{"id":6961,"date":"2021-12-23T16:06:17","date_gmt":"2021-12-23T16:06:17","guid":{"rendered":"https:\/\/tacticalarbitrage.spacecolts.com\/what-does-ipi-mean-on-amazon\/"},"modified":"2024-03-26T19:49:20","modified_gmt":"2024-03-26T19:49:20","slug":"what-does-ipi-mean-on-amazon","status":"publish","type":"post","link":"https:\/\/tacticalarbitrage.com\/blog\/what-does-ipi-mean-on-amazon\/","title":{"rendered":"What Does IPI Mean On Amazon"},"content":{"rendered":"<p><span style=\"font-weight: 400\">At first, life as a seller on Amazon seems easy. Identify products with promising metrics, load the descriptions and photos, and optimize keywords for Amazon search. The selling life is good until you start to struggle to keep your IPI above 350.<\/span><\/p>\n<p><span style=\"font-weight: 400\">This may bring you down to earth to discover what does IPI mean on Amazon?<\/span><\/p>\n<p><span style=\"font-weight: 400\">Maybe you can&#8217;t keep your Amazon Inventory Performance graph in the green zone and stare at rising costs for storage, additional fees and ultimately, your margins getting hammered.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Let&#8217;s help you to get on top of those metrics pronto!<\/span><\/p>\n<h2><b>What is the Amazon Inventory Performance Index (IPI)?<\/b><\/h2>\n<p><span style=\"font-weight: 400\">Diving into Seller Central and you will discover the following.<\/span><\/p>\n<p><span style=\"font-weight: 400\">The <a href=\"https:\/\/sellercentral.amazon.com\/help\/hub\/reference\/202174810\" target=\"_blank\" rel=\"noopener\">Amazon inventory performance index<\/a> is a number between 0-1000 that represents just how well you\u2019re able to balance the demand for your product with the supply available in Amazon\u2019s warehouse.<\/span><\/p>\n<p><span style=\"font-weight: 400\">The higher your Amazon IPI is, the better you\u2019re doing. Anything below 500 and you\u2019re staring at additional costs, limited storage capacity and fees.<\/span><\/p>\n<h3><b>IPI Measures Your Ability to Manage Stock<\/b><\/h3>\n<p><span style=\"font-weight: 400\">To keep Amazon happy and by extension, your wallet, you need to walk the ecommerce inventory tightrope. Lean too far towards excess inventory levels and you fall, lean too far the other way with inventory unavailable, and you fall too.<\/span><\/p>\n<p><span style=\"font-weight: 400\">The index covers the preceding 3 months&#8217; figures and is adjusted each week.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Amazon tracks your sales, unproductive inventory levels, and expenses and calculates whether you have a problem with too much stock that isn\u2019t selling or too little stock of the items that are selling.  <\/span><\/p>\n<h2><b>How Is Amazon Inventory Performance Index Determined?<\/b><\/h2>\n<p><span style=\"font-weight: 400\">Let\u2019s look at what exactly the Amazon IPI measures:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Management of your inventory over 3 months.<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">The relationship between stock-on-hand (minimum threshold requirement) and sales.<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">How quickly you can fix listing problems to maximize products available for sale.<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Your ability to maintain minimum stock levels of popular products.<\/span><\/li>\n<\/ul>\n<h3><b>4 Factors that Move Your IPI<\/b><\/h3>\n<p><span style=\"font-weight: 400\">Four factors influence the direction your IPI moves:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Excess inventory percentage (how you&#8217;re managing your inbound shipments)<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">FBA sell-through rates<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Stranded inventory rate<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">FBA in-stock inventory (tracking your units in stock)<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400\">But it\u2019s not too difficult to get your head around storage volume limits and shipment status to discover how to make them work for you.<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-6986 alignnone\" src=\"\/blog\/wp-content\/uploads\/sites\/2\/2021\/12\/What-Does-IPI-Mean-On-Amazon.jpg\" alt=\"What Does IPI Mean on Amazon\" width=\"815\" height=\"250\" \/><\/p>\n<h3><b>What\u2019s Your Target IPI Score?<\/b><\/h3>\n<p><span style=\"font-weight: 400\">If you don\u2019t have a target to aim for then it\u2019s difficult to know where to start.<\/span><\/p>\n<p><span style=\"font-weight: 400\">The average score is somewhere between 400-800. That\u2019s a very wide target, so let\u2019s narrow it down a bit.<\/span><\/p>\n<p><span style=\"font-weight: 400\">You don\u2019t want to be under 500 as that\u2019s where you attract overage fees and Amazon limits your FBA storage. You ideally want unlimited storage.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Amazon regards a score above 500 as an indicator of good performance.