Amazon Inventory Performance Index (This Q4’s Minimum IPI and How to Reach It)

Editor’s Note: Originally published on Aug. 24, 2020, last updated on Aug. 3, 2022.

What is a good Amazon IPI score? And why all the hubbub about Amazon restock limits this Q4? If you’re an FBA seller and you’re trying to raise your IPI, there’s no time to lose. Here are 20 tips for a better Amazon IPI score in 2022.

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You have to admire the tenacity of FBA merchants. Whatever Amazon throws at them, they keep on selling.

But with new Amazon restock limits and IPI thresholds every few months, it’s no wonder many don’t know what is a good Amazon IPI score or how to achieve it.

Then there’s the upcoming IPI check this month. Luckily, there’s still time to boost your score. But first, let’s go over the basics.

What is the Amazon Inventory Performance Index, anyway? And how can you reach the minimum IPI threshold to avoid any Amazon restock limits this Q4?

What Is the Amazon Performance Index (IPI)?

It’s a performance metric from 0 to 1,000 that renews weekly on Mondays.

The higher the better.

It serves to assess your FBA inventory management efficiency and to limit stock levels if you’re underperforming.

Amazon carries out an IPI review twice before the start of every business quarter, as explained in the video below.

Who Does the IPI Score Apply To?

Every Amazon account with FBA inventory has an IPI score and undergoes IPI reviews.

However, IPI thresholds can vary from one marketplace to the next and from one month to the next, so it’s important to check your current IPI score on all your venues.

What’s the IPI Threshold in 2022?

With IPI thresholds, it’s the other way around; the lower the better.

Amazon tends to change minimum IPI thresholds in January and July.

Luckily, when it comes to Amazon IPI score 2022 hasn’t been too eventful.

But here is a short list of IPI threshold changes over the past few years:

• 350 for all sellers when IPI launched in July 2018.
• 400 for European sellers in May 2020 due to Covid, according to Seller Forums.
• 500 for US sellers after a change in July 2020.
• 450 at the start of 2021, as announced on the Seller Forums.
• 500 after the July 2021 update for sellers across Europe.
• 400 for all sellers since Jan. 2022, based on the latest change.

How Do I Check My Amazon IPI Score in 2022?

Your IPI has its own dashboard (IPD).

There are several ways to access it.

Go to Seller Central and hit Inventory > Inventory Planning and click the Performance tab for details, as shown below.

Otherwise, click the IPI box on your Seller Central homepage.

Finally, you can check your IPI on the go if you bookmark this link.

When Is the Next Amazon IPI Review?

IPI checks tend to happen around the same time every year. The year 2020 was the only exception, when Q4 started mid-August and IPI checks were brought forward by a month.

So, sellers know that they need to start working on their IPI for Q4 in August. Here’s why…

There are two IPI checks before every new business quarter.

One in the middle of the current quarter (e.g. mid-Q3 for Q4), and one 5 weeks after.

Sellers who fail either of the two are not allowed to send any more items to FBA in the next quarter.

They may also be charged overage fees for any extra units currently in fulfillment centers.

The next IPI review is mid-August.

So, since IPI scores tend to update on Mondays, sellers have until Aug. 15 to boost their scores.

Failing that, they have another 5-6 weeks to bring their IPI score back up, so until Sep. 19, give or take a few days.

What if My Amazon IPI Score in 2022 Is Too Low?

That’s a great question.

Currently, if your IPI score is 400 or more on the week of Aug. 15 or Sep. 19, you have nothing to worry about in terms of Q4 storage.

But if not, you’ll probably be subject to higher fees and storage limits.

Looking back at IPI enforcement, here’s how Amazon used to go about it:

• In 2018, anyone with an IPI under 350 over 90 days paid overage fees for excess stock and had their inbound FBA shipments turned back.
• In Jan. 2020, Amazon changed IPI score calculation, choosing either 30-day or 90-day figures to set storage limits, whichever was best.
• In June 2020, Amazon raised IPI thresholds but removed quantity limits altogether.
• In July 2020, it introduced ASIN quantity limits of 200 units per ASIN.
• In Apr. 2021, Amazon slashed ASIN limits and introduced account-wide restock limits by storage type (e.g. Standard Size, Oversize, Apparel, Footwear, Restricted) and marketplace.

At the time of writing, Amazon restock limits and overall monthly storage limits are still very much the norm.

What’s the difference?

The first problem prevents you from sending more units of listed FBA items.

The second makes you liable for overage fees of $10/cf for any daily average volume in excess of your allocated storage limit.

Amazon’s Machine Learning (ML) tools estimate sales levels using seasonal patterns, peak selling times, and seller authority.

It’s based on algorithms like these that storage space is allocated to each seller.

For instance, new sellers have a 200cf storage limit for each product category and 1,000 total units per storage type.

To view your storage-type account limit, simply scroll down to the bottom of the Inventory Performance Dashboard and click the Restock Limits tab.

You can also check your total Storage Volume.

