How to Maintain a Healthy Amazon IPI Score

How to Maintain a Healthy Amazon IPI Score

The Amazon Inventory Performance Index (IPI) score is a critical metric for sellers using Fulfillment by Amazon (FBA). It reflects how efficiently you manage your inventory, impacting your access to FBA storage space and related benefits. A high IPI score can help avoid costly storage fees and ensure smooth inventory operations. Below, we outline key strategies to maintain and optimise your Amazon IPI score.

1. Optimise Inventory Levels

Maintaining the right inventory levels is crucial. Overstocking ties up capital and incurs additional storage fees, while understocking leads to missed sales opportunities and lower IPI scores. Use Amazon’s inventory management tools, such as the IPI dashboard and Inventory Planning page, to keep stock levels aligned with demand.

Tip: Regularly review Amazon’s Inventory Health Report to identify products that are close to overstock or in short supply. This will help you make timely adjustments and keep your inventory balanced.

2. Improve Inventory Turnover Rate

The turnover rate is a key factor in determining your IPI score. A slow-moving inventory can negatively impact this metric, so it’s essential to optimise your product listings and implement targeted promotions to move stagnant stock.

Action Plan:

• Review your inventory reports to pinpoint products with low turnover.

• Consider running deals or bundling slow-moving items with more popular products to increase sales velocity.

3. Minimise Excess Inventory

Excess inventory not only reduces profitability but also drags down your IPI score. Focus on identifying items that are aging or no longer in demand. Utilise Amazon’s FBA Inventory Age Report to assess which products need attention and create a plan for liquidating or re-pricing them.

Proactive Steps:

• Use Amazon’s “Sell Excess Inventory” tool to create liquidation orders.

• Regularly mark down prices for products that have been in storage for more than 90 days to encourage sales.

4. Strategically Manage Seasonal Stock

If you offer seasonal products, it’s essential to plan inventory levels carefully. Overstocking during the off-season can hurt your IPI score, while understocking during peak seasons leads to missed opportunities.

Best Practices:

• Use historical sales data to forecast demand and adjust inventory levels accordingly.

• Consider running end-of-season promotions to clear out excess stock.

5. Optimise Shipping and Replenishment

Avoid stockouts and minimise shipping delays by optimising your replenishment processes. Efficient replenishment not only keeps your IPI score healthy but also improves your product availability and customer satisfaction.

Implementation:

• Use Amazon’s Restock Inventory tool to predict replenishment needs.

• Create shipment plans and monitor inbound shipments closely to ensure timely restocking.

6. Diversify Your Product Portfolio

A varied product catalogue can help mitigate risks associated with fluctuations in demand. By offering a diverse range of products, you spread the risk and ensure that changes in demand for individual items don’t drastically impact your overall IPI score.

Actionable Strategy:

• Expand into complementary categories or related products.

• Analyse customer feedback and trending products to identify new opportunities for diversification.

7. Monitor Key Performance Metrics

Keep an eye on critical metrics such as sell-through rate, days of inventory cover, and stranded inventory. Regularly tracking these figures allows you to identify underperforming areas and implement corrective measures before they affect your IPI score.

Metrics to Track:

• Sell-through Rate: Aim for a high sell-through rate by reducing overstock and promoting high-demand items.

• Stranded Inventory: Minimise stranded inventory by addressing listing issues promptly. Use the Stranded Inventory Report to detect and resolve problems.

8. Maintain Strong Supplier Relationships

Open communication with suppliers is key to ensuring consistent product availability and optimised inventory levels. Implement just-in-time inventory practices where feasible to avoid overstock and minimise storage costs.

Supplier Strategies:

• Build strong partnerships with reliable suppliers who can accommodate fluctuating demand.

• Consider splitting shipments to avoid having too much inventory arrive at once.

Final Thoughts

Maintaining a healthy Amazon IPI score is an ongoing process that requires proactive inventory management, strategic planning, and close monitoring of performance metrics. By implementing the strategies outlined above, sellers can improve their inventory health and unlock additional FBA benefits, such as reduced storage fees and better access to Amazon’s fulfilment services.

Regularly review your IPI dashboard and Amazon’s inventory reports to stay ahead of potential issues and make data-driven decisions to optimise your inventory. With consistent attention and strategic adjustments, you’ll not only maintain a high IPI score but also ensure your business runs efficiently.