What Does IPI Mean on Amazon?

If you’re an Amazon seller, you may have heard of the inventory performance index (IPI), but you may not know what it means. Essentially, the IPI is a score that Amazon uses to measure your inventory management effectiveness.

Understanding the Amazon IPI Score

The IPI ranges from 0 to 1000 and indicates how well you manage your inventory. Amazon calculates the IPI by considering various factors, including how much inventory you have, how quickly it sells, and how long it takes to receive and process inventory.

A higher IPI score means that Amazon sees you as a more efficient seller who less likely to run out of stock or have excess inventory. A low IPI score, on the other hand, indicates potential issues with inventory management and may limit your access to certain Amazon features and benefits.

It is important to note that the IPI score is updated regularly, typically on a weekly basis. This means that sellers have the opportunity to improve their score by making adjustments to their inventory management practices. Amazon provides guidance and tools to help sellers improve their IPI score, such as the Inventory Performance Dashboard and the Restock Inventory tool. By actively monitoring and optimizing their IPI score, sellers can improve their overall performance on Amazon and increase their chances of success on the platform.

How Amazon Calculates IPI

Amazon calculates IPI by taking into account the following factors:

• Excess Inventory Percentage – The percentage of inventory that you have been storing for over 90 days or more.
• Sell-through Rate (STR) – The number of units that you have sold in the last 90 days.
• In-stock Inventory Rate (IIR) – The percentage of time your listings have sufficient inventory for customers.
• On-time Delivery Rate (OTDR) – The percentage of products that were delivered to Amazon’s fulfilment center on or before the expected delivery date.

It is important to note that Amazon updates IPI scores on a weekly basis. This means that sellers have the opportunity to improve their IPI by taking actions such as reducing excess inventory, improving sell-through rates, and ensuring timely delivery of products to Amazon’s fulfilment centers. A higher IPI score can lead to benefits such as increased visibility in search results and reduced fees for storage and fulfilment services.

Why IPI Matters for Amazon Sellers

If your IPI score drops below 500, Amazon may limit the amount of storage space you can use for your inventory. If your score falls below 350, you may not be able to store any inventory at Amazon’s warehouses through its Fulfilled by Amazon (FBA) program.

Moreover, having a high IPI score usually means better performance in search results, lower storage and fulfilment costs, and access to special promotions and benefits.

Another reason why IPI matters for Amazon sellers is that it can affect your eligibility for certain programs, such as the Amazon Buy Box. The Buy Box is the section on a product detail page where customers can add items to their cart or make a purchase. Amazon uses a variety of factors, including IPI score, to determine which sellers are eligible for the Buy Box.

Additionally, a high IPI score can help you maintain a good relationship with Amazon and avoid account suspensions or other penalties. By keeping your IPI score above the minimum threshold, you demonstrate to Amazon that you are a reliable and trustworthy seller who is committed to providing a positive customer experience.

How to Check Your Amazon IPI Score

To check your IPI score, you can access your Amazon Seller Central account and navigate to the ‘Inventory Planning’ tab. From there, you should see your current score and the factors that are affecting it.

It is important to regularly monitor your IPI score as it can directly impact your ability to store and sell products on Amazon. If your score falls below the minimum threshold, Amazon may limit your storage capacity or prevent you from sending in new inventory until your score improves. By keeping a close eye on your IPI score and taking steps to improve it, you can ensure that your Amazon business runs smoothly and efficiently.

Tips for Improving Your Amazon IPI Score

Here are some tips to consider if you want to improve your IPI score:

• Remove or liquidate aged inventory that is not selling.
• Improve your supply chain processes to ensure that inventory arrives at Amazon on time.
• Monitor your STR on a regular basis and adjust your inventory levels accordingly.
• Consider using Amazon’s FBA service to lower your storage and fulfilment fees.
• Activate Inventory Performance Dashboard (IPD) to get alerts when your IPI score is at risk
• Participate in Amazon’s Excess Inventory Removal Promotion to help move out aged inventory.

It’s important to note that your IPI score is not the only metric that Amazon uses to evaluate your performance. Other factors, such as your seller rating, customer feedback, and order defect rate, also play a role in determining your overall performance. Therefore, it’s crucial to maintain high standards across all areas of your Amazon business to ensure long-term success.

