Do you know how your Amazon IPI score affects your selling performance? A strong IPI score means more efficient inventory management and lower fees. But how do you improve it? This guide will walk you through what your IPI score means, and offer practical steps to help you boost it. Ready to take control of your inventory? Let’s jump in!
According to a discussion on Reddit, many sellers have experienced challenges with a low IPI score, which can result in storage limitations and higher fees. This makes it even more important to take proactive steps in managing inventory to avoid these penalties and keep your business running smoothly.
What is the Amazon Inventory Performance Index (IPI)?
The Amazon Inventory Performance Index (IPI) is a key metric that Amazon uses to evaluate how well sellers manage their inventory within its fulfillment centers. A high IPI score can lead to benefits like greater storage space and lower fees, while a low score can result in limitations and higher costs. The IPI helps sellers strike a balance between maintaining sufficient stock to meet demand and avoiding overstocking, which incurs additional storage fees.
Key factors that affect the IPI include:
Excess Inventory: Products that sit unsold for a long time.
Stranded Inventory: Inventory not linked to active listings.
Sell-Through Rate: The speed at which your inventory sells.
In-Stock Inventory: Keeping key products consistently available.
Score Range: 0 to 1,000
The IPI score ranges from 0 to 1,000, with higher scores reflecting better inventory management. A high score indicates that your inventory is well-optimized for Amazon’s marketplace, while a lower score suggests room for improvement.
Maintaining a higher score can result in:
Lower storage fees.
Greater storage capacity at Amazon fulfillment centers.
Faster order fulfillment due to improved inventory availability.
Minimum Threshold and Implications
Minimum IPI Threshold: Amazon sets a minimum IPI score, typically around 400. Falling below this threshold can have significant consequences.
Implications of Falling Below the Threshold:
Storage Restrictions: You may be limited on how much inventory you can store in Amazon’s fulfillment centers.
Higher Fees: Sellers below the threshold can face increased storage costs, especially during peak seasons.
Sales Impact: Low inventory performance can slow down sales growth due to limited stock availability or higher costs eating into profits.
Where to Find Your IPI Score
Knowing where to find and monitor your IPI score is crucial for keeping track of your inventory performance and making necessary adjustments. Here’s how you can easily access and understand your score.
Navigate the Inventory Performance Dashboard
Your Inventory Performance Dashboard in Seller Central is where you can find your IPI score and other important insights into your inventory management.
How to Access It:
Log in to your Amazon Seller Central account.
Go to the Inventory tab, then select Performance from the dropdown menu.
Your IPI score will be prominently displayed at the top of the dashboard, along with actionable insights.
Why It Matters: This dashboard gives you an overview of your current inventory health and offers tips on how to improve your performance.
Understand the Key Components of the IPI Dashboard
The IPI Dashboard breaks down several important components that directly affect your score. Understanding each one helps you make better decisions on how to manage your inventory.
Excess Inventory: This shows how much of your stock is not selling, impacting both your fees and IPI score.
Sell-Through Rate: Measures how quickly your products are selling. A higher rate means better inventory management.
Stranded Inventory: Highlights any inventory not tied to an active listing, which can hurt your score.
In-Stock Inventory: Tracks how well you keep popular products available.
Factors That Affect Your Amazon IPI Score
Your Amazon IPI score reflects how well you manage your inventory, and it directly impacts your storage costs and limits. Let’s break down the key factors that influence your score and how you can manage them effectively.
What is Excess Inventory and How to Manage It?
Excess inventory can weigh down your IPI score and increase storage fees. Managing it properly is essential for keeping costs low and optimizing your stock.
Inventory that has been sitting in Amazon's warehouses for too long without selling.
Why It Matters: Excess inventory leads to higher storage fees and lowers your IPI score.
What You Can Do: Run promotions, discount slow-moving items, or use Amazon’s removal service to clear out old stock.
How to Improve Your FBA Sell-Through Rate?
Your sell-through rate measures how quickly your stock sells. A higher sell-through rate can significantly boost your IPI score.
The rate at which your products sell compared to how much stock you have.
Why It Matters: A higher sell-through rate helps you avoid excess stock and keeps your IPI score high.
What You Can Do: Run sales, optimize your product listings, adjust pricing, and maintain just enough stock to meet demand without overstocking.
Optimize your listings and advertising with AI-driven recommendations from SellerMate.ai to improve your sell-through rate effortlessly
How to Fix Stranded Inventory Issues?
Stranded inventory means you have stock in Amazon's warehouse that can’t be sold because of listing problems. This negatively affects your IPI score and costs you money.
