What is the Inventory Performance Index? In simple terms, the Inventory Performance Index (IPI), also known as IPI score, is Amazon's measurement of FBA (Fulfilment by Amazon) sellers' inventory efficiency over time. The IPI score assesses how effectively you manage your FBA inventory to ensure smooth operations. Our recommendations and actions for our partner are based on the principles outlined below:

• Balanced Inventory Levels: Maintaining an equilibrium between sold and on-hand inventory is crucial. 
• Excess and Aged Inventory Management: It's essential to handle excess and aged inventory to prevent accumulating long-term storage fees.
• Promptly Address Listing Issues: Quick resolution of problems like stranded inventory is important to prevent missed sales opportunities.
• Stock High-Demand Items: Identifying and keeping your top-selling products in stock helps meet customer demand effectively.

The IPI score is influenced by four main categories:

1. Excess Inventory Percentage: This is determined by historical sell-through rates. Having more than 90 days' worth of inventory for an item classifies it as excess. Addressing this involves actions like using ads, sales, outlet deals, or removal/disposal orders.

2. Stranded Inventory Percentage:This percentage reflects the portion of your FBA inventory that isn't available for purchase on Amazon. When inventory is unavailable due to issues, it's considered stranded, resulting in lost sales and unnecessary storage costs.

3. FBA Sell-Through Rate: This rate is calculated as units shipped in the past 90 days divided by the average units on hand in fulfilment centres during that period. Maintaining competitive prices and utilising Amazon offerings such as ads and sales helps improve this rate.

4. FBA In-Stock Rate: This rate indicates the percentage of time your replenishable FBA products have been in stock during the last 30 days. Managing listings, keeping top sellers in stock, and managing restock recommendations are vital for this metric.

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Best Practices:

• Regularly monitor your IPI score.
• Aim to maintain an IPI score between 400-500 to safeguard your storage limits.
• Keep 30-60 days' worth of stock unless specific circumstances require more.
• Act swiftly to fix stranded inventory.
• Address excess inventory, starting with items older than 180 days and working backward.

To learn more about how eVenturing can assist in optimising your Amazon retail operations, please get in touch with our team on ellen.murphy@eventuring.co.uk.