<\/span><\/p>\n<p><span style=\"font-weight: 400\">So, taking those factors into account, a score of 500+ would be a good starting point to aim for.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Now, how do you do that?<\/span><\/p>\n<p><span style=\"font-weight: 400\">Well, you want to:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Keep at least 2 months\u2019 inventories on hand to keep feeding the Amazon beast<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Fix your stranded inventory problems<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400\">Let\u2019s take a look at how you can achieve these goals.<\/span><\/p>\n<h3><b>FBA Sell Through Rate<\/b><\/h3>\n<p><span style=\"font-weight: 400\">This is a measure of how quickly you are turning your stock around. The quicker you move stock, the better you and Amazon perform.<\/span><\/p>\n<p><span style=\"font-weight: 400\">The sell-through rate is calculated by dividing the total number of units shipped in the prior 90 days by the number of units in FBA storage over the same period.<\/span><\/p>\n<p><span style=\"font-weight: 400\">The total number of units sold and shipped is calculated at the ASIN level and gives an accurate metric of fulfilled orders.<\/span><\/p>\n<h2><b>How to Improve Your FBA Sell Through Rate<\/b><\/h2>\n<p><span style=\"font-weight: 400\">Simple, get more traffic to your listings, and then make sure you have enough products in stock to meet the increased demand.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Get your calculations wrong and you either get left with too little stock to meet demand or you\u2019re over the stock threshold with the product not moving quickly enough.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Both of those situations affect your excess inventory percentage and your in-stock rate.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Let\u2019s tackle the inventory health problem\u2026 by making more sales.  Here are 3<a href=\"\/tips-for-selling-on-amazon\/\"> ways to help improve sales<\/a>.<\/span><\/p>\n<h3><b>1. Optimize Your Listing<\/b><\/h3>\n<p><span style=\"font-weight: 400\">By tracking what is working for you and every other seller on a variety of different platforms, you can implement what is working.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Split-test headlines, descriptions, and call-to-action text.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Consider hiring a copywriter to rework your listing, push the benefits of your products, get your potential customer to visual themselves using or consuming your product.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Invest in higher-quality photographs that show your product in use.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Provide more detailed information in the form of an infographic or video.<\/span><\/p>\n<h3><b>2. Revise Your Price Point<\/b><\/h3>\n<p><span style=\"font-weight: 400\">Competing on price is a quick way to go bankrupt, so you need to prove your product will provide value.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Sometimes that means raising your price and sometimes it means lowering your price.<\/span><\/p>\n<p><span style=\"font-weight: 400\">You need access to accurate information across a wide variety of platforms to see what others are doing in terms of their pricing structure.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Consider using volume discounts for business customers.<\/span><\/p>\n<h3><b>3. Increase Your Advertising Budget<\/b><\/h3>\n<p><span style=\"font-weight: 400\">If you\u2019ve optimized your listing using the suggestions above and you can see that your sales percentage has increased as a result of your tweaks to product sales copy then your next step is to get more people to see your product.<\/span><\/p>\n<p><span style=\"font-weight: 400\">You need to be strategic when you do this, as it\u2019s not just about throwing money at the problem. You need to identify exactly who your target market is.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Test and track the ad copy that you use, split-test colors, headlines, and call to action copy.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Consider short copy and long copy, look at video sales letter formats, make greater use of happy customer testimonials. Social proof is what drives sales, so make use of it.<\/span><\/p>\n<h2><b>Optimizing Your Inventory | A Balance &amp; A Shuffle<\/b><\/h2>\n<p><span style=\"font-weight: 400\">How well you manage your inventory impacts your ability to meet your buyers\u2019 demand for products. Amazon focuses on this threshold when calculating your excess inventory metric.<\/span><\/p>\n<h3><b>In-Stock Rate<\/b><\/h3>\n<p><span style=\"font-weight: 400\">The in-stock rate tracks how well you keep your popular items in stock over the prior 60 days.<\/span><\/p>\n<p><span style=\"font-weight: 400\">100% in-stock rate means that all products that had sales are currently in stock, taking up storage space.<\/span><\/p>\n<p><span style=\"font-weight: 400\">You want to aim for a rating of Good which equates to a 90-100% in-stock rate.