October 27, 2022

What is the Amazon Inventory Performance Index (IPI)

Amazon Inventory Performance Index (IPI) measures inventory turnover and the cost of out-of-stocks. Learn more about the Amazon IPI.
What is the Amazon Inventory Performance Index (IPI)
Shannon Okubor
What is the Amazon Inventory Performance Index (IPI)

What is the Amazon Inventory Performance Index (IPI)

The success of your Amazon FBA business largely depends on inventory management

Employing effective inventory management strategies will help you reduce inventory and storage costs, increase sales and improve your overall profit. 

One way to measure the health of your inventory is through what is called Amazon FBA Inventory Performance Index (IPI). So what exactly is the Amazon IPI? 

Read on as we dive into what an IPI score is, how it is calculated, what a good IPI score is and how you can improve your Amazon IPI score. 

Here's what we will be looking at: 

  • What is the Amazon Inventory Performance Index (IPI)?
  • How to find Amazon IPI Score 
  • How to calculate IPI score on Amazon 
  • What is a good IPI on Amazon? 
  • Factors that affect IPI score on Amazon
  • How to improve your Amazon IPI score 

What is the Amazon Inventory Performance Index (IPI)? 

Amazon Inventory Performance Index is a scoring system that helps Amazon sellers gauge how effectively they are managing their inventory.


Introduced in 2018, Amazon IPI helps you measure the health of your inventory. 

It takes into account the number of units in your inventory. Having low units of inventory can lead to being out of stock causing you to lose sales. On the other hand, having too much inventory will lead to increased storage costs. 

The Inventory Performance Index score ranges from 0 to 1000. With Amazon IPI, you can effectively track your inventory and ensure you have the right products in stock. It will also help you avoid lost sales and excess costs. 

How to find Amazon IPI Score 

You can easily view and monitor your Amazon IPI score from your dashboard in your Amazon Seller Central account. Simply go to your Seller Central account, and click on Inventory > Inventory Planning > Performance to view your IPI score. 

Your IPI score is updated weekly based on your three-month performance statistics. 

How to calculate IPI score on Amazon 

How Amazon calculates your IPI score remains a secret. Amazon responds to calculating IPI scores by saying: “The calculation is proprietary and will not be published, just as we do not publish the Buy Box algorithm.

Amazon states that IPI points are not deducted when you run out of stock. 

Amazon also states that “The best way to increase your IPI score and minimize your FBA storage fees is to reduce unproductive inventory and keep your product inventory at lean levels while ensuring you have enough on hand to minimize lost sales.” 

What is a good IPI on Amazon? 

Amazon has a minimum IPI score that sellers must not go below to avoid high storage costs. 

As an Amazon FBA seller, if your IPI score drops below the minimum, Amazon will set storage limits on your seller central account until improvements are made to your inventory levels. 

As of 2022, the IPI score threshold is 400. This means that any score above the 400 IPI score threshold is considered a good IPI. 

What happens when your Amazon IPI score is too low? 

Amazon evaluates IPI scores for professional sellers every three months. If your Inventory Performance Index falls below 400 six weeks before the quarter ends, Amazon will send you a notification of potential storage limits. 

By the end of the quarter, if your Inventory Performance Index still falls below the 400 IPI score threshold, Amazon will apply storage limits in the next quarter of the year. 

Before Amazon places a storage limit, three major factors are considered. This includes your historical IPI scores, fulfillment center capacity, and your sales volume. 

If Amazon gives you a storage limit, you won't be able to create shipments for a storage type until your inventory falls below the limit of that storage type. Storage limits will be divided between six storage types which include Apparel, Footwear, Flammable, Oversize, Standard-size, and Aerosol. 

If you send more inventory than your storage limit, Amazon may reject your inventory at the fulfillment center. In addition, an Inventory Storage Overage Fee of $10 per cubic foot will be charged for the amount above the storage limit alongside other fees like monthly and long-term storage fees if applicable. 

