand: Use historical sales data and market trends to forecast demand for your products. This helps you maintain balanced inventory levels and avoid overstocking.
Adjust Your Pricing Strategy: If your sell-through rate is low, consider adjusting your pricing strategy. Competitive pricing can make your products more attractive to buyers, leading to faster sales.
Bundle Slow-Moving Products: Create product bundles that pair slow-moving items with popular ones. This strategy can help increase the overall sell-through rate for your inventory.
Monitor Sell-Through Metrics Regularly: Use Amazon’s Inventory Performance Dashboard to track your sell-through rate and make data-driven decisions about pricing, promotions, and inventory planning.
3. Fix Stranded Inventory
Stranded inventory can significantly impact your Inventory Performance Index score, so it’s important to address these issues promptly:
Check Your Stranded Inventory Report: Amazon provides a Stranded Inventory Report in Seller Central that lists products not available for purchase due to listing errors. Regularly review this report and resolve any issues.
Update Product Listings: Ensure your product listings are complete and accurate. Missing information, such as keywords or product details, can cause your listings to become stranded.
Monitor Listing Health: Use Amazon’s Listing Quality Dashboard to monitor the health of your listings and address potential issues before they lead to stranded inventory.
4. Maintain High In-Stock Inventory
Keeping popular products in stock is essential for a good Inventory Performance Index score. Here’s how to maintain high in-stock rates:
Use Amazon’s Restock Inventory Tool: This tool provides recommendations on when to reorder products based on sales history and demand forecasts. Use it to keep your best-selling products in stock.
Set Up Inventory Alerts: Set up alerts in Seller Central to notify you when stock levels for popular items are low. This allows you to reorder products before they go out of stock.
Use the Inventory Performance Advisor: Amazon’s Inventory Performance Advisor offers personalized recommendations to help you maintain healthy inventory levels and avoid stockouts.
5. Regularly Monitor Your IPI Score and Inventory Health
Consistent monitoring and adjustments are crucial for maintaining a high IPI score:
Review Your IPI Score Weekly: Amazon updates your IPI score every week. Make it a habit to review your score regularly and take action if you notice any significant changes.
Track Inventory Metrics: Use Amazon’s Inventory Dashboard and Performance Reports to track key metrics such as excess inventory percentage, sell-through rate, and in-stock rate.
Stay Informed About Policy Changes: Amazon’s policies and thresholds can change. Stay informed about updates that could affect your inventory handling strategies and IPI score.
6. Understand Amazon’s Storage Limit Policies
Familiarize yourself with Amazon’s storage limit policies to plan your inventory effectively:
Know the IPI Threshold: Amazon typically requires a minimum IPI score (around 400) to avoid storage limits. Keeping your score well above this threshold can help you avoid restrictions.
Plan for Peak Seasons: During peak seasons like holidays, storage space becomes more limited. Ensure your IPI score is high enough to avoid restrictions that could impact your ability to stock popular items.
Utilize Inventory Management Tools: Use tools like the Inventory Age and Excess Inventory reports to make informed decisions about restocking and liquidating inventory.
Manage Long-Term Storage Fees: Avoid long-term storage fees by managing your inventory effectively and reducing excess and aged FBA inventory.
Conclusion
Maintaining a high Amazon IPI score is essential for effective inventory management and cost minimization. Regularly monitoring the inventory dashboard allows you to manage excess and aged inventory, balance stock levels, and reduce unproductive inventory. By addressing overstocked items and minimizing lost sales, you can improve your IPI scores and avoid unnecessary fees.
Proactively managing your inventory—by reducing excess stock and optimizing restocking strategies—ensures a consistently high IPI score. This approach not only helps you avoid storage restrictions but also enhances your sales potential and customer satisfaction. Stay diligent with your inventory management practices to achieve long-term success on Amazon.
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