Key takeaways:
- Amazon’s Inventory Performance Index evaluates excess inventory, sell-through, stranded inventory, and inventory availability.
- A healthy IPI supports FBA capacity. In 2026, Amazon’s monthly cubic-foot capacity system considers IPI alongside sales, forecasts, seasonality, and other factors.
- Avoid both overstocking and stockouts by maintaining enough inventory to meet demand while limiting excess and aged inventory.
- Monitor key inventory metrics regularly. Review your IPI dashboard, sell-through, stranded inventory, in-stock performance, and profitability to identify problems early.
- Take proactive steps to improve IPI. Reduce excess and aged inventory, fix listing issues, improve sell-through, optimize reordering, and use inventory and profitability tools to make better FBA decisions.
The success of your Amazon FBA business largely depends on effective inventory management. Managing your Amazon FBA inventory effectively can help you reduce storage and aged-inventory costs, improve sell-through, prevent stockouts, and protect your Amazon FBA capacity.
One of the key metrics Amazon uses to evaluate inventory health is the Inventory Performance Index (IPI).
The IPI score measures how efficiently you manage inventory stored in Amazon fulfillment centers. It considers factors such as excess inventory, sell-through, stranded inventory, and the availability of popular products. Amazon uses inventory performance as one of several inputs when determining your FBA capacity.
In 2027, IPI management has become even more important because Amazon has moved to a monthly, cubic-foot-based FBA capacity system in the U.S. A weak IPI can contribute to tighter capacity, making it harder to send inventory into FBA when you need to restock or prepare for peak sales periods.
In this ePlaybooks guide, we will cover:
- What is the Amazon Inventory Performance Index (IPI)?
- How to find your Amazon IPI score
- How Amazon calculates your IPI score
- What is a good IPI score in 2027?
- Factors that affect your IPI score
- How to improve your Amazon IPI score
What is the Amazon Inventory Performance Index (IPI)?
Amazon Inventory Performance Index (IPI) is a score from 0 to 1,000 that measures how efficiently you manage your FBA inventory. Amazon evaluates whether you are maintaining an appropriate balance between inventory levels and sales, keeping products available for purchase, reducing excess inventory, and fixing listing problems that leave inventory stranded
The goal is not simply to keep as much inventory as possible at Amazon. Instead, Amazon encourages sellers to keep productive inventory at lean levels while maintaining enough stock to meet customer demand. Amazon generally recommends maintaining enough inventory to cover around 30 to 60 days of expected sales.
Your IPI score is updated weekly and reflects inventory performance over time. Because the score incorporates longer-term performance, a single removal order or sudden increase in sales will not necessarily cause an immediate jump.
How to find your Amazon IPI Score
You can view your IPI score and the metrics affecting it inside Seller Central. All you need to do is go to your FBA Inventory/Inventory Performance dashboard.
Here, you can look for your current IPI score, excess inventory percentage, FBA sell-through rate, stranded inventory percentage, FBA in-stock rate, historical IPI performance, and inventory recommendations. Amazon also provides recommendations showing where inventory performance can be improved. You can use some of the best tools for Amazon inventory management, like SoStocked or Veeqo, to monitor stock levels, sales velocity, reorder points, and inventory costs across multiple ASINs. Make it a practice to review your score weekly rather than waiting until Amazon warns you about a capacity problem.
Why does your Amazon IPI score matter?
Your IPI score isn’t just a number. Amazon uses your IPI score to manage inventory and optimize the fulfillment network. Here is why your Amazon IPI score matters:
- It can influence FBA capacity: Amazon's 2027 capacity system uses IPI as one factor when determining how much FBA capacity a seller receives. Other inputs include historical and forecasted sales, seasonal demand, shipment lead time, new selection, deals and promotions, and available fulfillment-center capacity.
- It helps you avoid excess inventory: Excess inventory ties up working capital and consumes valuable fulfillment-center space. Amazon identifies inventory as excess when its forecast indicates that it has more than 90 days of supply.
- It supports healthier sell-through: A strong sell-through rate indicates that inventory is moving rather than sitting in Amazon's warehouses.
- It helps identify stranded inventory: Stranded inventory occupies Amazon storage space without being available for purchase. Fixing listing problems can therefore improve both sales and inventory efficiency.
- It supports profitability: Inventory that does not sell can generate storage and aged-inventory costs while tying up capital that could be invested in faster-moving products.
Overall, your Amazon IPI score protects your ability to sell and stay profitable on Amazon. Maintaining a healthy IPI helps you avoid costly restrictions, optimize your inventory turnover, and maximize sales.