But if you’re not happy with yours, you can request more in exchange for a fee using the Storage Limit Manager, as described in the video below.

How Does Amazon Calculate IPIs in 2022?

The exact formula for the Amazon IPI score remains a well-kept secret.

But Amazon has always claimed there are 4 top influencing factors.

So, even though the weight of each factor is unknown, your IPI score is bound to rise if you improve all 4 of them.

Bear in mind that your IPI score is updated weekly.

It’s based on your latest 3-month performance stats- or longer, if your business model is seasonal.

But the influencing factors update at varying times.

Here’s a breakdown of the top 4 factors, what they mean, and how they are calculated:

• Excess inventory %: estimate of the proportion of units identified as excess stock.
• Stranded inventory %: number of units without an active listing, which incur storage costs.
• FBA sell-through rate: number of units sold as a proportion of units usually in stock.
• FBA in-stock rate: indicator of how efficiently you keep replenishable items in stock.

How to Raise Your Amazon IPI Score in 2022

The current threshold of 400 is nice and low, so most sellers should have no trouble passing the next IPI review.

But if you’re worried about your Amazon FBA inventory storage limit in 2022, there’s a whole list of things you can do.

Here are 20 steps to boosting your Amazon IPI score for 2022 Q4.

• Lower Excess Inventory% quickly by removing, donating, or liquidating it. If you opted out of automated inventory removal for aging and unsellable stock, look into VAT-free donations and FBA liquidations, as shown in this Seller University video.
• Get rid of outdated items and SKUs with a tendency to become unsellable (fragile items, disposable items, etc.), and remember that items pending removal stop affecting IPI score.
• Check for items you should avoid reordering with Manage Excess Inventory. Hide recommendations for them. While you’re at it, also hide recommendations for discontinued and non-replenishable items (which don’t affect your IPI), using the Restock Inventory tab.
• Share information with other sellers and find out which ASINs come with more generous storage limits. You may be surprised to find that bulkier items will have more storage space in Q4.
• Try to sell your products in quick bursts. Reach out to suppliers with small but regular purchase orders until your storage limits are lifted.
• Bring down Stranded Inventory% by closing or deleting inactive listings. Access the Fix Stranded Inventory page to remove or edit these listings.
• Have different types of backup inventory standing by, just in case Amazon comes up with new restrictions (like it did with household staples and medical supplies, for instance).
• When it comes to FBA Sell-Through Rate, your top-sellers do all the heavy lifting. So, focus on best-selling SKUs rather than profits until you get your IPI over the line.
• Remember, ASINs less than 90 days old don’t count, so don’t hesitate to send in newly listed items to boost sales.
• Tweak your prices and your offers to speed up sales using a real-time repricer like Sellery to win the Buy Box. Don’t raise prices too much when the Buy Box is yours, or risk losing business.
• Reach out to customers and influencers to raise your feedback score and product ratings quickly, while also making sure not to break the rules.
• Work on your listings. Mind the grammar. Enlist the help of professional writers to help you attract your target customers and earn their trust.
• Boost your advertising efforts with a double-whammy of Sponsored Brands and Sponsored Products campaigns.
• To improve your FBA In-Stock Rate, regularly check the ‘SKUs to restock today’ section next to the IPI bar. Out of this list of SKUs, select the ones that sell best and/or you can afford to sell off cheap.
• Archived listings still count. So do listings converted from FBA to MFN. Hide these listings from Amazon’s recommendations so they don’t affect your stats.
• Check your in-stock inventory stats in your IPD to see how close you are to reaching your limit. Consider shifting some of your less profitable stock if it’s unlikely to sell quickly.
• Send new shipments in fast to minimize the risk that they’d overcrowd the FBA fulfillment center and incur overage fees. Especially if they’re low-margin products.
• Monitor your shipment status daily. Whether it’s an inbound shipment or a removal order, be sure to contact Amazon if you notice a delay. Consider using SellerEngine Plus to speed up despatch.
• Time your shipments using the FBA holiday guide so you always have a few units in stock. But make sure you always have a tad fewer units than Amazon’s recommended value.
• Make sure you don’t run out of stock completely, or your IPI will drop. Adjust the price to the number of units in stock. Sellery can help you in this regard as well.

To sum up, any IPI score above 400 on and around Aug. 15 is a good IPI score.

But if it’s too low, you risk hefty overage fees and not being allowed to restock.

There are 4 factors that you can address to boost your IPI, and you have no less than 20 ways to go about it.

That being said, valuation checks for Q1 2023 will start in Nov.

So, you have plenty of time to boost your score and lift any storage limits before the new year, even if you fail this next IPI review.

And there’s more advice where that came from, so be sure to follow our blog for news, tips, and insights.

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Melanie takes an active interest in all things Amazon. She keeps an eye on the latest developments and keeps Amazon sellers up to speed.

The post Amazon Inventory Performance Index (This Q4’s Minimum IPI and How to Reach It) appeared first on SellerEngine.