Factors that affect IPI score on Amazon

While Amazon doesn't reveal how IPI scores are calculated, it does tell us the factors that can affect your IPI score. 

Here are the four factors that affect your IPI score on Amazon:

  • Excess inventory %: This is an estimate of the units identified as excess stock. It is expressed as - Excess units X 100 / Total units 
  • Stranded inventory %: This refers to the number of units not actively listed but incurring storage costs. It is expressed as - Inactive listing units X 100 / Total units
  • FBA sell-through rate: This refers to the number of units sold in proportion to units in stock. This is expressed as - Units sold / Shipped over 90 days/ Total units in stock available from the past 90 days
  • FBA in-stock rate: This refers to how well you manage replenishable items in stock. This is expressed as - [(%ST1 x SV1) + (%ST2 x SV2)] / (SV1 + SV2) where ST = Stock Time, SV = Stock Velocity, 1 = SKU1, and 2 = SKU2

Excess inventory

One of the biggest factors that influence your IPI score is excess inventory. Amazon prioritizes moving inventory items from fulfillment centers to customer doorsteps quickly. If your inventory units exceed the 90-day supply, it is declared to be excess or overstock. On your inventory dashboard, Amazon provides insights that you can execute to deal with your excess inventory. 

Stranded inventory

Stranded inventory refers to units that are not selling due to product listing problems. This can happen if your listing doesn't meet Amazon guidelines or if there is a problem with your listing tool. When this happens, customers won't be able to buy the product ultimately leading to higher storage costs and loss in sales. 

FBA sell-through rate

Your FBA sell-through rate refers to the number of inventory units sold over the past 90 days from your total inventory stocks at fulfillment centers from the past 90 days. 

For example, if you sold 200 units over the last 90 days with a total stock of 300, your FBA sell-through rate will be 0.67. 

FBA in-stock rate

Amazon calculates the percentage of time your product has remained in stock for the past 30 days in addition to items that have sold more units in the past 60 days. If you can maintain a good in-stock rate, you will have fewer lost sales. 

Misconceptions about IPI scores

Here are some common misconceptions about IPI scores: 

  • New products affect IPI scores: There is a common misconception that new products can affect IPI scores. However, this is not the case. Amazon considers the sales history of a product after 90 days. 
  • IPI scores can affect ASIN limits: During periods of ASIN replenishment limits, your IPI scores do not affect ASIN limits negatively or positively. 
  • Placing a removal order affects IPI scores: This is false. If you place a removal order for your overstocked inventory, it doesn't affect your IPI score. 
  • Pointing out items as non-replenishable does not impact your IPI score.  

How to improve your Amazon IPI score 

To avoid being penalized, here are a few ways you can improve your Amazon IPI score: 

Remove excess inventory 

To avoid excess inventory and incur higher storage costs, remove the items that are not in demand. To remove excess inventory, simply go to your inventory dashboard and then “Manage Inventory Page”. You will find recommendations on the dashboard to help you handle the excess inventory. 

Increase your sell-through rate 

You can improve your sell-through rate and ensure you maintain a green high mark on the IPI score graph. 

To boost your sell-through rate, you can run sponsored ad campaigns to increase sales velocity, optimize your product listing and improve your keyword targeting. 

Avoid incurring long-term storage fees

To avoid hefty long-term storage fees, remove inventory in fulfillment centers within 365 days. You can allow Amazon to remove your inventory or make a removal order. 

Proactively tackle listing problems 

If you have issues with your listing, you can take simple steps to tackle them:

  • Maintain a well-balanced inventory level 
  • Check your dashboard frequently for stranded inventory to avoid incurring excess costs 
  • Avoid excess inventory to prevent higher storage costs
  • Ensure you check your inventory dashboard to make sure your metrics are on the right track 


Optimizing your inventory levels and maintaining a good Inventory Performance Index is key to maximizing sales and increasing your profit margins. 

For new sellers, it may take a while to figure out the right amount of inventory for your product ASINs. However, paying attention to recommendations and actionable insights will help you avoid higher storage fees. 

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