Everything There Is to Know About Amazon IPI Score

Amazon seller success is determined by how skillfully you manage inventory. The Amazon Inventory Performance Index (IPI) is a crucial indicator that helps you understand and master inventory management. Amazon IPI and its corresponding score are beneficial to both sellers and Amazon.

This article covers everything you need to know about Amazon Inventory Performance Index, how to improve your IPI score, what factors influence it, and everything else in between.

Amazon’s Inventory Performance dashboard helps you identify opportunities to grow sales, reduce costs, and track key performance metrics. The IPI dashboard also has a display feature performance bar for each of the four categories:

An item is considered overstock if it has more than a 90-day supply based on the predicted demand. Therefore, you should aspire to properly track your overstock inventory percentage, which is the percentage of your excess FBA inventory units. Three related measurement standards of interest are shown with the excess inventory percentage on the Amazon inventory performance dashboard:

• Excess units are the number of units that cost you more doing nothing and paying storage fees instead of reducing the price or removing inventory. This value is based on the product demand and costs (including fees and goods).
• Estimated gross storage cost is the value of estimated costs you would incur by taking no action and allowing your inventory to remain idle in the fulfillment center for above three years. This is inclusive of monthly storage fees and long-term storage fees.
• The Reduce excess inventory button shows how many stock-keeping units (SKUs) are available with excess inventory. By clicking the button, you can view the “manage excess inventory” page and take appropriate action on the inventory.

With your 90-day rolling FBA sell-through rate, you can maintain the right balance of inventory. The FBA sell-through rate is the total number of units sold and shipped over the previous 90 days divided by the number of units available in fulfillment centers during that period. Two related metrics are shown with your FBA sell-through rate on the Inventory Performance Dashboard:

• Units sold (over the previous 90 days) are the total FBA units sold and shipped over the last 90 days.
• The “improve sell-through” button displays the amount of Amazon Standard Identification Number (ASINs) with an opportunity to improve sell-through.

Having replenishable, in-demand items in stock helps to maximize and increase sales. Moreover, tracking your performance in this area can be done using the FBA in-stock rate. It is the amount of time your replenishable FBA ASINs have been available in stock in a previous 30-day period, weighted by the number of units sold for each SKU during the last 60 days.

An SKU can be indicated as non-replenishable in restock inventory by going to the “action” column drop-down menu and choosing “hide recommendation.” Hiding all SKUs linked with an ASIN prevents the ASIN from your FBA in-stock rate and approximates FBA lost sales.

The performance bar also has two related metrics of interest showed under the replenishable FBA in-stock rate percentage on the Inventory Performance Dashboard:

• First, estimated FBA loss sales in the previous 30 days equal the estimated unit sales on days your products were unavailable multiplied by the average price of items.
• Secondly, the “restock today” button displays SKUs’ volume where the restock lead time is lower than the supply days. A supplier’s order must be expedited to prevent products from being unavailable.

Four factors can improve sellers’ Amazon IPI scores: managing stranded inventory, eliminating excess inventory, enhancing sell-through rates, and maintaining stock.

Excess inventory refers to storing more inventory than you should at a fulfillment center. It is simply keeping more than the product forecasted demand. Slow-moving products may end up creating an excess inventory scenario. Managing this situation can be done by removal orders. However, act cautiously as disposing of your inventory or shipping it back to your warehouse requires paying a per-unit cost, which quickly mounts up. Improving your Amazon IPI score enables you to keep your fast-selling products in stock, so doing away with slow-moving products might be worth it. Consider the option that would be best before you make a decision. DataHawk’s Inventory Management Software helps sellers deal with surplus stock issues. Its sophisticated software allows you to set your transfer schedule and order schedule as needed. It also enables you to check your Amazon stock performance and input your target maximum inventory value.

Sell-through compares the ratio of a product’s stock sold to the average number of products available at an Amazon fulfillment center. This is calculated continuously over the previous 90 days. The sell-through rate is enhanced by increasing sales. The sales increase is usually done by improving your listings and increasing sponsored ads. A good listing is vital to increasing your sales. Good copywriting can help you increase traffic and improve lead conversion, increasing your sell-through and improving your IPI. You can also adjust your logistics systems by reducing your Amazon inventory and using third-party logistics (3PL).

Using a 3PL option ensures that your high MOQ (Minimum Order Quantity) for a slow-moving product is received instead of going to your Amazon fulfillment center. Utilizing a 3PL ensures your IPI does not suffer, and though it may not seem worthy initially, its value is unprecedented. Amazon uses the IPI score as a monitoring and rating tool to urge sellers to adopt better Amazon inventory management practices. Products with very poor sell-through or slow-moving rates should be liquidated and not restocked. It is more profitable to stock products with quick sales but less profit margin than stock items with high-profit margins but slow sales.

A significant portion of success on Amazon is allocated to sellers’ IPI scores. In short, IPI helps sellers properly manage Amazon inventory and monitor their stock performance. To improve Amazon’s IPI index score, sellers should regularly survey their Amazon Inventory Dashboard to prevent potential lost sales and implement any suggestions Amazon offers.