Amazon is making it slightly easier for sellers who use its FBA fulfillment service by easing standards for the Inventory Performance Index (IPI). This comes after stricter rules went into place on January 1st.
Introduced in the fall of 2017, IPI scores are based on how well sellers drive sales by stocking popular products and the efficiency with which they manage on-hand inventory.
On Monday, Amazon announced, “As of January 20, 2020, your Inventory Performance Index (IPI) score considers both your recent and long-term inventory performance. Your IPI is now based on the time duration that results in a higher score.” (The higher the better for sellers.)
The company explained that the majority of FBA sellers would see a higher IPI score or no change at all:
“Previously, your IPI score was based only on recent inventory performance. The calculation change benefits sellers with lower sales volume in their off-peak season as well as sellers taking action to improve their inventory performance.”
The IPI score matters – in July 2018, Amazon imposed storage limits on sellers who didn’t efficiently manage their inventory stored in Amazon fulfillment centers, using the IPI to measure sellers’ efficiency.
As we wrote in this March 2018 article, “Beginning July 1, 2018, Amazon said it may limit access to storage for sellers with an Inventory Performance Index below 350 (IPI scores range from 0 to 1,000). Sellers who maintain an index score of 350 or greater will have unlimited storage for standard‑size and oversize items.”
Monday’s move comes after Amazon imposed stricter storage limits on sellers this month, as we reported in October. It raised the bar, notifying sellers that, “Effective January 1, 2020, we are changing the IPI threshold for storage limits to 400 (previously 350).”
One frustration sellers have cited about the metric is that Amazon does not disclose the formula it uses to calculate their IPI, only explaining in general terms: “We calculate IPI for you based on how well you maintain inventory levels, fix listing problems that make your inventory unavailable for purchase, and keep popular products in stock.”
Some sellers responding on Monday’s post said they had noticed their score rise and had wondered why.