Inventory in Amazon's warehouse that isn’t linked to an active listing.
Why It Matters: Stranded inventory takes up space and racks up storage fees while not generating any sales.
What You Can Do: Regularly check for stranded inventory and resolve any listing issues or remove unsellable items from Amazon’s fulfillment centers.
Why Keeping Popular Items In-Stock Boosts Your Score?
Having key products in stock is crucial for satisfying customer demand and improving your IPI score. Running out of stock can lead to missed sales and a drop in your score.
Ensuring that your top-selling products are always available.
Why It Matters: Out-of-stock items lead to lost sales, unhappy customers, and a lower IPI score.
What You Can Do: Use Amazon’s restock alerts and forecasting tools to make sure your popular items are always available when customers need them.
Focusing on these key areas—managing excess inventory, improving sell-through rates, resolving stranded inventory, and keeping popular items in stock—you can maintain a strong IPI score and maximize your profitability on Amazon.
Watch the My Amazon Guy video to discover key tips on improving your Inventory Performance Index (IPI) on Amazon. Don't miss out on these valuable insights!
What Happens If Your IPI Score Is Too Low?
A low Amazon IPI score can result in serious setbacks for your business, including storage restrictions and increased costs. Let’s explore the consequences and how they affect your ability to manage inventory effectively.
Low IPI Scores Lead to Storage Limits and Higher Fees
If your IPI score falls below Amazon’s minimum threshold (currently set at 400), you could face costly penalties and limitations that impact your bottom line.
Storage Restrictions: Amazon limits the amount of inventory you can store in their fulfillment centers if your score is under 400. This could be problematic, especially during peak seasons like Q4, when inventory turnover increases by as much as 30-40%.
Higher Fees: Sellers with low IPI scores may face long-term storage fees of $6.90 per cubic foot, significantly higher than the standard monthly storage fees, which can drastically cut into your profit margins. Excess inventory penalties can also rise during peak seasons.
Low IPI Score Can Disrupt Your Inventory Management
A low IPI score affects more than just storage space—it can throw off your entire inventory planning and management strategy.
Stockouts and Lost Sales: With limited storage, you risk running out of high-demand products. According to studies, stockouts can cause up to 40% of potential customers to abandon their purchase, resulting in lost revenue and dissatisfied shoppers.
Operational Headaches: Constantly adjusting to storage limits can make managing your inventory a hassle, creating inefficiencies in your business.
How to Boost Your Amazon IPI Score
Improving your IPI score is key to avoiding fees, unlocking more storage, and keeping your business running smoothly. Here’s how you can make impactful changes to raise your score quickly.
How to Increase Your Sell-Through Rate
A better sell-through rate means faster-moving inventory and a higher IPI score. Here’s what you can do:
Run Promotions and Discounts: Clear out slow-moving items with limited-time sales to boost your sell-through rate.
Use Amazon Ads: Increase your product visibility and drive more sales by investing in Sponsored Product ads.
Optimize Your Listings: Make sure your listings are fully optimized with strong keywords, clear images, and accurate descriptions to attract more buyers.
How to Reduce Overstocked Inventory
Excess inventory can lower your IPI score and increase storage costs. Managing stock levels effectively is crucial.
Set Smart Inventory Limits: Use Amazon’s Restock Inventory tool to help maintain balanced stock levels based on demand.
Sell Overstock Through Amazon Outlet: Move excess inventory quickly by listing slow-moving products on Amazon Outlet at discounted prices.
Avoid Long-Term Storage Fees
Long-term storage fees can add up quickly and hurt your profitability. Here’s how to stay ahead:
Remove Old Inventory on Time: Regularly check for products nearing the 12-month mark and create removal orders to avoid long-term storage fees.
Offer Clearance Deals: Run clearance sales or bundle items together to clear older stock before fees hit.
Fix Listing Issues to Avoid Stranded Inventory
Stranded inventory can’t be sold and drags down your IPI score. Make sure you fix these issues proactively.
Check for Stranded Inventory: Regularly monitor your Stranded Inventory Report to catch issues early.
Resolve Listing Errors Fast: Update or fix inactive listings quickly so your stranded inventory can start selling again.
Stay proactive with SellerMate.ai’s alerts that help you catch and fix listing issues before they impact your sales and IPI score.
Common Misconceptions About Amazon IPI Scores
There are several misunderstandings about how the Amazon IPI score works and what impacts it. Let’s clear up some of the most common misconceptions that could be holding your business back.
1. Myth: IPI Score Directly Limits the Number of ASINs You Can List
Many sellers believe that a low IPI score will reduce the number of ASINs they can list on Amazon. However, this is not true.
