As peak shopping season draws near, Amazon sellers are growing increasingly anxious. Many face a critical challenge: their Inventory Performance Index (IPI) score has fallen below 400, potentially triggering storage limits that could hamstring their ability to compete during the most lucrative sales period of the year.
The IPI Score: A Critical Metric for Amazon Sellers
Amazon's IPI score serves as a key measure of inventory management efficiency, directly determining a seller's storage capacity within Amazon's fulfillment network. Falling below the 400-point threshold triggers strict storage limitations, preventing sellers from restocking inventory and potentially costing them significant market share during peak sales periods when revenue typically multiplies.
One illustrative case shows the severe consequences of a low IPI score. After several unexpected events, a seller saw their score plummet to 180, resulting in substantial overage fees and shipment restrictions. Even after clearing their inventory, the seller couldn't secure adequate storage space, casting doubt on their peak season prospects.
Amazon's Storage Limits: Quantity and Volume Restrictions
Since the 2020 pandemic disrupted global supply chains, Amazon has implemented increasingly strict storage limitations to manage warehouse capacity. These restrictions operate in two dimensions:
- IPI-based storage capacity limits: Amazon updates IPI scores weekly and adjusts storage allowances accordingly. Quarterly evaluations determine whether sellers face restrictions.
- FBA replenishment quantity limits: Amazon restricts restocking quantities based on sales performance and inventory levels, with update frequencies varying by product category from weekly to daily.
Notably, Japan's marketplace only imposes storage capacity limits without replenishment restrictions. Sellers of large or slow-moving items face greater IPI score pressure, while new sellers enjoy a 13-week grace period before IPI evaluation begins.
Q4 Deadline Looms: Time Is Running Out
For sellers on Amazon's U.S., U.K., European (Germany, France, Italy, Spain), and Japanese marketplaces, the fourth-quarter IPI evaluation carries particular weight. Industry analysts predict the first assessment will occur during the week of August 8 or 15, with a second evaluation likely the week of September 19. Sellers need only meet the 400-point threshold once during either evaluation to enjoy unlimited storage capacity throughout Q4.
An important clarification: While Amazon updates IPI scores weekly, the quarterly evaluations—not weekly scores—determine storage restrictions.
Four Strategies to Boost Your IPI Score
Sellers can implement these proven tactics to improve their IPI standing:
- Reduce excess inventory: Maintain FBA inventory below 90 days' supply. Remove stagnant products that show no sales improvement.
- Address stranded inventory: Quickly resolve listings with no active offers by creating removal orders.
- Hide replenishment suggestions: For discontinued SKUs, regularly update replenishment recommendations to signal discontinuation to Amazon's system.
- Improve sell-through rates: Focus on SKUs with rates below 1, either by boosting sales or removing them. Note that sell-through improvements require sustained effort—products typically need 45 days to achieve a rate of 2.
Peak Season Considerations: Storage Fee Increases
Sellers should note that Q4 storage fees typically double. Weekly inventory reviews become essential to avoid excessive charges. Monitoring low sell-through SKUs and implementing corrective measures can help maintain adequate storage capacity during the critical holiday selling period.
With peak season approaching, proactive IPI management becomes crucial for Amazon sellers. Strategic inventory optimization and regular system updates can mean the difference between capitalizing on seasonal demand or watching competitors seize market opportunities.