22 Nov What is the Amazon Inventory Performance Index (IPI) and how does it affect you?

• This is a tool that seeks to find the balance of the inventory you have in relation to your ability to send units to the fulfillment center.
• The IPI index is designed to maintain inventory performance over the short and long term.

If you are an Amazon seller, you probably already know all the advantages of using its logistics (FBA): shipping and returns management, Prime label, product storage, etc. But, not everything is as easy as sending them your goods and that’s it, but you have to be careful with some details and metrics.

This is the case of the IPI, the inventory performance index, which measures the stock you have in Amazon’s warehouses and relates it to its rotation speed.

This is a fact that you have to take into account whenever you use this type of logistics. For this reason, if you are not clear about the concept, we explain in more depth what it is for and how you can have it under control.

What exactly is IPI?

As we’ve said, this is your inventory performance index and measures the efficiency and productivity of your stock in FBA. This value ranges from 0 to 1,000, with 500 being the number considered neutral or good.

Thanks to this value, Amazon will determine the storage capacity you can have, i.e., the larger it is, the more products you can ship and store in the company’s warehouses.

To find out what PII value you have, go to the Seller Central dashboard and go to the Performance section. There, you’ll find a color-coded rating system, similar to a traffic light, that will tell you what your inventory performance index is.

Factors involved in the IPI

The IPI is just a number and doesn’t tell you what may be going wrong with your inventory, but Amazon has indicated a number of factors that directly intervene in determining this metric.

• First of all: overstocking. This means a higher cost of transport and storage.
• Secondly: that there is stock, that is, that you avoid running out of stock to supply any demand and, thus, not lose possible sales.
• Finally: stranded inventory. This refers to those products that are not selling due to issues related to the detail page, causing unnecessary storage expenses and stagnant products.

Tips for improving IPI

It is common for this metric to fall into oblivion, so you must always keep it in mind and, above all, prevent it from falling below 350, since this is the value that Amazon considers negative and from which it will apply penalties. But what can you do to always have it optimal?

On the one hand, be realistic. Make an estimate as close as possible to the reality of your business so you know how many products are going to be sold. This way, you’ll be able to ship the right stock every time and prevent Amazon from considering it as excess inventory. Analyze your sales at a global level, study the market and the trends that prevail in each era, because it is as harmful to overdo it as it is to fall short.

On the other hand, he thinks that a timely withdrawal can be a victory. By this we mean that if you see that you have over-shipped products, you can make a withdrawal of the excess units, assuming the cost that this entails, but that will be a lesser evil compared to the fact that your IPI decreases. An alternative option is to try to sell that surplus stock by applying an offer that encourages its purchase.

Finally, you should always keep an eye on the status of your listings to spot items that are no longer active so you can remove them before your performance rate drops. In addition, if you suffer a stock-out at a certain time and you are not going to have certain products, it is best to close the listings to avoid delays in shipments or cancellations.