Amazon's Inventory Performance Index
Managing inventory effectively is one of the most crucial aspects of running a successful Fulfillment by Amazon (FBA) business. Amazon's Inventory Performance Index (IPI) is a key metric that evaluates how well sellers manage their inventory. Your IPI score directly impacts your ability to store and sell products through Amazon's fulfillment network, making it an essential factor in your business's profitability and growth.
What is the Inventory Performance Index (IPI)?
The Inventory Performance Index (IPI) measures your recent and long-term inventory management performance. Amazon calculates this score based on how efficiently you handle inventory, balancing stock levels and sales demand. Your IPI score fluctuates based on several key factors, including:
- Unresolved listing issues – If your listings have errors or inactive statuses, your IPI score may suffer.
- Excess inventory levels – Amazon prefers sellers to maintain stock levels that cover approximately 30-60 days of expected sales. Overstocking can lead to high storage fees and a lower IPI score.
- Stocking out of high-demand products – Frequently running out of popular items affects your score, as it signals poor inventory planning.
- Improper inventory balance – Ensuring a balanced stock across all your products is essential to avoid excessive fees and lost sales.
Your IPI score directly impacts your FBA storage limits. If your score drops below Good (Light Green) and moves into the Fair (Yellow) or Poor (Red) range, Amazon will restrict your storage capacity. These limitations can severely impact your ability to stock and sell products, ultimately reducing your revenue. In some cases, sellers lose out on hundreds or even thousands of dollars in monthly profits due to restricted inventory space.
How to Improve Your IPI Score
To maintain a healthy IPI score and avoid storage restrictions, consider these best practices:
- Fix listing errors promptly – Regularly check for inactive or stranded listings and resolve any issues.
- Manage stock levels efficiently – Avoid overstocking while ensuring you have enough inventory to meet demand.
- Keep popular products in stock – Consistently monitor sales trends and replenish fast-moving items in a timely manner.
- Utilize Amazon’s restock recommendations – Amazon provides suggestions to help you optimize inventory levels and avoid excessive fees.
Conclusion
A strong Inventory Performance Index (IPI) score is vital for the success of your Amazon FBA business. By proactively managing your inventory, resolving listing issues, and maintaining a balanced stock, you can avoid storage restrictions and maximize your profitability. Stay ahead of inventory challenges, and your business will thrive within Amazon’s competitive marketplace.