Amazon Inventory Performance Index (IPI): Tips on How to Hack It
When Amazon opened its marketplace to third-party sellers, it quickly became popular. As Amazon wants to become a primary shopping center for everyone, it allows third-party sellers to store products in its warehouses.
To ensure the efficient use of available storage space, Amazon has created Inventory Performance Index — the bane of seller’s lives. The article will tell why IPI is important for FBA sellers and will help tame it.
What is a Good Inventory Performance Index?
Your task, as a seller, is to learn about the Inventory Performance Index (IPI) . The consequences of penalties can lead to you being banned from the FBA program. Let’s take a closer look at what the IPI index is about and how Amazon measures it.
The Importance of Amazon Inventory Performance Index?
Inventory management is a difficult task for many sellers. A lot of products lay in the Amazon warehouses for a very long time . Due to this Amazon has come up with a new metric — Inventory Performance Index.
In simple words, the IPI can be described as a metric for tracking the health of your inventory on Amazon. The marketplace measures how long your products stay in your inventory and how efficiently you manage inventory.
Amazon uses marks from 0 to 1,000. The higher the score you get, the better.
How is the Amazon Inventory Performance Index Calculated?
Since Amazon wants to ensure fair competition, it does not disclose the mechanisms behind the Amazon Inventory Performance Index score calculation.
Amazon states that four factors actually influence the IPI:
- Excess inventory
- In-stock inventory
- Stranded products
- Sell-through rate
What is the Optimal IPI?
The minimal IPI is 350, scores above 450 are good and the ones above 500 are top performers. An average IPI you can see on Amazon is between 400 and 800.
Please note that IPI is not only about numbers, as sellers with lower ratings have inventory storage limits. Amazon IPI is evaluated at the end of each quarter and storage limits are set for the next quarter.
How Do You Increase Inventory Performance Index?
Naturally, every FBA seller wants to be in Amazon’s good graces. Here are some hacks to do that:
- Find the best balance between the number of units sold and your stock
- Ship products to Amazon warehouses based on data-driven demand predictions.
- Have a sufficient stock of the most in-demand products
Amazon Inventory Performance Index: Final Thoughts
Amazon algorithms are everchanging.Make IPI tracking being an integral part of daily operations. This way, you will be able to react to changes in time and avoid penalties.
This is a brief summary of an article published on Sellbery blog. If you would like to learn the details Amazon Inventory Performance Index — read the full article.
