How to Improve IPI

1. Understand the Inventory Performance Index (IPI):

• The IPI is a metric used by Amazon to evaluate and measure the efficiency of your inventory management. It is based on factors such as excess inventory, sell-through rates, and stranded inventory.
• The IPI ranges from 0 to 1,000, with a higher score indicating better inventory management. Maintaining a score above 450 is crucial to avoid storage limits and long-term storage fees.

2. Optimize your inventory levels:

• Maintain an optimal inventory level: Keep your inventory levels balanced to meet customer demand without excessive oversupply. Analyze historical sales data, seasonal trends, and market demand to make informed inventory decisions.
• Implement just-in-time (JIT) inventory management: Utilize JIT practices to minimize storage costs and maximize efficiency. Time your inventory restocking to align with demand fluctuations, reducing excess inventory and stockouts.
• RestockAMZ enables the user to set targeted days of inventory using a min/max inventory methodology.

3. Improve sell-through rates:

• Enhance product visibility and conversions: Optimize your product listings with compelling titles, clear descriptions, and high-quality images. Use relevant keywords and follow Amazon’s SEO guidelines to improve search visibility.
• Price competitively: Analyze competitors’ pricing and adjust your prices accordingly. Consider using Amazon’s automated pricing tools or repricing software to stay competitive while maintaining profitability.
• Leverage advertising and promotions: Utilize Amazon’s advertising features, such as Sponsored Products and Lightning Deals, to increase product visibility and drive sales. Strategic promotions and discounts can help stimulate demand.

4. Minimize excess and stranded inventory:

• Identify slow-moving or stagnant inventory: Regularly review your inventory performance and identify products with low sell-through rates. Consider running promotions, bundling products, or liquidating stagnant inventory through clearance sales.
• Utilize Amazon’s tools: Take advantage of RestockAMZ and the Stranded Inventory report in Seller Central. These tools can help you identify and address issues with aging or stranded inventory.

5. Optimize storage space utilization:

• Implement efficient storage strategies: Organize your inventory in a way that maximizes storage space and accessibility. Use proper shelving, bin locations, and labeling to streamline fulfillment operations.
• Opt for FBA small and light or automated removal orders to return, donate, or liquidate excess inventory: If you have slow-moving products or items with low margins, consider utilizing FBA Small and Light to reduce storage fees. Alternatively, remove excess inventory and fulfill orders using other methods, such as FBM (Fulfilled by Merchant).

6. Monitor and track performance:

• Regularly review your IPI score: Check your IPI score in Seller Central’s Inventory Performance Dashboard. Keep a close eye on any changes or fluctuations and take proactive measures to address issues.
• Leverage inventory management tools: Utilize third-party inventory management software or Amazon-approved, such as ForecastRx & RestockAMZ, tools to gain insights into your inventory performance, forecast demand, and optimize replenishment.