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Once you head towards the Poor rating, meaning your score is &gt;70% you know that something is amiss.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Lost opportunities to make sales will reduce the IPI score but the in-stock rate doesn&#8217;t on its own impact the IPI score. It merely helps you to track a metric that does directly impact your IPI score.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Amazon calculates your in-stock rate by dividing the number of daily units sold multiplied by the individual percentage time each item was in stock by the total number of items that were sold.<\/span><\/p>\n<p><span style=\"font-weight: 400\">A Simple Example Illustrates The Calculation<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Item A has a daily sales rate of 2 items per day (in a 60-day cycle) but was only available for 15 days in the last 30 days (50%).<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Item B has a daily sales rate of 3 items per day (in a 60-day cycle) and was available for the full 30 days in the last 30-day cycle (100%).<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">In-stock rate = (2 X 50%) + (3 X 100%) \/ 2 + 3 = 4\/5 = 80%<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400\">Bear in mind that the re-stock recommendations in Seller Central are not always 100% accurate especially if you fulfil some of your own orders and not everything goes through the fulfillment center system.<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-6649 alignnone\" src=\"\/blog\/wp-content\/uploads\/sites\/2\/2021\/05\/inventory-levels.jpg\" alt=\"inventory\" width=\"800\" height=\"544\" \/><\/p>\n<h3><b>Excess Inventory Management<\/b><\/h3>\n<p><span style=\"font-weight: 400\">Any ASIN that has been <\/span><b>sitting longer than 90 days needs to move,<\/b><span style=\"font-weight: 400\"> do whatever you have to get rid of it pronto.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Focus your attention on the high return on investment (ROI) products and reconsider not stocking items that make very little profit. Volume plays a part here, so high volume low-profit items can make you a lot of money.<\/span><\/p>\n<p><span style=\"font-weight: 400\">However, you don\u2019t want to be stuck with a high volume of low-margin stock that isn\u2019t moving quickly enough.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Amazon views this metric as the most critical aspect of calculating your IPI so this is important!<\/span><\/p>\n<p><span style=\"font-weight: 400\">The calculation is as follows: <\/span><i><span style=\"font-weight: 400\">Excess FBA units \/ Total FBA units.<\/span><\/i><\/p>\n<h4><b>Get Rid of Dead Inventory<\/b><\/h4>\n<p><span style=\"font-weight: 400\">Amazon has a \u201cManage excess inventory\u201d tab on your inventory dashboard within Seller Central, get familiar with it and use it.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Creating a sale, advertising your listing, or matching the lowest price are some options available to maintain healthy inventory levels and manage seasonal sellers.<\/span><\/p>\n<p><span style=\"font-weight: 400\">As an absolute last resort, you should consider removing the product, but you then need to have a plan B to move those stock items outside of the Amazon platform.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Amazon makes recommendations depending on a variety of factors including demand for the product, input costs, supplier lead times as well as storage and removal costs.<\/span><\/p>\n<h3><b>Save Your Stranded Inventory<\/b><\/h3>\n<p><span style=\"font-weight: 400\">Your stranded inventory metric is based on the inventory levels of items that are not available for purchase due to errors in your listing.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Here are a few key factors for items being stranded:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Brand qualification reasons<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">ASIN restrictions<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Listing errors<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Expired ASINs (where you&#8217;ve reached ASIN-level Quantity limits)<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Deleted listings<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Pricing errors<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Bulk upload template errors<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400\">Calculating the stranded inventory percentage is as simple as dividing the number of units unavailable for purchase by the total number of FBA units.<\/span><\/p>\n<h4><b>Fixing Stranded Inventory<\/b><\/h4>\n<p><span style=\"font-weight: 400\">Go to Amazon Seller Central each day and select Manage Inventory in the inventory dashboard. You will see an option to fix stranded inventory.<\/span><\/p>\n<p><span style=\"font-weight: 400\">The reason the on-hand inventory is stranded is listed next to each ASIN. Fix the listed problem as soon as it appears in the list and you could soon be enjoying unlimited storage.