Amazon’s Inventory Performance Index, or IPI score, is one aspect of the business that sellers need to stay on top of if they want to be successful. This score is a tool that Amazon uses to keep its warehouse inventories in check. As most sellers probably already know, Amazon warehouses are overflowing, and they need to make sure that sellers are maintaining their stock properly in order to keep products moving efficiently.

Amazon uses each seller’s IPI score to determine how much space is allotted to them in Amazon’s warehouses. The better a seller manages their inventory, the more space Amazon will allow them to have. This makes sense since space is limited; Amazon wants to support the sellers on top of their inventories.

Amazon IPI Score Calculation  

Each seller’s IPI score is calculated with existing data and is used to determine how well (or poorly) Amazon sellers are managing their inventories. Amazon is not sharing how they calculate IPI scores, but we do know that there are four main factors that impact each seller’s overall score: in-stock inventory, excess inventory, stranded inventory, and sell-through. 

Simply put, sellers who can keep their inventory moving, listed, and stocked properly will have a higher IPI score. 

Improving your IPI Score

While Amazon doesn’t share exactly how they calculate IPI scores, they do give some tips on how to improve it, including: 

• Keep your inventory balanced in order to avoid aging stock
• At the same time, make sure you have your popular items stocked adequately
• Solve listing issues
• Avoid being assessed fees for long-term storage

Managing stock properly can take some time to master, but there are a few things that sellers can do to fix issues in the short term. First, getting rid of stranded inventory will help increase IPI scores. Either relist the items or remove them from your inventory. Second, sellers might want to reduce the amount of inventory they have stored in Amazon’s warehouses. Do this by looking at historical sales data, estimating sales in the near future, and removing any extra that might be stocked. Sellers should consider each item separately in order to ensure that their more popular products remain adequately stocked.

It is also a good idea for sellers to routinely assess the products that they are selling. If there are items that just are not moving, it might be time to liquidate and replace them with something more popular.

High IPI Score Improves the Bottom Line

While these tips help to increase a seller’s IPI score, they also benefit each seller’s business overall. Sellers who have exceptional inventory performance will also have a more successful business. Getting rid of products that aren’t performing, keeping waste at the minimum, and always paying attention to which products are moving are all sound business practices to whichever seller should adhere.

In the end, a great IPI score is a good indicator of the overall health of any seller’s business. Paying attention to inventory, making sure that stock isn’t gathering dust on the warehouse shelves, and sorting out listing issues are all part of building a successful Amazon business.