What’s the impact of IPI for FBA Sellers?

As an Amazon seller, you are likely familiar with the importance of maintaining a good IPI (Inventory Performance Index) score. Your IPI score is a metric that Amazon uses to evaluate your inventory management and how well you are performing in terms of meeting customer demand. A high IPI score means that you are effectively managing your inventory and meeting customer demand, which can lead to increased sales and profits. In this article, we will discuss the IPI score, strategies to improve it, its effects, storage limits, and managing FBA returns and reconciliations.

What is the IPI score?

The IPI score is a metric that Amazon uses to evaluate how well sellers are managing their inventory. It is calculated based on several factors, including excess inventory, sell-through rate, stranded inventory, and in-stock rate. A higher IPI score indicates that a seller is effectively managing their inventory, while a lower score indicates that there is room for improvement.

How does the IPI score affect sellers?

Maintaining a good IPI score is crucial for Amazon FBA sellers because it directly impacts their ability to store and sell products on Amazon. Amazon has set minimum IPI score requirements for sellers to store and fulfill their products through Amazon's FBA (Fulfillment by Amazon) program. If a seller's IPI score falls below the minimum threshold, they may face storage limits, and Amazon may restrict their ability to send in new inventory.

How to improve your IPI score?

There are several strategies that sellers can use to improve their IPI score. One of the most effective strategies is to manage inventory levels effectively by forecasting demand and optimizing inventory levels accordingly. Sellers should also focus on improving their sell-through rate by optimizing their listings, pricing strategies, and promotions to increase sales velocity.

Another Amazon strategy to improve your IPI score is to reduce stranded inventory. Stranded inventory refers to products that are not available for purchase because they are not listed correctly, out of stock, or have been removed from the Amazon catalog. By reducing stranded inventory, sellers can increase their in-stock rate and improve their IPI score.

Managing FBA returns and reconciliations

FBA returns can also have a significant impact on a seller's IPI score. When a customer returns a product, Amazon may hold the inventory for up to 30 days before returning it to the seller. During this time, the inventory is considered stranded, which can negatively impact the seller's IPI score. To minimize the impact of FBA returns on their IPI score, sellers should actively manage their FBA returns by monitoring their return rates, processing returns quickly, and restocking inventory as soon as possible.

In addition, sellers should regularly reconcile their FBA inventory to ensure that their inventory levels are accurate. This involves comparing the inventory levels reported by Amazon to the actual inventory in stock. If there are discrepancies, sellers should investigate and reconcile them promptly to avoid any negative impact on their IPI score.

The IPI score is an essential metric for Amazon sellers, as it directly impacts their ability to store and sell products on Amazon. The above steps can be complicated and time-consuming, so our final recommendation is to enlist in Amazon marketing services or Amazon FBA consulting services to help manage the process and hone your Amazon strategy.

Co-authored by Jen Garza and Chat GPT