Great news for many sellers – as of the 1st of January we’ve seen the Amazon IPI threshold reduced to 400.
Seeing the Amazon IPI threshold reduced (Inventory Performance Index threshold) means that you should be able to store more product in Amazon FBA warehouses and your storage volume limits should be under less pressure. IPI, is a metric to gauge your inventory performance over time and your IPI score measures how efficient and productive you are in managing your FBA inventory. Multiple factors could influence your IPI score, however, the most important ones are to:
- Maintain a balanced inventory level between sold and on-hand inventory and avoid excess and aged inventory.
- Avoid long-term storage fees.
- Fix listing problems.
- Keep your most popular products in stock at the right levels, when possible, to meet customer demand and maximize customer satisfaction.
With Amazon IPI threshold reduced, Amazon estimate that less than 10% of sellers will have storage volume limits as we enter 2022. However, be aware that throughout the pandemic we’ve seen IPI thresholds change rapidly with little warning so this shouldn’t be an excuse to simply stuff FBA with inventory. A good guideline is to maintain enough inventory to cover 30 to 60 days of your expected sales. Amazon consider an item to be excess if it has over 90 days of supply based on the forecasted demand and with Christmas over if you have stock which is likely to hang around it’s worth considering how to deal with it.
Reducing prices, removing, disposal are all options and the reason this is critical is if IPI thresholds change again then stock which has sat in an Amazon warehouse for over three months could easily put you over the limit and impact restocking just at the wrong time of year.