What is Amazon's Inventory Performance Index (IPI)?
You inventory performance index, or IPI, measures how efficiently you manage your Fulfilled by Amazon inventory. This score is measured by sales, excess inventory, sell-through rate, stranded inventory, and in-stock levels.
Why is having a high IPI score important?
When you can manage your inventory efficiently it results in reduced costs. It can help you identify excess inventory that may need a removal order. If you have excess inventory and slow sales, you will have items that are sitting in inventory that are not moving. When you have unit limitations, this could prevent you from being able to send additional units of your top sellers. This creates the risk of running out of inventory and loose ranking. It is also important to check that all of your listings stay active and are not suppressed so they are available for the customer to purchase.
How do I measure my IPI?
The inventory performance index is on a scale of 0 to 1000. You will want to have an IPI of at least 450, if it is below this score review your inventory to see if there are any opportunities for you to improve. Falling below a score of 350 could result in limited storage and additional fees. You are considered a top performer if your score is over 550. IPI scores are looking at sales for the past 3 months, inventory and retail prices. The score is updated weekly, but if you are not seeing quick changes it could be because it is looking at data from the past 3 months.
What Influences my IPI?
- Excess inventory percentage: Excess inventory is items that are not seeing a lot of sales, but there are many units in FBA. Review your excess inventory in Inventory Planning. You can see how many days of supplies, estimated storage costs and sales. You can also create a sale to help move this inventory.
- FBA sell-through rate: This a balance of sales and inventory levels. Forecasting is very important so that you are sending the appropriate inventory to match your sales history, you can also visit Inventory Planning, Restock Inventory to see recommended replenishment for your products.
- Stranded inventory percentage: Inventory that incurs storage fees without the possibility of sales may hurt your IPI score. You can also view your stranded inventory in Inventory Planning. To avoid stranded inventory fees, you can automate to have stranded inventory removed from FBA. This is most common for items that are returned to Amazon that can not be resold.
- FBA in-stock rate: The in-stock rate shows how much value you are getting by keeping ASINs in stock. If you go out of stock on a top mover, your lost sales represent missed opportunities.
To check your IPI in Seller Central, just go to the dashboard and click on the IPI number for details of your IPI to see ways that you can improve your performance. Make it a weekly exercise to go into inventory planning to be sure that your inventory levels represent your product sales needs.
July 2021 | Erin Hollingsworth | AiCommerce