Improving your FBA inventory performance


#1

Manage your FBA inventory effectively so that it leads to reduced overstock, better sell-through, and higher profits for your business. We measure inventory management through the Inventory Performance Index (IPI). This score is based on how well you do the following:

  • Reduce your excess inventory to increase your profitability.
  • Increase sell-through to balance your inventory weeks of cover.
  • Ensure that your inventory is buyable by fixing stranded listings.
  • Keep popular items in stock.

When you improve your IPI score, you can gain higher storage limits or be exempted from volume-based storage limits.

During our Amazon Accelerate virtual summit, we shared the actions that can help and hurt your IPI and the tools available on Seller Central to help improve your inventory management. You can view the Improving FBA Inventory Performance session in Seller University.

We would like to answer more of your questions.

Do old, deleted, listings negatively impact my IPI score?

No, IPI is based on your inventory performance of your on-hand inventory. Listings without ASINs, including non-replenishable products, with no inventory and no sales will not affect your IPI score. Ensure that when you delete listings, you do not have any units available for sale, this will cause the units to become “stranded”. Stranded units that are incurring storage fees without an active listing can impact your IPI score.

Once we move our IPI score above the required IPI threshold, will we get unlimited storage?

No. There are two score check weeks that we announce and evaluate to determine your storage limits each quarter. You will need to reach the required IPI score during either of these two score check weeks to be exempt from the storage limits in the next quarter. If your IPI score goes above the threshold only after the second score check week, you will still be subject to storage limits the following quarter. Your IPI score considers both your recent and long-term inventory performance, and is based on the duration that results in a higher score. Our aim is to ensure that IPI represents your overall inventory performance. We encourage you to maintain your IPI score in time for the next storage limit cycle.

If we have a SKU that is out of stock and inventory will not be replenished for 30 days, will closing that SKU until we replenish help our IPI score?

No. Flagging an ASIN as non-replenishable for short durations removes it from your FBA in-stock rate calculation, allowing you to better determine your in-stock rate, but does not impact your IPI score. In addition, ASINs, including non-replenishable products, with no inventory and no sales will not affect your IPI score.

For more information on IPI, visit Inventory performance.


#2

Helpful information to help me improve my account activity I will continue to visit this page often I am happy to learn from others and will contribute any information I consider to useful to the community


#3

My shop name has changed to KEGHOUSE
Thank you for your support


#4

Can you tell us how the size of our product is accounted into the IPI score?
There is an important part of the equation that Amazon is not telling us about so it becomes impossible to manage this IPI number. It is evident because I am so consistent in my score over the years and I perform MUCH better than many of my peers but my score is always lower.
None of your tips move the needle honestly, it would help if we knew more about how you calculate the score.


#5

@I_love_pancakes I have a theory about the IPI. Amazon is about maximizing revenue. A warehouse is measured on it’s revenue. What if the IPI is a factor of revenue per cubic foot warehouse space?

We have a low IPI (under 500). All of our factors ( Excess inventory percentage, FBA Sell-thru, Stranded, In-stock) are green or greenish. But it seems like we cannot break 500.

Then I dug into the data and found that our commission paid to Amazon per cubic foot hovers around $20. While our FBA inventory all has a good AOV (around $200), they are large boxes (1.33 Cubic Feet).

My theory is that Amazon wants to see more revenue per cubic foot and that large (greater than 1 cubic foot)

Has anyone else doe this math?


#6

when are two score check weeks to be exempt? for example during this Q4?


#7

Very nice. Keep discouraging sellers from doing business on your platform in Q4. GREAT IDEA, Amazon.
In the season where sales are 3x 4x usual, enforce inventory limit base on … sale history??


#8

In September, I created removal orders to reduce seasonal stock in preparation for the higher storage fees starting in October. About 80% of the inventory I asked Amazon to send back to me, was canceled by Amazon and is still there now.


#9

So Amazon changes the Buy Box in July.

Now only the largest sellers on the listing get the sale almost all the time.

There is no way to do anything with our IPI scores.

Amazon cannot even receive inventory in a timely manner. 30 days or more for some items.

This is equivalent to spitting in our faces.

Another example of treating sellers like garbage.


#10

How does one flag an ASIN as non-replenishable?


#11

We believe we have figured out why Amazon’s calculation of determining the Sell Through rate is inaccurate. The formula does not reflect the true sell-through rate of our products on Amazon, and consequently brings down the entire IPI score.

Amazon is using a simple average method of calculating sell-through rate instead of a more accurate - weighted average method.

To simplify the explanation, imagine a seller only sells 2 products on amazon, main product and accessory. Product A sells 99 units per month and product B just 1 unit per month and takes up very little room in inventory, but for argument sake, imagine that they take up exactly same % of warehouse space per unit.

Sell through rate is defined by Amazon is as units sold and shipped over the past 90 days divided by the average number of units available at fulfillment centers during that time period. We are not showing examples of that calculation here.

