Managing inventory effectively is crucial for success on Amazon’s marketplace. The right approach helps sellers reduce costs and boost profits through better stock control and storage management.
Amazon uses a scoring system called the Inventory Performance Index (IPI) to track how well sellers handle their stock. This tool measures the health of a seller’s inventory and provides insights to help them run their business more efficiently.
Understanding this score and its impact on selling privileges is essential for any Amazon merchant.
What is the Inventory Performance Index Score?
The Inventory Performance Index (IPI) measures the efficiency of Amazon FBA sellers’ inventory management practices. Amazon assigns scores between 0 and 1,000, with higher scores reflecting better inventory management.
Currently, sellers must maintain an IPI score above 400 to avoid storage limits in Amazon’s warehouses. This threshold helps ensure optimal use of warehouse space.
Four main factors affect a seller’s IPI score:
- Stock balance: Maintaining appropriate inventory levels without excess stock
- Storage costs: Minimising long-term storage fees
- Listing quality: Fixing any product listing issues
- Stock availability: Keeping popular items available for customers
The IPI score appears in the inventory dashboard within Seller Central. Amazon uses this metric to track how well sellers manage their stock and warehouse space.
It helps identify whether products are selling quickly or sitting unused in warehouses.
Sellers with scores below 400 face storage restrictions until they improve their inventory management practices. These limits encourage sellers to keep their warehouses stocked with items that customers actively purchase.
What Affects Your Inventory Performance Index Rating?
Storage Surplus
Extra stock takes up valuable space in Amazon’s centres. The system flags items as surplus when FBA stock goes beyond a 90-day supply based on predicted sales. A smart approach is to keep 30-60 days of stock ready.
The FBA dashboard gives three key details about surplus stock:
- Extra units that cost more to store than to sell or remove
- Predicted storage costs over three years
- Number of products with too much stock
Amazon’s system calculates storage costs, including monthly fees and aged stock charges. Many sellers cut prices or remove stock to avoid these expenses.
FBA Product Movement Rate
The system measures how fast products move by comparing units sold in 90 days to average warehouse stock levels. A low rate means stock sits too long in the centres.
The FBA stock page shows:
- How old stock is
- Extra unit estimates
- Expected aged stock fees
Amazon offers ways to boost sales:
- Create outlet deals
- Update product keywords
- Remove slow-moving items
Stuck Stock
Products in storage without active listings count as stuck stock. These items rack up fees without any chance of sales. The system spots these issues and shows steps to fix them.
The dashboard displays:
- Number of stuck units
- Why items are stuck
- Steps to relist products
- Auto-removal dates
Stock Availability
Having popular items ready to ship helps the rating. The system tracks missed sales from empty shelves over 30 days.
Special note for unique items: Mark these as “non-replenishable” in the stock system:
- Limited editions
- Out-of-production goods
- One-time finds
This setting protects the rating when these items sell out.
Stock levels need regular checks to catch low stock before it runs out. The FBA dashboard shows:
- Current stock levels
- Sales predictions
- Restock suggestions
- Missed sale estimates
Amazon’s tools make it simple to spot problems:
- Watch for surplus warnings
- Check movement rates
- Fix stuck items quickly
- Keep fast-selling items stocked
How to Boost Your Inventory Performance Score
1. Optimise Your Product Sales Rate
Monitor the 90-day sales rate for each product in the FBA inventory section. Sort items by lowest sales to spot trouble areas quickly.
Try these proven tactics to increase sales:
- Launch targeted promotional campaigns
- Invest in product advertising
- Fine-tune product keywords
- Build up customer reviews
- Create high-quality product photos and videos
2. Clear Surplus Stock Levels
Extra stock sitting in warehouses costs money and lowers performance scores. Check the FBA inventory page for specific guidance on managing excess stock. Setting up outlet deals can help move seasonal items and overstock quickly.
3. Watch Storage Duration Carefully
Remove items before they reach one year in storage. After 365 days, additional fees apply to aged stock. Create removal orders or arrange for stock disposal to avoid these charges.
4. Fix Product Listing Problems Fast
Check these inventory aspects regularly:
- Stranded inventory: Fix any listing problems stopping sales
- Stock balance: Keep sold versus stored items in proportion
- Supply levels: Maintain 30-60 days of stock for top sellers
- Excess stock: Avoid keeping more than 90 days of predicted sales
A weekly review of the inventory dashboard helps spot issues early.
5. Managing Low Performance Scores
A drop below minimum score requirements affects storage space limits. Check the capacity monitor to see current allowances.
Storage solutions when space is limited:
- Use external storage centres
- Switch some items to merchant fulfillment
- Partner with third-party logistics providers
Important score details:
- New products get a 90-day grace period
- Removed or liquidated stock doesn’t count
- Regular monitoring prevents surprises
Track these metrics each week:
| Metric | Target Range |
|---------------------|--------------|
| Sales rate | 90+ days |
| Storage duration | Under 365 |
| Stock balance | 30-60 days |
| Supply forecast | 90 days max |
Make small adjustments often rather than large changes rarely. Quick responses to inventory problems keep scores healthy and costs low.
Managing Amazon IPI: Success Tips
Maintaining proper inventory levels plays a vital role in becoming a profitable Amazon seller.
New merchants should start with small FBA shipments to gauge product demand and test the market.
Learning to set the right inventory levels takes time. Each ASIN needs individual attention to stock levels.
Amazon provides helpful metrics for sellers to monitor their inventory and avoid excess stock.
Tools for Inventory Success:
- Regular metric analysis
- Small test batches for new items
- Stock level monitoring per ASIN
- Inventory prediction software
Many sellers use specialised inventory management tools to predict stock needs accurately. These programmes can calculate optimal order timing and quantities based on sales data.
Key Steps for New Sellers:
- Start with limited test inventory
- Track sales patterns carefully
- Use available metrics
- Adjust stock levels gradually
Proper inventory control helps sellers maintain healthy IPI scores whilst maximising profits and minimising storage costs.