July 8, 2025

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)
What is the Amazon Inventory Performance Index (IPI)

Key takeaways: 

  1. Amazon Inventory Performance Index is a scoring system that helps Amazon sellers gauge how effectively they are managing their inventory.
  1. The Inventory Performance Index score ranges from 0 to 1000. A good IPI score typically ranges from 400 and above. 
  1. 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. 
  1. Factors that affect your Amazon Inventory Performance Index include excess inventory, stranded inventory, FBA sell-through rate, and FBA in-stock rate. 

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

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 the Amazon FBA Inventory Performance Index (IPI). So, what exactly is the Amazon IPI? 

Read on as we dive into an IPI score, 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 your Amazon IPI Score 
  • How to calculate your IPI score on Amazon 
  • What is a good IPI on Amazon? 
  • Factors that affect your 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 your 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. 

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: 

  • Allocate warehouse space: Amazon will give sellers with high scores more storage space. This means that the better your IPI score, the more storage space Amazon may give you. 
  • Enforce storage limits: Amazon also uses your IPI score to determine your storage limits. Sellers with consistently low scores may face FBA storage restrictions.
  • Reduces inefficiencies: Your IPI score helps Amazon optimize its fulfillment network by encouraging sellers to send inventory that is more likely to sell quickly.
  • Shows operational health: Amazon uses your IPI score to gauge how well you manage your inventory. A good IPI score shows that you keep items moving, reduce stranded inventory, and avoid overstocking. 

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 avoid Amazon FBA inventory storage limits, which can restrict your ability to ship more products to Amazon warehouses and increase storage fees. 

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? 

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 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. 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 stocks 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. 

Misconceptions about IPI scores

Here are some common misconceptions about IPI scores: 

  • Sellers often worry that launching new products will hurt their IPI score. However, Amazon evaluates the sales history of products after 90 days, so the launch of new products does not affect your IPI score. 
  • It's a common belief that your IPI score can directly influence your ASIN (Amazon Standard Identification Number) limits, but this is not the case. Your IPI score does not negatively or positively affect your ASIN limits.
  • It's a misconception that new seller accounts receive an IPI score immediately. What happens is that new seller accounts will not get an IPI score until approximately 15 weeks after they send their first item to Amazon FBA fulfillment centers. 
  • Contrary to what some sellers might think, marking items as non-replenishable does not have any impact on your IPI score. This action is primarily used for inventory management purposes and does not influence your IPI score.
  • Another misconception about IPI scores is that placing a removal order affects IPI scores. However, 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.  
  • The idea that you can significantly improve your IPI score in a short period is not accurate. Your IPI score is a reflection of both recent and historical sales and storage activity, making it quite challenging to see immediate changes.

How to improve your Amazon IPI score 

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

  1. Remove excess inventory 
  2. Increase your sell-through rate
  3. Optimize in-stock inventory
  4. Avoid incurring long-term storage fees
  5. Proactively tackle listing problems 
  6. Ensure an efficient reordering process
  7. Stay informed about Amazon updates

Remove 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 “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, 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. 

Avoid incurring long-term storage fees.

Regularly monitor your inventory levels to ensure you don’t have excess inventory that sits in Amazon’s fulfillment centers for too long. You can use the recommended removal report. This report provides a list of products that Amazon recommends you remove from their fulfillment centers to avoid paying 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 

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. 

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. 

Oops! Something went wrong while submitting the form.

Frequently Asked Questions (FAQs)

What is a good IPI score on Amazon?

A good Amazon IPI (Inventory Performance Index) score is around 450-800. However, Amazon uses an average threshold of 400 and above to determine whether sellers will face storage limits at fulfillment centers. If your score is below 400, Amazon may limit your FBA storage.

What is Amazon's inventory performance index?

The Inventory Performance Index (IPI) on Amazon is a metric that measures how efficiently and effectively you manage your FBA (Fulfillment by Amazon) inventory.

Your Amazon IPI is calculated considering several factors, including sell-through rate, stranded inventory, excess inventory, and FBA in-stock rate. Amazon updates your IPI weekly. However, decisions about storage limits are made on a quarterly basis. 

What are IPI scores?

IPI scores (Inventory Performance Index scores) are numerical values that Amazon uses to measure how well sellers manage their FBA (Fulfillment by Amazon) inventory. The IPI score ranges from 0 to 1,000 and reflects how efficiently you’re managing your FBA inventory. The minimum target to avoid limited storage is 400, and a good IPI score ranges from 450-1000. 

How is Amazon IPI calculated?

Amazon does not disclose the exact formula for calculating the Inventory Performance Index (IPI). However, Amazon calculates your IPI based on four factors: excess inventory, sell-through rate, stranded inventory, and FBA in-stock rate. Amazon updates your IPI score weekly, and storage limit decisions are made quarterly. 

How do I find my Amazon IPI score?

To find your Amazon IPI (Inventory Performance Index) score: 

  • Log in to your Amazon Seller Central account: https://sellercentral.amazon.com
  • Go to the “Inventory” tab on the top menu.
  • Click “Inventory Planning” from the dropdown.
  • On the Inventory Performance dashboard, you’ll see your current IPI score and a breakdown of other metrics like Excess Inventory, Sell-through rate, etc. You can check the performance insights to find recommendations for improving your IPI score. 

What does IPI mean in Amazon?

IPI stands for Inventory Performance Index. It is a score that Amazon gives to sellers using FBA (Fulfillment by Amazon) to measure how efficiently they manage their inventory in Amazon’s fulfillment centers.

Turbo-Charge Your Revenue!

You’ve probably already considered selling on Amazon but its way easier than you think.

Call Us Now

Enjoying our articles?

Subscribe to our newsletter to receive ePlaybooks insights directly in your inbox. Don't worry we will respect your inbox.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.