Continuing the example…

The sell through rate of product A is 3 and

The sell through rate of Product B is 0.7;

The Seller’s average sell-through rate on a "simple average" basis would be (3+0.7)/2 items = 1.85 IPI

However, Product A makes up 99% of the sales and takes up 99% of the inventory space and Product B make 1% of sales and takes up 1% of the inventory. The more accurate and correct sell-through rate if using a weighted-average approach would be:

Product A Sell Through x % inventory storage: 3.0 x 99% = 2.97

Product B sell through x % inventory storage: 0.7 x 1% = 0.007

Total (2.97 + .007) = 2.98 IPI based on weighted average sell-through rate calculation

Instead of a 2.98 weighted average sell-through rate, this example company would have a 1.85 sell-through rate by using the "simple average" method, which makes no sense and is not accurate – especially since this calculation is used to determine how much inventory the company can have at Amazon.

We have crunched the numbers for our products – and Amazon is using the simple average basis to determine the IPI score.

We have an open case with Amazon. Take time to do the math and start a case for your own store.


#12

Improve your FBA shipping Amazon. But it’s nice to receive a new item, thrown in a too, too big box with a little plastic air puff, ALL DAMAGED. Love it!


#13

UPDATE - Oops - Sell Through Rate contributes to IPI, so remove IPI after 1.85 and 2.98.


#14

I did not follow all your calculations.
But, You use the terms of how many units are sold per period of time.
You neglected to calculate how many units are stored in amazon, and this is a key element to calculate how efficient is your inventory management.


#15

Inventory, Inventory Planning, Restock Inventory.

Right click next to the item

Go to Customize SKU settings.

It is here.


#16

Great. So when are the two score checks for Q4 and what is the IPI threshold?


#17

My thoughts exactly, but I have not gotten a “real” answer from Amazon other than that information is proprietary. It is frustrating that Amazon presents this like we have the ability to control it when we clearly do not.
I am 100% in all categories and have been since the IPI was launched I have t consistent turn above 3 times or once every 30 days, how on earth can you manage inventory any tighter than to the 30 days?
Yet I can not get above 500.
Amazon?


#18

How about Amazon should be the one improving their FBA Inventory Performance?


#19

Dear Amazon,

Inventory performance is a 2 way street in which sellers are dependent on the efficiencies and capabilities of Amazon’s fulfillment center operations. However, it seems only one party is ever held accountable in the equation.

As of late, many sellers have had their IPI scores negatively impacted by no fault of their own. This is unacceptable and has been detrimental to many businesses including ours.

When you push all of the accountability on to sellers only, you are distracting from the real issues at hand with Amazon’s own operations and ongoing fulfillment center issues. How are the FCs held accountable to sellers for the IPI problems and negative financial impact they create?

Fulfillment centers should not be able to purposely strand a seller’s inventory because of issues at their FC. And if a FC does that and admits to their fulfillment center issues, Amazon must remove any negative impact to a seller’s IPI score! They must also be responsible for the storage fees during this time. If there is inventory marked stranded and it is not fault of your own, a seller should be able to send more inventory to other FCs. This is simply not right. We have fought both of these issues and can not get any help or resolution other tan being at the mercy of the Amazon FC. We also have inventory limits in place during our peak selling time, and due to no fault of our own. We had a large inventory stranded at a single FC because of their own issues. This in turn caused an avalanche of IPI problems like out-of-stock, 0 average sales, aged inventory and low sell through rate. Again, none of this which was our fault and was admitted by Amazon, but this has continued to plague us for months with no care and ZERO accountability from Amazon regarding our lost sales, additional storage fees/overages, decreased storage allowance and peak season limits.

Help sellers plan inventory appropriately by giving us timing estimates. If we ship today, provide us an estimate as to when we should reasonably expect items will be checked in and sellable. Currently, there is no way for sellers to effectively plan, but Amazon holds sellers accountable by managing their IPI. Items may take 6 days or they may take 66 days to check in. With unknown timeframes and so many variables, how can a business effectively plan their inventory and maintain a strong IPI?

Close the loops to no where in the Shipping Queue dashboard. Inventory delivered but never checked in? Can’t open a case until the reconciliation date…no reconciliation date, because the item has not been scanned at the fulfillment center…it’s enough to drive a seller mad. And then, Amazon dings our IPI for the issues this causes!

Let sellers know exactly how the IPI score is calculated and how often it is updated. We’ve received emails that state “take action now to immediately improve your score”. We make the changes as suggested, and the score goes unchanged. The 4 key IPI indicators are consistently in the Green on all items week after week, but overall index is in the red? Why? When I asked about this, I was told by seller support that there are various factors that are considered but they could not tell me what they were. It’s like we are playing game Amazon created, but we don’t know the rules or how to win.

Amazon needs to actively take responsibility for their issues that affect seller IPI scores, without sellers having to initiate and open and reopen cases. If you mess up, own it, fix it and make it right with. Don’t funnel sellers through an endless process of guilty until proven innocent case management hell.


#20

In another thread a seller told me that all of his 4 scores were terrible, but his IPI was above 700. He conjectured, and I think he is right, that the reason was because thousands of his items fit in a tiny space. I only recently started paying attention to this as our IPI is at 506 and dropping 1 or 2 a week, and our storage fees for October hit 1% of our sales for the first time. Our two best sellers, between them, take up more space than all of the other hundreds put together. Because they sell well we’ve been maintaining 60 days or more at Amazon, sending large weekly shipments. For now we are letting inventory on those two fall, and planning on sending small shipments every day to maintain a lower average. The idea is that if a shipment gets delayed (sometimes a shipment will take 2 months to go into receiving, sometimes 2 days) it won’t hurt because it will be too small to matter.