Lowering the minimum index IPI
The Inventory Performance Index (IPI) is one of the tools developed by Amazon to measure the effectiveness of the use of warehouse space by third-party sellers. This metric is based on stock metrics of popular products, sales growth rates, and the effectiveness of current inventory management.
One of the most embarrassing changes for third-party sellers who use the FBA program is that Amazon changed the minimum threshold value that must be for a seller to use the entire volume of warehouse space allocated to him. set it at the IPI threshold of 500 for the fourth quarter. Sellers below 500 began to be subject to restrictions from August 16, 2020, until the end of .2020. Since the beginning of 2021, Amazon has reduced the threshold to 450. You can improve your IPI by following guidelines to increase sales or reduce excess and stranded inventory.
Like many other Amazon seller solutions, IPI is largely driven by overcrowding in Amazon warehouses, and therefore Amazon tries to motivate sellers to better optimize their warehouses and inventory.
Amazon does not disclose the details of calculating this indicator, there are only tips and suggestions on how to improve this indicator.
- Reducing excess inventory in warehouses to increase profitability;
- Increase in the dynamics of “through sales”;
- Increase in sales dynamics due to the availability of popular products that are in demand among buyers;
It is worth saying that all the same, the key factors in the rise of this indicator are the prevention of excess inventory on Amazon and the increase in sales dynamics.
The sanctions for a low IPI level (below 450) currently have limitations on the storage of inventory and higher storage fees, namely $ 10.
In connection with this situation, FASTFBA3PL recommends using third-party storage services such as us, and gradually sending to Amazon warehouses that part of the stock that is currently allowed by Amazon with your current IPI index