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In the week of September 19, the last Amazon Logistics (FBA) IPI assessment for the fourth quarter came. The peak season is now
September 6, 2022
Table of Contents
0/ Fourth quarter IPI assessment summary
1/ Inventory Performance Index (IPI)
-How is IPI assessed?
-How is IPI calculated?
2/ Storage capacity limits
Frequently asked questions
0/ Fourth quarter IPI assessment summary
1/ Inventory Performance Index (IPI)
-How is IPI assessed?
-How is IPI calculated?
2/ Storage capacity limits
Frequently asked questions
Atention!The fourth quarter IPI assessment is here!
The Black Five Network promotion is coming soon!To ensure that you have unlimited storage space for inventory turnover in the most important fourth quarter, Xiaobian reminds you to quickly pay attention to the final IPI assessment for the fourth quarter of Amazon Logistics (FBA), which will be conducted in the week of September 19!
📍 Applicable sites
📅 Examination time
① First time in the fourth quarter (week of August 8, 2022)
② Second time in the fourth quarter (week of September 19, 2022)
② Second time in the fourth quarter (week of September 19, 2022)
📑 Assessment requirements
If your Inventory Performance Index score falls below the site's Inventory Performance Index threshold in both rounds, you will be subject to storage restrictions in the fourth quarter. Currently, Amazon recommends keeping your Inventory Performance Index score above 400.
Therefore, regardless of your performance in the last round of IPI score assessments (the week of August 8), as long as your IPI score reaches 400 or above during the upcoming September 19 assessment week, you won't be limited by storage capacity in the fourth quarter.
Tips:
Storage capacity limits are different from replenishment limits; they help sellers manage the inflow of new inventory (replenishment limits) and the use of physical space in fulfillment centers (storage limits). You can view these limits through the Replenishment and Storage Capacity Monitors.
🔺 Replenishment limits determine how much inventory a seller can send to a fulfillment center and are set for different storage types (for example, classifiable products, bulky items, clothing, and footwear). They are determined based on your past and forecasted sales. Replenishment limits are independent of your Inventory Performance Index (IPI).
🔺 The storage limit is measured in cubic meters and represents the total amount of inventory a seller can store in an Amazon fulfillment center. If your Inventory Performance Index score is higher than 400, then you have no additional storage limits beyond your replenishment limits.
The Inventory Performance Index (Inventory Performance Index, IPI for short) is an indicator used to measure the effectiveness of sellers in managing Amazon's logistics inventory. The overall inventory performance within a quarter is assessed through data such as account sales performance, product circulation rate, and inventory level of best-selling products for at least 13 weeks. This metric score is used to determine whether sellers will need to comply with storage capacity limits in the next quarter.
Notes for new sellers
The Inventory Performance Index is a dynamic tracking statistics method that places higher demands on sellers to manage their inventory. At least 13 weeks of account activity data are required to count inventory performance index (IPI) scores. Therefore, a new seller's Inventory Performance Index (IPI) score will not generate the first IPI score until 13-15 weeks after the product is successfully received and listed at the Fulfilment by Amazon (FBA) fulfillment center. New sellers will not be subject to IPI score limits for 26 weeks.
Log in to Seller Central and click “Inventory > Inventory Planning > Inventory Control Panel > Performance”. You can view your Inventory Performance Index (IPI) score on this page and check your storage limits through the Storage Monitor at the bottom of the page. As shown in the figure below:
How is IPI assessed?
Amazon will review the seller's IPI score twice every quarter and adjust the seller's inventory for the next quarter based on the assessed IPI score. Within these two score check weeks, you'll need to meet the required Inventory Performance Index (IPI) standards in one of the score check weeks to be exempt from the storage capacity limit for the next time period.
Generally, Amazon will conduct an assessment in the 6th week before the end of each quarter and the last full week of the quarter, but sometimes there are delays. Please refer to the actual schedule.
💡 Tips: Currently, the inventory performance index (IPI) score for the US site, European site, and Japan site are all 400 points.
How is IPI calculated?
IPI score measures how efficient and productive you are in managing your FBA inventory. There are many factors that influence inventory performance index scores, but the most important factor is your actions.
How can I improve my IPI score?
As mentioned above, sellers can improve the IPI score by improving the above 4 factors that influence the IPI score:
① Reduce your excess inventory
② Make sure the sell-out rate is good (green)
③ Fix issues with no active product information in a timely manner
④ Timely replenishment of popular products
② Make sure the sell-out rate is good (green)
③ Fix issues with no active product information in a timely manner
④ Timely replenishment of popular products
🔍 Click on this link to learn more about the IPI assessment.
