IPI (Inventory Performance Index) refers to the inventory performance index, which is an inventory performance standard set by Amazon to better utilize warehouse space and encourage sellers to improve inventory management. It is mainly based on three criteria: inventory rate, excess inventory percentage and stranded inventory percentage. The index is 1-1000 points and was implemented on July 1, 2018.

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Inventory - Inventory Planning

cost

If the score is below 350, you will be charged $10 for each cubic foot above the inventory level.

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The IPI index score ranges from 0-1000. A score over 400 means the index is excellent. If it is below 350, it means there is a problem and the seller should take action to improve the score.

Starting from July 1, 2018, sellers who fail to maintain an inventory performance index score of 350 or above will be subject to storage restrictions every three months on a quarterly basis. If the index score is still below 350, Amazon will impose storage restrictions on the seller in the next quarter.

Key dates during the IPI assessment period

1. IPI assessment starts from mid-quarter, which is around November 19, February 19, May 19 and August 19. If your IPI score is below 350 now, you will receive the first warning notice.

2. The IPI evaluation will continue until the end of the quarter, which is the last day of December, March, June and September. If your IPI score is still below 350 on the last day of the quarter, you will receive an inventory restriction notification.

3. Inventory restrictions will be implemented on the second day after the announcement, which is the first day of the new quarter (January 1, April 1, July 1 and October 1), and the restrictions will not be lifted until the next quarter, which is 3 months later.

4. Once you receive an inventory warning notification, you will have about 6 weeks to resolve the issue. Because the IPI score is calculated over a 90-day period, it is still possible to avoid inventory restrictions if you act quickly.

Factors affecting IPI

1. Sell-through rate (sell-through rate, currently the most important influencing factor);

2. In-stock rate

3. Excess inventory percentage (unsalable inventory ratio is too high);

4. Stranded inventory percentage (The ratio of inventory that is stranded in the warehouse due to listing problems.

How to improve your IPI score

1. Clear out excess inventory and reduce storage fees and logistics costs.

2. Restocking increases the spot ratio.

3. Deal with stranded inventory and ensure consumers can purchase it.

4. Organize the listing and pay attention to the grammar of the listing description, especially some grammatical errors.

5. Frequently monitor product inventory status and adjust product prices and discount information in a timely manner to accelerate sales.

6. Before the evaluation period begins, you should focus on increasing sales of your best-selling products to improve your IPI score.

7. Make sure there is at least one product in stock in the warehouse, especially products recommended by Amazon.

8. Sell products quickly in a short period of time. If possible, negotiate with suppliers to deliver small quantities and multiple times. After Amazon lifts the inventory restrictions, resume the original delivery speed.

9. The seller's storage limit is no less than 25 cubic feet per product. Note that inventory limits and excess fees have a much greater impact on large items and should be given more consideration.

10. Deal with slow-moving inventory by creating removal orders, closing or deleting inactive listings, and deleting problematic or obsolete SKUs. This should be done once a week.

11. Products that are discontinued or cannot be restocked have no impact on your IPI score, so you can ignore any recommendations Amazon makes for these products on the Restock Inventory page. You can use the Manage Excess Inventory tool to learn about products that are not recommended for restocking.

12. Archived listings are also included in the IPI score calculation. Listings that have been converted from Amazon Logistics FBA to Seller-Fulfilled MFN are also included in the IPI calculation. Hiding these listings from Amazon recommendations is the only way to bypass the IPI score.

Seller Operation Suggestions

1. Clean up the category catalog. In order to clean up some poorly performing or slow-selling products and help improve the experience provided by sellers, sellers can use some tools to clean up the category catalog that may be expired. For example, you can use the method of low-price clearance, buy product A, and give a high discount on product B, or buy A and get B free. This is the most commonly used, safest and effective method.

2. Prioritize minimizing inventory. If the seller's inventory exceeds the limit, before Amazon calculates the excess fee, the seller can remove the product and remove all the backlog of goods from FBA. For products with high value, they can be moved to a third-party overseas warehouse for relabeling and restart sales.

3. Merge products, merge the backlog of similar products and products with good sales, and clear the inventory for a period of time. It is worth mentioning that at present, merging listings may be warned for illegal operations. If they are not the same type of products, have different attributes, etc., it is not recommended.

4. Determine new inventory limits. Amazon will allocate separate storage space for apparel, standard sizes, and oversized products. If the seller's catalog spans multiple categories, then placing products in separate warehouses for these categories can at least relieve some of the storage pressure for some sellers.