As an e-commerce giant, Amazon is continually evolving to improve its platform for both sellers and customers. One development is the Inventory Performance Index (IPI), a scoring system Amazon utilizes to evaluate the efficiency and effectiveness of a seller’s inventory management. In this blog post, we’ll dive into what the Amazon IPI is, how it works, and how it can impact your beauty business on the online marketplace.

What is the Inventory Performance Index (IPI)?

The Inventory Performance Index is a score ranging from 0 to 1,000 that Amazon assigns to sellers to assess their inventory management. This score reflects the overall efficiency of a seller’s inventory management, taking into consideration factors such as:

1. Excess inventory percentage
2. Sell-through rate
3. In-stock rate
4. Stranded inventory percentage

How Does the IPI Work?

Amazon calculates your IPI score by analyzing your inventory management practices over the past 90 days. It considers four main factors:

1. Excess Inventory Percentage: The proportion of inventory in your stock that has not sold in the last 90 days and is not expected to sell in the next 60 days.
2. Sell-through Rate: The ratio of your total inventory units sold to the average available inventory, measured over the past 90 days.
3. In-stock Rate: The percentage of time your most popular products have been available for sale in the past 30 days.
4. Stranded Inventory Percentage: The percentage of your total inventory that is unsellable due to issues such as listing errors or policy violations.

The Impact of Your IPI Score on Your Beauty Business

A higher IPI score indicates that your beauty business has efficient inventory management, which can benefit your Amazon selling experience in several ways:

1. Improved Product Visibility: A high IPI score increases the chances of your products appearing in the Buy Box and search results, resulting in better visibility and potentially more sales.
2. Increased Storage Limits: Amazon may grant you higher storage limits in their fulfillment centers, allowing you to stock more inventory and reduce the risk of stockouts.
3. Lower Storage Fees: Efficient inventory management can help you avoid high storage fees by minimizing excess and stranded inventory.

On the other hand, a low IPI score may result in Amazon imposing storage restrictions or higher storage fees, ultimately affecting your sales and profit margins.

Understanding and managing your Amazon Inventory Performance Index is essential for efficient inventory management and optimizing your online selling experience. By monitoring your IPI score and implementing strategies to improve it, you can enhance your beauty product visibility, increase storage limits, and lower storage fees, ultimately driving growth and success for your beauty brand on Amazon.

Want to improve your IPI score and achieve even more success on Amazon? Click here to reach out to our team at Market Defense, the experts in growing the world’s best beauty brands on Amazon, globally.