What is Amazon IPI?
From time to time, Amazon does limit the amount of stock sellers can send to their fulfillment centers. This is typically in response to manage the space in storage ahead of the holiday shopping – a process they call restock limits.
The confusing thing about this policy is that it happens to sellers who have excellent scores on the IPI which is the Inventory Performance Index.
It seems that sellers become more vocal around the holiday season because without the inventory in the warehouse, they might not have enough stock available to cover potential sales.
In addition to the API, sales can be a factor in limiting storage. Obviously, Amazon is not going to warehouse excessive stock for one seller when their sales numbers don’t warrant the space.
Therefore, it has been suggested that sellers use a mixed approach, especially during peak times. They should be using both the FBA inventory method and FBM. In this way, if they receive the dreaded Limited Storage Notification, They can supply customer requests with their own stock on hand. It may also be necessary to use third-party fulfillment centers.
The stock limitation policy has been around for some time and is based mostly on the Inventory Performance Index – a metric they use to measure the rate of stock turnover.
Let’s take a look at the situation further in order to understand the connection between IPI Amazon and Inventory Storage Limits.
What Does Amazon Consider A Good IPI Score?
Firstly, it is important to understand that the IPI is a confidential proprietary algorithm. In other words, it is not possible to say with 100% certainty how the actual score for the Inventory Performance Index is calculated. It is reasonable to assume, though, that is has to do with how much sales you have and how quickly your on-hand stock decreases.
Needless to say, sellers with fast turnover of stock will be seen in a more positive light, as they are selling and replenishing. They understand how to manage their business, and keep their products moving.
But having said all that, Amazon uses your IPI to evaluate your restock limits in its fulfillment centers. The IPI is presumably calculated by considering your previous sales and a forecast of future sales. Scoring below the company threshold will cause limits on your storage account. The limits are lifted when you gain a healthy score. The IPI score is dynamic. It can change often but scores can range from 0 to 1000. It is thought that a minimum of 400-500 is adequate for maintaining an acceptable score.
What Are the Penalties for a Bad IPI Score?
The penalties that directly impact your bottomline are increased storage fees, and restricted inventory storage limits. Neither of these situations are ideal and can be quite costly.
Plus, you need to be careful of when the score is calculated. For example, if it is done quarterly, and then at the six-week prior mark, you could potentially see limits or increased fees for the next quarter.
What Are Four Common Misconceptions About IPI Scores?
#1 ASINs – Although some believe that Amazon will limit the number of ASINs when you have a bad IPI score, the one does not affect the other.
#2 New Products – Again some sellers are afraid to introduce new products as their IPI may suffer if the products don’t sell. On the contrary, the new products are not accessed until at least 90 days after you offer them. So you have time to see what will happen.
#3 Fast Increase in Score – It is impossible to improve your score either immediately or quickly. It takes time because too many variables are involved in the score. Most people will find the system can’t be gamed.
#4 Non-Replenishable – Setting a status of non-replenishable to products has zero effect on Amazon IPI.
What Is Amazon Inventory Storage Limit?
Amazon inventory storage limits refer to the volume of stock a seller is allowed to store in fulfillment centers. These limits are applied to better manage the limited space in the Amazon fulfillment centers during the high-selling seasons especially, the holidays. According to amazon’s latest communication, they explained that restock limits of every vendor are determined by various factors, including:
- seasonal and peak selling periods for products
- forecasts for ASINs
- the new selection sellers carry
- special promotions or deals that have scheduled
- actual fulfillment center capacity
All these goals aim at enhancing the shipping process hence, improving user experience.
Amazon Inventory Storage Criteria
Those who hold Amazon individual accounts are slotted 10 cubic feet worth of space for storage. However, if you have a professional individual account, you are assured of 25 cubic feet worth of space.
Furthermore, individual selling accounts with 10 cubic feet are not subject to storage limit alterations. Sellers with professional individual accounts, however, may have their space decreased or lessened based on the following:
- They have standard-size or oversize clothing and footwear but maintain a steady and healthy Inventory Performance Index (IPI) or exceed by a few points. This category of sellers will not have their storage space reduced.
- Newer than 26 weeks sellers or those with insufficient sales data to compute their IPI scores during the two-week score check weeks are exempt from storage limits.
- An individual professional account without storage limits will maintain a minimum of 25 cubic feet of Amazon fulfillment center space for standard and oversize clothing and footwear.
How Many Units Can I Send to Amazon AFCs?
Your Restock Limit will determine the quantity of your Amazon FBA inventory you are allowed to send to Amazon Fulfillment Centers.
As we mentioned earlier, restock limits are determined by your Inventory Performance Index. If your IPI is below 500, then you are not eligible for additional storage on top of the restock limit.
What Is Amazon’s Oversize Storage?
This is a situation where the allotted storage space is used up and exceeded, hence, a fee applies for the extra room.
Amazon’s Oversize has two categories: Sortable which is Standard-size, and Non-Sortable which is Oversize.
It should be noted that warehouse rules suggest that Dimension Weight (DIM) is also used for packages. This means that the actual size of the item in relation to its weight is a factor in storage limits.
How Do I Know My Restock Limit?
You will find this information on your Seller Central dashboard. Follow these steps:
- Sign in on your Seller Central account.
- Go to Inventory Dashboard
- Click on Inventory Performance.
- Hit on Restock Limit then look for Utilization Quantity and Restock Limit
- The number given is your Maximum Inventory Level or Restock Limit
How Can I Increase My Amazon Storage?
You cannot increase your Amazon fulfillment center storage allotment heading into the festive seasons or holidays. This is due to the FBA Inventory Storage policy, wherein you cannot send more inventory packages to the centers until your stock drops below your limit for that storage type.
And this is where the confusion lies with sellers.
First, they wonder why they cannot “ramp up” with more inventory in the eventuality of increased sales?
Second, if their Inventory Performance Index score exceeds recommendations, why should they be penalized?
Suggestions for creating yourself more space in the warehouse is to do one of the following:
- Sell your inventory so you have more room. Potentially hold a sale or some incentive to sell more product.
- Recall items that are probably not going to sell for the season. You can create a Removal Order, and thus, use that wasted space for better performing items.
- Consider cancelling shipments of stock that are deemed non-urgent, so again, you aren’t wasting your limit with inventory that doesn’t need to be there.
- Fix any stranded shipments on an immediate basis. Keep this up to date so you don’t negatively impact your IPI score.
Final Note on Amazon IPI
In a bid to stay on top of the recent trends in global economies and the ever-growing eCommerce space, Amazon has decided to implement a raft of measures, including and not limited to, limiting the amount of inventory a seller will keep in the fulfillment centers – what they call Restock Limits.
In addition to the Amazon FBA storage policies, the company applies your IPI which is the Inventory Performance Index to evaluate the amount of space one will take at its fulfillment centers during the holiday seasons.
As a seller, you will be notified early enough to improve your IPI scores which would later be used to calculate your storage allotment at the fulfillment centers. Moreover, seasoned Amazon vendors advise that you can consider third-party services for extra space.