A huge element of success as an Amazon seller tool API is how well you can achieve your inventory. With good inventory management skills come compact loading fees and inventory costs, and improved overall cost-effectiveness.

Amazon has a natural metric to help sellers’ device their inventory performance over time: The Inventory Performance Indication, or IPI. The IPI is designed to help sellers fully recognize the health of their inventory, so they can be as effective and as gainful as possible.

So what correctly is the Inventory Performance Indication score, how is it measured, and how does it disturb you? We will go over all of this and more.

What is the Inventory Performance Indication Score?

According to Amazon, the IPI score processes how effective and creative you are in managing your FBA inventory. It ranges from 0 to 1,000 — the higher, the better. Here’s how Amazon displays your IPI in the inventory dashboard in Seller Central.

Amazon sets a lowest edge score that all sellers must meet. If you fall below that threshold, Amazon will set storage limits on your account until you can increase your inventory health. At the time of writing, the Inventory Performance Indication (IPI) threshold is 450; anything above 450 is considered a “good” IPI score.

Amazon analyses your IPI every two to three months: at the end of each quarter and 4 to 6 weeks before the quarter ends, so Amazon can notify you that you still have time to increase your score before they impose inventory limits. If you score above the threshold during these two score check weeks, you will qualify for unlimited storage space for each storage type (standard-size, oversize, apparel, footwear, flammable, and aerosol).

There are a little key factors that influence your IPI score, which can touch your FBA storage capacities and ability to use certain Amazon programs.

  • Maintaining a balance between sold and available inventory, without excess stock
  • Avoiding long-term storage fees
  • Resolving problems with your listings
  • Keeping popular products in stock to meet customer demand

Essentially, Amazon uses the IPI score to ensure that their own warehouse space is used efficiently; that is, the products sellers are storing in FBA warehouses are products that buyers want, and that won’t sit around unsold for large periods of time.

How to Improve your IPI (Inventory Performance Indication) Score?

Amazon has a few overall recommends for maintaining a healthy inventory performance.

1. Improve your Sell-Through Rate

Amazon wants sellers to maintain a healthy 90-day rolling sell-through rate that places you in the “green” on the IPI graph. To view the sell-through rate for each of your active products, visit the “Inventory Age” page in your inventory dashboard. You’ll be able to sort by products with the lowest sell-through and view recommendations to improve it.

You can improve your sell-through rate by running a sale to encourage conversions, advertising your products, sharpening

2. Decrease Overstocked Inventory

This one is beautiful noticeable: Amazon does not want to store products that do not sell. Visit the “Manage excess inventory” page in your inventory control panel to see recommendations on how to deal with excess inventory. Amazon may also recommend you set up an “Amazon Outlet” deal to quickly sell overstocked and out-of-season products.

3. Check Long-Term Storage Fees

Make sure you remove any inventory earlier it reaches 365 days in FBA. If your inventory is over 365 days old, you will be hit with large long-term storage fees. You can create a removal order or even have Amazon destroy your inventory.

4. Be Proactive with Listing Issues

If you have stranded inventory or any other listing problems preventing customers from buying, take care of them in a timely manner.

Normally, you should:

  • Frequently check your stranded inventory ratio so you can fix the issue before you start paying more in storage fees.
  • Maintain a balanced inventory level between sold and on-hand inventory
  • avoid excess inventory (above a 90-day supply, based on your sales forecast)
  • keep your most popular products at the proper inventory levels (between 30-60 days of supply).