How to calculate your 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, “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.
An average score typically ranges from 400 to 800. However, a good Amazon IPI (Inventory Performance Index) score is considered to be around 550 or above. It's crucial to maintain a good IPI score to reduce the risk of Amazon FBA capacity limits, which can restrict your ability to ship more products to Amazon warehouses and increase storage fees.
A useful way to think about your score is:
- Below 400: High-priority inventory management problem
- 400 to 549: Functional, but limited buffer
- 550+: Healthier operating position
- 700+: Strong inventory performance
- 800+: Excellent performance
Keep in mind that Amazon periodically updates the acceptable IPI score threshold, so it's advisable to check the current standards.
What happens when your Amazon IPI score is too low?
A low IPI score can contribute to tighter FBA capacity. Amazon has moved to a monthly capacity system measured in cubic feet. Amazon provides a confirmed capacity limit for the upcoming month and estimated limits for the following two months. Your capacity is influenced by factors like IPI performance, historical sales, forecasted sales, seasonal demand, new products and selection, etc.
Your inventory usage includes inventory already at Amazon and qualifying open shipments headed to Amazon. For professional sellers with more than 39 weeks of FBA history, capacity is personalized according to IPI and sales performance rather than being governed by one universal cubic-foot limit. Individual selling accounts have a fixed 15-cubic-foot capacity limit, while new professional accounts active in FBA for fewer than 39 weeks do not receive FBA capacity limits during that initial period.
If your inventory and inbound shipments use up your available capacity, Amazon can prevent you from creating additional inbound shipments. Understanding how FBA processing times affect your inventory flow is also important because delays in receiving and processing inbound inventory can affect when stock becomes available for sale. That creates a major operational problem during periods when you need to increase inventory. This is why IPI should be treated as an inventory planning metric, not simply a score you check after something goes wrong.
IPI and the Low-Inventory-Level Fee
The Low-Inventory-Level (LIL) Fee and IPI are not the same metric, and the LIL fee is not simply an additional component of the IPI formula. However, they are now closely connected from a seller-strategy perspective. Amazon's LIL fee is assessed when a product's historical days of supply is below 28 days for both the short-term 30-day and long-term 90-day measures.
At the same time, Amazon's inventory-performance guidance encourages sellers to maintain enough productive inventory to support demand while avoiding excessive stock. Amazon also states that maintaining the Minimum Inventory Level can positively contribute to inventory performance.
The goal is therefore not to keep inventory as low as possible. It is to maintain enough inventory to support sales without crossing into excessive days of supply.
For many core ASINs, a practical starting point is to maintain roughly 30 to 60 days of expected demand, then adjust based on lead times, seasonality, and sales velocity.
Use Profit Analytics to monitor inventory profitability
Amazon's Profit Analytics gives sellers another way to evaluate inventory decisions from a profitability perspective. The tool can analyze sales, fees, advertising spend, refunds, returns, and other costs at the ASIN/SKU level. Amazon says it can analyze historical costs from the previous two years and project costs for the next 90 days.
Use Profit Analytics alongside your IPI dashboard to answer questions such as:
- Which slow-moving ASINs are consuming cash?
- How much are storage and aged-inventory costs reducing margin?
- Is discounting excess inventory more profitable than keeping it?
- Which products have strong sales but weak net proceeds?
- Would reducing inventory improve cash flow?
So, your IPI tells you how efficiently you are managing inventory, while Profit Analytics helps you determine whether that inventory is actually profitable.
Factors that affect your 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. You can calculate this by counting the number of days each replenishable product was in stock over the past 30 days and dividing this count by the total number of replenishable products to get a percentage.
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. Having too much excess inventory and a low sales volume can affect your FBA sell-through rate, indicating poor inventory management.
On your inventory dashboard, Amazon provides insights that you can use 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. Following Amazon FBA packaging and labeling requirements can also help prevent inbound inventory issues that delay receiving or make inventory unavailable for sale.
When this happens, customers won't be able to buy the product, ultimately leading to higher storage costs and a loss in sales. Stranded inventory can occur due to various reasons, including listing errors, ASIN restrictions, expired ASINs, and issues with the listing tool that prevent the item from being available for purchase on Amazon.
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 stock at fulfillment centers.
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. A high FBA sell-through rate indicates efficient inventory management, with stock being sold or shipped more frequently. This is beneficial for maintaining a good IPI score and avoiding higher fees and storage limitations.
