What’s so special about the Amazon Inventory Performance Index? And why all the hubbub about the minimum IPI threshold? If you’re an FBA seller and you’re trying to raise your IPI, there’s no time to lose. Here are 20 tips for a better IPI score.
The last month’s minimum IPI change was a tough pill to swallow. With mere days to raise their Amazon Inventory Performance Index, sellers are having their hopes for a ‘normal’ Q4 dashed. Still, all’s not lost.
Even if you failed your first IPI check in July, you still have a few days left before August 10 to boost your Amazon Inventory Performance Index.
But first, let’s go over the basics.
What is the Amazon Inventory Performance Index, anyway?
And how can you boost your score and reach the minimum IPI?
How Do I Check My Amazon Inventory Performance Index?
Your IPI has its own dashboard.
For details, click the Performance tab on your dashboard.
To log into your Seller Central account and check your IPI on the go, bookmark this link.
What Is the Amazon Inventory Performance Index?
Two years ago, when it was introduced, the A score between 0 and 1,000 calculated b… More didn’t go unnoticed.
In Apr. 2018, an Amazon moderator wrote on the Seller Forums to clear up some of the confusion.
But sellers are still scratching their heads over this metric.
In a nutshell, the Amazon IPI score is a number from 0 to 1,000.
It’s used to gauge inventory management and enforce stock limits for underperforming sellers.
Every quarter, Amazon carries out two IPI checks. Sellers who fail either of the two are not allowed to send any more items to FBA in the following quarter.
But that was then, and this is now. Today we’re in the middle of a pandemic. So, Amazon took the unusual step of bringing the evaluation checks forward by a month and spacing them out more. It also increased the stock limit enforcement period.
So, Q4 limits come into force on Oct. 1, not Aug. 17.
What is the Minimum IPI on Amazon?
In 2018, those with an IPI of at least 350 over a 90-day period were allowed to carry on as normal. The rest paid overage fees on any excess FBA inventory. And new FBA inbound shipments were refused. But Amazon made some exceptions for special circumstances and seasonal stock.
Then, in Jan. 2020, Amazon announced that the Amazon IPI score would consider either short-term or long-term performance – whichever is best.
So, a long-term performance score would apply to seasonal sellers, but other sellers might see weekly changes based on a few months’ worth of data.
As Amazon started prioritizing shipments on April 5, sellers’ IPI dropped. Amazon promised to try to “account for this change” in Q3 storage limits and IPI checks.
But in May, Amazon raised the minimum IPI to 400.
Then it removed quantity limits altogether in June.
But in July, Amazon raised the minimum IPI again to 500 for Q4 2020.
Failing the Minimum IPI Check
If your IPI score is 500 or more on the week of July 13 or Aug. 10, you have unlimited storage.
For an IPI score below 500, there will be stock limitations and associated storage fees.
How the Amazon Inventory Performance Index Is Calculated
The formula for the Amazon IPI score remains a well-kept secret.
But there are 4 top influencing factors, as shown in this IPD tutorial by Seller University (made before the new IPI threshold).
So, even though the weight of each factor is unknown, your IPI score is bound to rise if you improve all 4 factors.
Bear in mind that your IPI score is updated weekly based on your latest 3-month performance stats (or longer, if your business model is seasonal).
But the influencing factors update at varying times. Here’s a breakdown of the top 4 factors, what they mean, and how they are calculated:
- Excess inventory % gives you an estimate of the proportion of units identified as excess stock.
- Stranded inventory % is the number of units without an active listing, which incur storage costs.
- FBA sell-through rate is the number of units sold as a proportion of units usually in stock.
- FBA in-stock rate is an indicator of how efficiently you keep replenishable items in stock.
How to Raise Your Amazon Inventory Performance Index
The threshold might be lower than ever before, but the steps you can take to improve your IPI are the same. So, even though you may not be able to see the effects of your actions right away, you may want to go through each one of the 20 steps on the list.
- Take advantage of free removals and VAT-free donations offers while they’re still available. Have all your excess inventory removed, donated, or disposed of quickly to lower Excess Inventory %.
- Check for items you should avoid reordering with the Manage Excess Inventory. Hide recommendations for them. While you’re at it, also hide recommendations for discontinued and non-replenishable items, which don’t affect your IPI, using the Restock Inventory tab.
- Close or delete inactive listings to lower Stranded Inventory %. Access the Fix Stranded Inventory page to remove or edit these listings.
- Get rid of outdated items and SKUs with a tendency to become unsellable (fragile items, disposable items, etc.).
- Archived listings still count. So do listings you convert from FBA to MFN. Hide these listings from Amazon’s recommendations so they don’t affect your stats.
- Check your in-stock inventory stats in your IPD to see how close you are to reaching your limit. Consider shifting some of your less profitable stock if it’s unlikely to sell quickly.
- Send new shipments in fast to minimize the risk that they’d overcrowd the FBA fulfillment center and incur overage fees. Especially if they’re low-margin products.
- Monitor your shipment status daily. Whether it’s an inbound shipment or a removal order, be sure to contact Amazon if you notice a delay. Consider using SellerEngine Plus to speed up despatch.
- Your top-sellers do all the heavy lifting. So, focus on best-selling SKUs rather than profits until you get your IPI over the line.
- Tweak your prices and your offers to speed up sales using a real-time repricer like Sellery to win the This refers to the situation where a sel… More. Don’t raise prices too much when the Buy Box is yours, or risk losing business.
- Regularly check the ‘SKUs to restock today’ section next to the IPI bar. Out of this list of SKUs, select the ones that sell best and/or you can afford to sell off cheap.
- Time your shipments using the FBA holiday guide so you always have a few units in stock. But make sure you always have a tad fewer units than Amazon’s recommended value.
- Make sure you don’t run out of stock completely, or your IPI will drop. Adjust the price to the number of units in stock. Sellery can help you in this regard as well.
- Reach out to customers and influencers to raise your feedback score and product ratings quickly, while also making sure not to break the rules.
- Work on your listings. Mind the grammar. Enlist the help of professional writers to help you attract your target customers and earn their trust. More on listing optimization here.
- Share information with other sellers and find out which ASINs come with more generous storage limits. You may be surprised to find that bulkier items will have more storage space in Q4.
- Boost your Advertising is a means of communication … More efforts with a double-whammy of Pay-Per-Click (PPC) ad platform f… More and Pay-Per-Click (PPC) ad platform for Amaz… More campaigns.
- Try to sell your products in quick bursts. Reach out to suppliers with small but regular purchase orders until your storage limits are lifted.
- Have different types of backup inventory standing by, just in case Amazon comes up with new restrictions (like it did with household staples and medical supplies, for instance).
- Evaluation checks for Q1 2021 may start in November. So, even if you don’t dodge the IPI check on Aug. 10-16, try to boost your score progressively and lift your storage limits from January.
So, if you were wondering “What is the Amazon inventory performance index?”, there you have it, along with a list of tips to boost your score and meet the minimum IPI requirement.
As we draw nearer to Q4, we’ll be sure to update it, so be sure to follow our blog for all the latest news and recommendations.
Win the Buy Box more often and accelerate sales
Melanie takes an active interest in all things Amazon. She keeps an eye on the latest developments and keeps Amazon sellers up to speed.