Common Mistakes That Can Lower Your IPI Score

Here are some mistakes to avoid that can lower your IPI score:

• Overstocking inventory that does not sell quickly.
• Understocking inventory during peak sales periods.
• Delaying shipment to Amazon’s warehouses.
• Allowing products to temporarily go out of stock.

The Impact of IPI on Your Amazon Sales

The IPI score reflects your inventory management performance and can impact your sales. A high score means less stock outs and better overall performance. Conversely, a low score means slower sales velocity, higher fulfilment fees, and less access to Amazon’s tools and benefits.

One way to improve your IPI score is to regularly review your inventory levels and adjust them based on sales trends. This can help you avoid overstocking or understocking, which can negatively impact your score. Additionally, optimizing your product listings with relevant keywords and high-quality images can also improve your sales velocity and ultimately your IPI score.

It’s important to note that your IPI score is not the only factor that affects your Amazon sales. Other factors such as product pricing, customer reviews, and advertising also play a significant role. However, maintaining a high IPI score can help you stay competitive and increase your chances of success on the platform.

How to Maintain a High IPI Score on Amazon

To maintain a high IPI score, you must regularly monitor and optimize your inventory. Having a sound inventory strategy is crucial for sellers interested in maintaining other metrics, such as Buy Box Winning %, Refund Rate, etc.

One way to optimize your inventory is to use Amazon’s FBA (Fulfillment by Amazon) service. This service allows Amazon to handle the storage, shipping, and customer service for your products, which can help improve your IPI score. Additionally, using FBA can also improve your product’s visibility on Amazon, as it is more likely to be eligible for Prime shipping and other perks.

Another important factor in maintaining a high IPI score is to regularly review and update your product listings. This includes ensuring that your product titles, descriptions, and images are accurate and up-to-date. It’s also important to monitor customer reviews and feedback, and make any necessary changes to your product or listing based on this feedback.

Best Practices for Optimizing Your Inventory Performance Index

Here are some best practices to follow for optimizing your IPI score:

• Regularly check your metrics to identify areas of improvement.
• Ensure that you always have enough inventory to meet demand.
• Try to keep inventory levels under 90 days
• Check and maintain inventory quality to avoid storage issues

Another important factor to consider when optimizing your IPI score is to manage your inventory turnover rate. This means that you should aim to sell your inventory quickly, so that you can replenish it with new products. A high turnover rate can help you avoid excess inventory and reduce storage costs.

It’s also important to have a clear understanding of your customers’ needs and preferences. By analyzing your sales data and customer feedback, you can identify which products are popular and which ones are not. This can help you make informed decisions about which products to stock and how much inventory to keep on hand.

The Relationship Between IPI and FBA Fees

Your IPI score can impact the fees you pay on the FBA program. The higher your score, the lower the fees you pay, while the lower your score, the more you may pay. A high IPI score can help offset some of the costs of storing and fulfilling your inventory on Amazon’s platform.

It is important to note that your IPI score is not the only factor that determines your FBA fees. Other factors, such as the size and weight of your products, also play a role in determining your fees. However, maintaining a high IPI score can still have a significant impact on your overall costs.

In addition to reducing your FBA fees, a high IPI score can also improve your overall performance on Amazon’s platform. This can lead to increased visibility for your products, higher sales, and ultimately, greater profits. Therefore, it is important to regularly monitor your IPI score and take steps to improve it if necessary.

Using Analytics to Monitor and Optimize Your IPI Score

Various Amazon third-party tools are available to help monitor and optimize your IPI score such as Sellics and Jungle Scout. Such services can help you track your IPI over time and provide insights into improving your score.

What Happens If You Have a Low IPI Score on Amazon?

In addition to storage limitations and restricted access, a low IPI score can result in other negative impacts on your Amazon sales. If your score is low, you may have a harder time winning the Buy Box, competing on search results pages, or even having your products listed at all. This can negatively impact your bottom line and leave you struggling to make sales on Amazon’s platform.

Conclusion

In summary, the IPI is a score that Amazon uses to measure how well you manage your inventory. A high score usually means better visibility in search results, lower fees and costs, and access to special promotions. Conversely, a low score can lead to storage limitations, restricted access, and even business closures. To maintain your IPI score, it’s important to monitor and optimize your inventory regularly and ensure that you have an efficient supply chain in place.