FBA in-stock rate
The FBA (Fulfillment by Amazon) in-stock rate is a measure of how often your replenishable FBA ASINs (Amazon Standard Identification Numbers) have been in stock during the previous 30 days. This metric is crucial for maintaining a good Amazon IPI (Inventory Performance Index) score, as it indicates the quality of in-stock inventory for popular items. When an ASIN is out of stock, you should flag that ASIN as non-replenishable in the Restock tool so it doesn’t affect your score negatively. If you can maintain a good in-stock rate, you will have fewer lost sales.
Common misconceptions about IPI scores
Here are some common misconceptions about IPI scores:
Does Amazon publish the exact IPI formula?
No. Amazon does not publish the exact mathematical formula or fixed percentage weights used to calculate the score. Third-party estimates of the component weights should therefore be treated as directional rather than official.
Does a low FBA in-stock rate directly lower my IPI?
No. Amazon specifically says that FBA in-stock rate is not a direct input that lowers IPI. However, stockouts on popular products can result in lost sales, which can indirectly affect inventory performance.
Does marking an ASIN as non-replenishable improve my IPI?
No. Marking a SKU as non-replenishable removes it from the in-stock-rate calculation, but Amazon says this does not directly change your IPI score.
Does removing inventory immediately increase my IPI?
Not necessarily. IPI reflects performance over time, so improvements may take time to appear.
Does a high IPI guarantee unlimited FBA storage?
No. Amazon's 2027 capacity allocation considers multiple factors beyond IPI, including sales forecasts, seasonality, shipment lead time, and fulfillment-center capacity.
Is the LIL fee part of my IPI score?
No. The LIL fee and IPI are separate mechanisms. However, both reward better inventory planning, so they should be managed together as part of your overall FBA inventory strategy.
How to improve your Amazon IPI score
To avoid being penalized, here are a few ways you can improve your Amazon IPI score:
- Reduce excess inventory
- Improve your sell-through rate
- Optimize in-stock inventory
- Manage aged inventory before surcharges begin
- Proactively tackle listing problems
- Ensure an efficient reordering process
- Stay informed about Amazon updates
Reduce excess inventory
To avoid excess inventory and higher storage costs, avoid overstocking by focusing on replenishing popular items promptly and discontinuing products that are not selling well.
To remove excess inventory, simply go to your inventory dashboard and then the “Manage Inventory Page”. You will find recommendations on the dashboard to help you handle the excess inventory.
Improve 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, regularly check your stock levels and adjust your inventory as needed to ensure you're not holding excess inventory that could lead to overstocking and increased storage fees. Ensure your product listings are accurate and appealing to customers, as this can impact sales and your sell-through rate. Also, create and adjust your advertising strategies to increase visibility and attract more customers to your products. Consider liquidating products with very poor sell-through rates, as these are not generating much revenue and can be costly to store.
Optimize in-stock inventory
Monitor and update your inventory levels to ensure you have enough stock to meet customer demand. Utilize Amazon's sales data report and analytics to identify popular products and adjust your inventory accordingly. Consider using automated inventory management systems or software tools to streamline the process and ensure accurate stock levels.
Manage aged inventory before surcharges begin.
Amazon's aged inventory surcharge now starts at 181 days for applicable inventory. For U.S. FBA, the 2026 surcharge schedule begins at $0.50 per cubic foot for inventory aged 181 to 210 days and increases across subsequent age bands, reaching $6.90 per cubic foot or $0.30 per unit, whichever is greater, at 366 to 455 days; inventory aged 456+ days is charged $7.90 per cubic foot or $0.35 per unit, whichever is greater. This makes inventory age another important reason to act before products become deeply overstocked.
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
Ensure an efficient reordering process.
You want to work closely with suppliers to specify precise delivery schedules and reduce lead times. This can help you maintain optimal inventory levels without overstocking or understocking, which can negatively impact your IPI score. Efficient reordering processes can help you minimize stockouts and avoid excess inventory. Ultimately, this improves customer satisfaction and the IPI score.
Stay informed about Amazon updates.
Keep track of Amazon's announcements and updates regarding inventory management, such as changes to restock limits or new storage management programs like the Storage Limit Manager. These updates can provide opportunities to improve your IPI score.
Conclusion
Optimizing your inventory levels and maintaining a good Inventory Performance Index is key to maximizing sales and increasing your profit margins. In 2027, that balance is more important because Amazon's FBA capacity system is increasingly tied to inventory efficiency and is managed on a monthly, cubic-foot basis.
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. If you need additional support with inventory planning, account health, and day-to-day marketplace operations, you can take advantage of ePlaybooks' Amazon account management services.
