If you’re selling on Amazon through the Fulfillment by Amazon (FBA) program, managing your inventory isn’t just good business, it directly affects your ability to grow. One key metric Amazon uses to evaluate how well you’re doing this is the Inventory Performance Index (IPI) score.
But what exactly is the IPI score? How is it calculated? And why does it matter so much to your FBA business?
Let’s take a closer look.
What Is the Amazon IPI Score?
The Amazon IPI score is a performance metric that reflects how efficiently and effectively a seller manages inventory in Amazon’s fulfillment centers. It’s used by Amazon to monitor and evaluate sellers in the FBA program and helps determine how much storage space a seller is allowed.
IPI scores range from 0 to 1,000, with a higher score indicating better inventory health and operational efficiency.
How Is the IPI Score Calculated?
Amazon calculates your IPI score using a combination of several inventory-related factors. Here’s a breakdown of the four primary components:
Excess Inventory
This measures the percentage of your inventory that exceeds Amazon’s forecasted 90-day demand. If you’re holding more than 90 days’ worth of stock, Amazon considers it excess inventory.
Products that aren’t selling well or are no longer in demand contribute to this problem. Failing to reduce excess inventory, by lowering prices, creating removal orders, or adjusting restock plans, can negatively impact your IPI score.
Sell-Through Rate
Sell-through rate looks at how quickly your products are selling over time. It’s calculated by dividing the number of units sold in the past 90 days by the average number of units available during that period.
A strong sell-through rate indicates healthy demand and efficient inventory movement. A low rate signals that inventory is sitting idle, which can drag down your score.
Stranded Inventory
Stranded inventory refers to stock that exists in Amazon’s fulfillment centers but can’t be sold due to listing issues, errors, or policy violations. Since it takes up valuable warehouse space without generating revenue, it’s a red flag for Amazon.
Your stranded inventory percentage shows how much of your total inventory is currently disconnected from active listings. Addressing these issues quickly helps improve both your IPI score and your fulfillment efficiency.
In-Stock Inventory
This metric evaluates how consistently you keep your popular products in stock. Amazon wants you to avoid both overstocking and running out of inventory.
Products that sell frequently but are often out of stock hurt your IPI score. On the flip side, maintaining a healthy inventory level for high-demand items helps ensure customer satisfaction and boosts your performance.
What’s a Good IPI Score?
Amazon considers a score of 550 or higher to be strong. However, keeping your IPI score above 400 is generally acceptable. If your score drops below 400, Amazon may start limiting your FBA storage capacity and applying additional storage fees.
That’s why monitoring your score and acting proactively to improve it, is critical.
Why the IPI Score Matters
Your IPI score doesn’t just affect your seller dashboard. It can have a direct impact on your ability to:
- Send new inventory into FBA
- Avoid costly overage fees
- Keep high-performing products in stock
- Maintain sales velocity, especially during peak seasons
Low scores can lead to real limitations that restrict your ability to scale. In contrast, a strong score gives you the flexibility and space needed to grow your business efficiently.
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