For sellers who use Amazon Marketplace as a sales space, it is possible to determine the performance of inventory management through the so-called IPI, the inventory performance index. This data is closely linked to a series of factors, among which the most relevant is undoubtedly the Amazon Logistics sales rate , that is, the number of units sold in a given period of time compared to the number of units present in the initial inventory.
Using a 90-day time frame as an example, the Inventory Performance Index allows a seller to easily view both their weekly sell-through percentage and an estimate of the number of days they have in stock before Amazon’s storage fees increase.
Knowing the IPI is therefore essential for the success of your sales activity, but it is especially important in those periods in which the sales volume is higher than average, such as during the Christmas period or on Black Friday.
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Amazon Inventory Performance Index: How it is calculated
Once we have defined what exactly the IPI is, it is time to know how it is calculated. To calculate the IPI you can proceed in two main ways : by analyzing the Amazon Logistics sales rate or by taking into account the Amazon Logistics availability rate.
In the first case, it involves examining the product units sold and shipped in the last 90 days and dividing it by the average of the units available in the logistics centers in the same period of time.
In the second case, instead, the percentage of time in which the ASINs or Amazon Standard Identification Numbers, or the number assigned to each individual product for sale on Amazon, were available for sale in the previous 30 days, is taken into consideration. Several factors contribute to influencing these indices, but among the most important it is possible to mention first of all the quantity of excess inventory and in stock; maintaining a good balance between the products sold and those in stock is in fact necessary to improve the IPI.
Another factor that often negatively impacts the IPI is the payment of Amazon fees for long-term storage , which occurs when the goods remain in the warehouse for a period longer than initially estimated based on sales volume. Finally, the lack of availability of the most requested and sold products also tends to have a negative impact, which can lead to a loss of satisfaction and engagement on the part of customers.
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Amazon Marketplace: How to Optimize IPI
Starting from the factors that can negatively impact the IPI, it is therefore possible to identify some guidelines to follow not only to optimize the inventory performance index, but in general to improve sales on Amazon Marketplace. The advice is always to turn to professionals in the sector , especially if you are a beginner, to minimize errors and receive continuous assistance in case of problems.
The first step to take is to increase your sell-through rate , for example by selling products in bundles to increase the number of items sold in each transaction, reducing reorders for slow-selling products, moving unneeded inventory out of Amazon's warehouses, or applying product discounts to encourage customers to purchase.
Subsequently, it is important to avoid the so-called overstocking , that is, having an excessive amount of stock available that can lead in the long term not only to having unsold goods but also to having to pay a higher Amazon fee for storage. To avoid overstocking, you can proceed with careful sales planning and adopt a correct strategy to establish the pricing of the products.
While on the one hand, several businesses that do not take IPI into consideration often find themselves in a situation of overstocking, many others decide to focus entirely on the most popular and sold products on the marketplace: this allows them to always have t
