What does Amazon IPI mean? How is IPI calculated?

I don't know if you have paid attention to the inventory index data of Amazon's backend. According to the latest Amazon FBA policy, the IPI index will affect the inventory space. What does Amazon's IPI mean? The following is a relevant introduction for everyone.

What does Amazon IPI mean?

Since Amazon implemented IPI on July 1 last year, some sellers have been restricted from using FBA inventory space due to poor performance, resulting in performance scores below 350. The excess amount will be charged an overage fee and will no longer be able to create a shipping plan, which is very uncomfortable.

However, as long as the inventory performance IPI threshold (350 points) is exceeded, there will be no storage restrictions, and most sellers’ scores are around 400. In addition, there are no other benefits of having too high inventory performance, so no one pays too much attention to this performance.

Recently, Amazon adjusted its IPI policy. Starting from January 1 next year, the IPI threshold will be adjusted from 350 points to 400 points. Sellers with scores below this will be subject to FBA inventory restrictions.

This threatens a large number of sellers with scores of just over 400. At this point, Amazon is stuck at the end of the peak season. If they have a lot of goods in stock, won’t their points be deducted after the peak season ends and they will be charged an excess fee?

How is IPI calculated?

IPI is an indicator that is constantly changing. This score is updated once a week. You can click on the IPI score on the homepage to see the score change compared to last week. The picture below shows that it has increased by 1 point compared to last week.

Although it is updated weekly, the IPI assessment is based on quarterly, starting from the last 6 weeks of each quarter. In other words, as long as you stay above the IPI threshold score during this period, you can continue to enjoy unlimited storage space in the next quarter.

In this update, Amazon will uniformly remind sellers who have not reached 400 points around November 11, warning them that they may have their storage space restricted in the first quarter of next year.

Sellers will then have about 6 weeks to improve their IPI scores, but if the seller's IPI is still below 400 in the last week (December 23), storage restrictions will be imposed until the score exceeds the threshold.

Although many sellers’ scores are slightly higher than 400, it is easy to have inventory problems at the end of the peak season in December. If the score is slightly higher than 10 or 20, it is still very dangerous. FBA warehouses will directly reject shipments that exceed the inventory limit, which will cause great losses to sellers.

The IPI score update has affected the delivery plans of some sellers. Some sellers told me that their IPI scores were only around 410 points, and they had planned to ship more goods during the peak season. However, after the policy change, they dared not ship so many goods.

Let’s first look at how IPI is calculated so that we can optimize it accordingly. The IPI score is determined by the following aspects: the proportion of redundant inventory, the FBA sales rate, the proportion of inventory with no sales information, and the FBA spot rate.

All Amazon merchants should know what Amazon ipi means. In fact, the meaning is very obvious. As an Amazon merchant, all you have to do is find ways to improve the Amazon ipi indicators.

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