The storage capacity limit is directly linked to the seller's IPI score for the previous quarter. For sellers with IPI scores below the required threshold, storage capacity limits are calculated based on a number of factors, including: ① your sales volume (including seasonal sales); ② your historical inventory performance index score; ③ available fulfillment center capacity.
The seller's storage restrictions are divided into 3 types of situations:
① Current storage limit = unlimited
② Current storage restrictions ＞ Usage volume
Sellers are required to schedule a delivery and replenishment plan based on the amount remaining.
③ Current storage limit ≤ usage volume
The seller was unable to create a shipment. Also, sellers are required to pay an additional storage fee (storage overage fee) for the portion of the excess storage capacity.
Check the “Estimated Monthly Overage Fee” under Current Usage
🔺 Estimated monthly overage charges = (current overage value x daily overage rate x number of remaining billing days in the month) + monthly overage charges accrued to date
🔺 Current Overage = Current Usage - Current Limit
🔺 Daily overage rate = $10/number of days in the month
🔺 Remaining billing days in the month = number of days in the current month - current day value + 1
🔺 Current Overage = Current Usage - Current Limit
🔺 Daily overage rate = $10/number of days in the month
🔺 Remaining billing days in the month = number of days in the current month - current day value + 1
How to increase storage capacity
① Open source: improve your IPI score
As long as you raise your IPI score to 400 points or more before the IPI assessment node, you can lift the storage capacity limit.
🔍 Click on this link to learn more about the IPI assessment.
② Throttling: Eliminate excess inventory
In the case of limited storage capacity, sellers and friends are advised to prioritize cleaning up the oldest inventory that takes up the most volume to free up more storage capacity. These products incur significant storage fees, and reducing such products will not only help reduce storage fees, free up more space, but also improve IPI scores.
There are many ways to remove this portion of overage inventory. In order for sellers to recover the remaining value of this portion of inventory more quickly and easily, Xiaobian recommends that you use automatic removal. After you enable this function, the system will automatically clean up this part of the inventory for you in order of the recovery value from largest to smallest.
🔍 Follow this link to learn more about automatic removal.
③ US Seller Artifact: Storage Limit Manager
US sellers with an IPI score of 400 or less can choose to try out the “Storage Limit Manager”. With this tool, you can apply for more storage space for high-volume products and earn performance points through sales generated by this portion of storage space, thereby deducting storage space fees. Even if Amazon removes your storage restrictions after your application is approved, you will no longer be subject to storage restrictions and no reservation fees.
🔍 Click this link to learn more about the Storage Limit Manager.
❓ Q1: If my inventory performance index score falls below the standard storage limit period and is subject to storage restrictions, why should I increase my inventory performance index score?
The Inventory Performance Index measures the efficiency and effectiveness of your Amazon logistics inventory over a period of time. Higher scores generally indicate that you are managing your inventory more efficiently, which can increase sales and minimize storage costs.
❓ Q2: Will the new ASIN affect my Inventory Performance Index score?
Newly created ASINs will not affect your Inventory Performance Index score for the first 90 days.
❓ Q3: Do inventory performance metrics include inventory removal or clearance?
Once you submit a removal order or clearance request, that inventory will no longer count towards your Inventory Performance Index score. Remember that actions taken today, such as a removal order, will take time to be reflected in your IPI score.
Q4: After checking my score, I found that I met the Inventory Performance Index score criteria. Can my storage volume limits be removed?
Impossible. Amazon will publish two score check weeks to evaluate and determine your storage capacity limits. Within these two score check weeks, sellers are required to meet Amazon's required inventory performance metrics standards in one score check week to be exempt from the storage capacity limit for the next time period; the current capacity limit will remain in effect until the new time period begins. We encourage you to take actions to maintain your IPI score in time for the next storage volume limit cycle.
The IPI score determines the seller's storage capacity limit, and the IPI score assessment combines the seller's short-term and long-term inventory performance, so you can't completely focus your hopes on a few weeks before the end of each assessment point.
Whether the above measures will definitely improve the IPI score also needs to be examined based on the actual situation of sellers. For example, the low IPI score is mainly due to which factor; whether one factor was improved or 4 factors were improved at the same time; whether the extent of the improvement was sufficient to affect the overall IPI score; whether action was taken in a timely manner, etc.
Hurry up and check your inventory and complete the IPI assessment for the fourth quarter. Amazon wishes all sellers a smooth entry and great sales during the peak season!
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