<\/span><\/p>\n<h2><b>What If You Don&#8217;t Meet The Minimum IPI Target Score?<\/b><\/h2>\n<p><span style=\"font-weight: 400\">It makes a lot of sense to maintain strict control over your in-stock inventory levels, chief among them is that you will make more money.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Amazon recognizes this and from experience, they know that sellers who track and manage their stock in the Inventory performance dashboard efficiently are the most successful vendors.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Amazon uses a carrot-and-stick approach to vendors, rewarding those that meet the criteria and punishing those that don\u2019t, especially when it comes to long-term storage fees.<\/span><\/p>\n<p><span style=\"font-weight: 400\">You will face stock limits, unfavorable storage costs, and other additional hefty storage fees until you get control of your inventory.<\/span><\/p>\n<p><a href=\"\/pricing\/\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-6802\" src=\"\/wp-content\/uploads\/sites\/2\/2021\/09\/TA-CTA.jpg\" alt=\"Tactical Arbitrage\" width=\"800\" height=\"300\" srcset=\"https:\/\/tacticalarbitrage.com\/blog\/wp-content\/uploads\/sites\/2\/2021\/09\/TA-CTA.jpg 800w, https:\/\/tacticalarbitrage.com\/blog\/wp-content\/uploads\/sites\/2\/2021\/09\/TA-CTA-300x113.jpg 300w, https:\/\/tacticalarbitrage.com\/blog\/wp-content\/uploads\/sites\/2\/2021\/09\/TA-CTA-768x288.jpg 768w, https:\/\/tacticalarbitrage.com\/blog\/wp-content\/uploads\/sites\/2\/2021\/09\/TA-CTA-200x75.jpg 200w, https:\/\/tacticalarbitrage.com\/blog\/wp-content\/uploads\/sites\/2\/2021\/09\/TA-CTA-400x150.jpg 400w, https:\/\/tacticalarbitrage.com\/blog\/wp-content\/uploads\/sites\/2\/2021\/09\/TA-CTA-600x225.jpg 600w\" sizes=\"(max-width: 800px) 100vw, 800px\" \/><\/a><\/p>\n<h2><b>6 Tips On How to Increase Your Amazon IPI Score?<\/b><\/h2>\n<p><span style=\"font-weight: 400\">The recap on some of the suggestions we provide.  Follow these 6 tips to help increase and raise your IPI score<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Optimize your listing (make more sales)<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Revise your price point (be competitive but not cheap when taking excess inventory measures)<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Increase your advertising budget (get more eyeballs on target)<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Liquidate your stock (so you don&#8217;t hit inventory storage limits)<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Fix stranded Inventory issues ASAP! (This is a daily housekeeping chore)<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Reduce overstocked inventory (manage your suppliers to reduce inventory holding costs)<\/span><\/li>\n<\/ol>\n<h2><b>Final Thoughts<\/b><\/h2>\n<p><span style=\"font-weight: 400\">With even the most successful sellers\u2019 plans going awry, stock management via the Amazon IPI should be part of your monthly business management plan to reduce long-term storage fees.<\/span><\/p>\n<p><span style=\"font-weight: 400\">There are numerous eCommerce tools available to help you manage your Amazon inventory performance and chief among these are the ones that provide a competitive advantage when sourcing products across multiple platforms while comparing price points and profitability.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Grab a free trial of Tactical Arbitrage to help you find better products that have a good sales velocity and demand which should help keep your IPI above the threshold.  Click <a href=\"\/pricing\/\">here<\/a> to try it for free.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>At first, life as a seller on Amazon seems easy. Identify products with promising metrics, load the descriptions and photos, and optimize keywords for Amazon search. The selling life is good until you start to struggle to keep your IPI above 350. This may bring you down to earth to discover what does IPI mean [&hellip;]<\/p>\n","protected":false},"author":8,"featured_media":6985,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[2,9],"tags":[],"class_list":["post-6961","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-tactical-arbitrage","category-amazon"],"blocksy_meta":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What Does IPI Mean On Amazon - Tactical Arbitrage | Amazon Seller Blog<\/title>\n<meta name=\"description\" content=\"Amazon has an inventory performance score called IPI. It measures how quickly your products are selling on Amazon. We give you tips on how to get a good score.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/tacticalarbitrage.www.threecolts.com\/blog\/what-does-ipi-mean-on-amazon\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What Does IPI Mean On Amazon - Tactical Arbitrage | Amazon Seller Blog\" \/>\n<meta property=\"og:description\" content=\"Amazon has an inventory performance score called IPI. It measures how quickly your products are selling on Amazon. 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