Fact: A low IPI score affects your storage limits, not the number of ASINs you can list. You can still list as many products as you want, but your overall storage space may be restricted.
2. Myth: New Products Automatically Lower Your IPI Score
Sellers often worry that launching new products with low initial sales will harm their IPI score. While it’s true that the sell-through rate affects your score, new products are handled differently.
Fact: New products generally have a grace period before their sales performance impacts your IPI score. You have time to optimize their listings and improve sales before it counts against you.
3. Myth: You Can Improve Your IPI Score Quickly with Large Inventory Adjustments
Some believe that making large adjustments, like a big sale or bulk removal of stock, will lead to instant improvement in their IPI score.
Fact: While these actions can help, your IPI score is calculated over time. It takes consistent, ongoing inventory management to see significant, lasting improvements.
4. Myth: Marking Items as Non-Replenishable Boosts Your Score
Some sellers think marking items as non-replenishable will immediately improve their IPI score by signaling that no excess inventory will accumulate.
Fact: Marking items as non-replenishable does not directly boost your IPI score. Your score improves by managing existing inventory, optimizing sell-through rates, and avoiding excess stock.
Recommended Actions to Maintain or Improve Your Amazon IPI Score
Maintaining a strong IPI score is crucial for avoiding storage limits and extra fees. Here’s a mix of immediate actions and long-term strategies to help you keep your score above Amazon’s threshold and improve your inventory performance.
Immediate Steps: Regularly Monitor and Take Action
To prevent sudden drops in your IPI score, consistent monitoring and quick fixes are essential.
Check Your IPI Score Regularly: Log in to Seller Central and monitor your IPI score frequently to ensure it stays above the minimum threshold (usually 400). Regular checks help you spot problems before they escalate.
Fix Stranded Inventory Quickly: Address any stranded inventory immediately by resolving listing issues or removing unsellable items. Stranded inventory negatively impacts your score and racks up storage fees.
Run Promotions on Slow-Moving Products: Clear out excess inventory by offering discounts, promotions, or bundling products to improve your sell-through rate.
Long-term Strategies: Sustained Improvements for a Healthy IPI
Building a sustainable inventory management plan will help you maintain a consistently high IPI score.
Utilize Third-Party Logistics (3PLs): Offload some of your inventory to 3PLs, which can store and ship your products outside of Amazon, reducing storage pressure on your FBA inventory.
Maintain Optimal Stock Levels: Use tools like Amazon’s Restock Inventory feature or third-party inventory management software to forecast demand and avoid overstocking or understocking.
Diversify Sales Channels: Spread your inventory across multiple sales channels (Amazon, Shopify, eBay, etc.) to move stock faster and reduce the risk of overstock at Amazon’s fulfillment centers.
Schedule Regular Inventory Audits: Conduct periodic inventory audits to track what’s moving and what’s not, so you can make better decisions about reordering, removing, or promoting certain products.
Stay on Top of FBA Policies: Ensure you’re familiar with Amazon’s evolving FBA policies, including fees and thresholds, so you can adjust your strategy accordingly and avoid unexpected penalties.
Increase Your Amazon IPI Score with Smart Automations from SellerMate.ai
SellerMate.ai offers several tools and features that can help boost your Amazon Inventory Performance Index (IPI) score by optimizing inventory management and ad performance:
Improves Sell-Through Rate: By analyzing sales and ad performance, SellerMate.ai identifies top-selling products and adjusts ad strategies to move inventory faster, directly improving your sell-through rate.
Reduces Excess Inventory: It tracks slow-moving products and suggests strategies like discounts or ad adjustments, helping to avoid excess inventory and the associated storage fees.
Optimizes Restock Timing: Real-time alerts notify you when to restock popular items, ensuring you maintain inventory without overstocking, which is crucial for improving your IPI score.
Boosts Keyword and Product Targeting: SellerMate.ai’s custom reports provide insights on keyword and product performance, helping you target the right products to sell more effectively, which contributes to better inventory management.
Automates Ad Campaigns for Better Sales: With features like dayparting and automated bid adjustments, SellerMate.ai ensures your ads are optimized, driving higher sales and better inventory turnover.
Improving your Amazon IPI score requires balancing inventory levels, optimizing sell-through rates, and minimizing excess stock. By leveraging data and making informed decisions, you can maintain a high score and avoid fees. Stay proactive in managing your inventory for consistent success.
Ready to streamline your inventory and ad management? Book a demo with SellerMate.ai today and see how it can help you achieve better results!
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