Once you’ve successfully launched with Fulfillment by HAQM (FBA) and start making sales, it’s time to focus on how to manage your inventory. Managing inventory is a key part of running any successful online business. If you don’t have enough inventory to meet demand, you run the risk of disappointing customers. If you have too much, you could incur storage costs that can affect your bottom line. And if you can’t find the balance between too much and too little FBA inventory, that could affect your HAQM Inventory Performance Index (IPI) score.
That’s where the FBA Inventory tool comes in. In this post, we’ll take a look at the FBA Inventory tool and IPI score, how inventory health affects your IPI score, how the FBA Inventory tool can help you improve your score and manage your HAQM FBA inventory, and more.
What is the FBA Inventory tool?
Sellers who are enrolled in FBA have access to the FBA Inventory tool to help them manage their inventory more easily. Using this tool’s features and functionality, you can plan for future demand, reduce excess or aged inventory, and fix stranded inventory. You can also monitor your sell-through rate and identify problem areas, optimize your pricing and assess costs, and more efficiently use your capacity at fulfillment centers. All of this helps you maintain healthy inventory levels, which can positively affect your HAQM Inventory Performance Index (IPI) score.
Stranded inventory: This term refers to inventory that’s stuck in a fulfillment center and unable to be sold for a variety of reasons—say, for example, the item doesn’t have an active product listing, so customers can’t find and purchase it. In HAQM terms, stranded inventory refers to a product in FBA fulfillment centers that doesn’t have an active offer. Stranded inventory either needs to have its listing reactivated, or it can be removed from your inventory so you don’t incur additional storage costs.
Aged inventory: Stock that has been sitting in storage for an extended period of time becomes aged inventory. This includes items that haven’t been purchased or account for excess inventory. HAQM calculates aged inventory based on a first-in, first-out basis across our entire fulfillment network.
What is the Inventory Performance Index (IPI)?
The Inventory Performance Index (IPI) is a score that measures your HAQM inventory performance over time. The score, which ranges from 0 to 1,000, is largely based on your ability to:
- Maintain balanced levels between sold and on-hand (fulfillable or sellable) inventory
- Avoid excess and aged inventory, and long-term storage costs
- Efficiently address listing issues
- Maintain popular products to meet customer demand and maximize satisfaction
The score represents your overall inventory performance in both the short term and long term. If your score is low, you can take actions to improve it, though it can take time for those actions to result in a boost. The IPI also accounts for seasonal fluctuations and unexpected disruptions, which means your long-term performance helps safeguard your score in the short term and gives you time to make corrections and respond to changes.
The higher your IPI score, the better. Ultimately, the IPI score acts as a barometer to help you run your ecommerce business more efficiently. If you have a Professional selling plan, you can find your IPI score on the Inventory Performance dashboard in Seller Central.
How does inventory performance affect your IPI score?
There are a variety of scenarios in which inventory performance can affect your IPI score. For example, your score may lower if:
- You have too much inventory and can’t turn it over every 30 to 60 days—if you have over 90 days of supply, this may count as excess or aged inventory
- Your inventory is unbalanced, where you either have too much or too little, which can affect your 90-day rolling sell-through rate
- You have stranded inventory, where you have units that aren’t saleable because they’re not connected to an active listing
- You’re unable to keep popular items in stock, which results in a drop in sales
Maintaining balance in your inventory is key to maintaining a good IPI score. Too much or too little will decrease your score, as will inventory that has been sitting in a fulfillment center for an extended period of time. Ideally, you want your inventory to be in a constant state of flow where what goes out is consistently replenished so you can always meet customer demand.
How does the FBA Inventory tool help with IPI?
The FBA Inventory tool can help with your IPI score by helping you more effectively manage your HAQM FBA inventory. The way you manage your inventory using the tool can have a big impact on your IPI score. You can use the tool to monitor inventory metrics, which can help you forecast demand, track your excess inventory percentage, monitor your stranded inventory, and keep an eye on your sell-through and in-stock rates. If you’re not sure how to fix or amend any inventory imbalances, HAQM offers suggestions that can help you meet your goals and may boost your IPI score.
Using the FBA Inventory tool, you can:
- Make a plan for improving your 90-day rolling sell-through rate. The tool can show you when you’re in a good sell-through range so you can stay balanced between holding too much inventory and having too little, and it offers recommendations to help you find your ideal balance. Having this information can also help you identify opportunities to offer promotions, advertise, solicit product reviews, improve your listings, and more. You can filter your inventory by age range or sell-through rate so you can remove inventory that’s not moving and replace it with more popular items. This can help make your inventory healthier, which can have a positive effect on your IPI score.
- Reduce your excess inventory. You can also use the tool to identify products that are aged or overstocked, and take recommended actions. One option may be to use HAQM Outlet to sell overstock or out-of-season items if they can’t be returned to the manufacturer. You can filter your aged stock to see which items are eligible for HAQM Outlet.
- Fix listing issues quickly and easily. Since the tool monitors your stranded inventory percentage, you can use it to identify sellable items that don’t have an active listing. Remember, you incur storage costs for all items you store with FBA. Once you identify stranded items, you can create active listings for them and present them for sale to customers.
Ultimately, the FBA Inventory tool helps you maximize and manage FBA inventory on HAQM, highlighting opportunities for improvement and optimization, which can have a positive effect on your IPI score.
How do you manage FBA inventory?
There are a variety of tools and features you can use to manage FBA inventory:
- Inventory Performance: This tool shows your Inventory Performance Index (IPI) score and the factors that inform your score so you can identify areas for improvement.
- Track inventory age: Using this filter in the FBA Inventory tool, you can easily see how much inventory you’re holding and how long it’s been in fulfillment centers, so you can avoid storage costs and improve your sell-through rates.
- Fix Stranded Inventory: Add or amend product listings using this tool, which can identify opportunities to make active listings for items that may not have them.
- Restock Inventory: Use this tool to maintain your inventory at healthy levels so you can keep your account in good standing by reducing out-of-stocks, minimizing excess inventory, and more. You can also get recommendations based on your sales history, along with demand and seasonality forecasts so you can stock up accordingly.
How can AWD help you manage FBA in inventory?
HAQM Warehousing and Distribution (AWD) can help you lower your FBA costs and maintain a healthy cost-to-inventory ratio. It’s a low-cost bulk storage solution that can automatically replenish your FBA inventory when it starts to run low. AWD can help you maintain healthy FBA inventory levels and avoid FBA capacity limits. You can also use AWD to distribute inventory to non-HAQM channels.
When you ship to AWD, you get pay-as-you-go pricing, even during the holiday season—and the FBA inbound placement service is included.
Ready to boost your IPI score with the FBA Inventory tool?
With the FBA Inventory tool, you can take the guesswork out of managing your inventory and supporting a strong HAQM IPI score. With options to manage and track the age of your inventory, and suggestions that can help you make the right choices for your business, you have the support you need to streamline your inventory and help your ecommerce business thrive.
The FBA Inventory tool is easy to access right from Seller Central. Just sign up for a Professional selling plan to get started.
Frequently Asked Questions
How do I manage my HAQM FBA inventory?
What is a sell-through rate?
What is the HAQM IPI score?
What is a good HAQM IPI score?
*A Professional selling plan is $39.99 a month + selling fees. Learn more
