What is IPI? Inventory Performance Index for Amazon Sellers Explained
Most sellers don't think about their IPI score until Amazon emails them that their storage is being capped. By then it's too late — you're already losing the next 6 weeks of sales because you can't send enough inventory in. The harsh truth: your Inventory Performance Index is quietly deciding how much money you're allowed to make, and most sellers have never opened the dashboard.
What is IPI?
The Inventory Performance Index (IPI) is a single score from 0 to 1,000 that Amazon assigns to your FBA account to measure how efficiently you manage inventory. It rolls up four things — how much excess inventory you're sitting on, how fast it sells, how much is stranded, and how often your best sellers are in stock — into one number.
Here's why it actually matters and isn't just another vanity metric: if your IPI drops below Amazon's threshold (currently 400, down from 450 in earlier years), Amazon restricts your storage capacity and can cap how many units you're allowed to send into FBA. Score above 400 for two consecutive check weeks and you keep unlimited storage across every storage type. Drop below, and you get a smaller box to play in — right when you probably want to scale.
So IPI isn't an inventory metric. It's a revenue cap in disguise.
How IPI Works on Amazon
Amazon recalculates your IPI continuously and reports it on the Inventory Performance dashboard in Seller Central. The score is built from four weighted factors:
1. Excess inventory. This is the biggest lever. It measures how much stock you're holding beyond what you can realistically sell, factoring in storage costs. Sitting on 8 months of cover for a slow SKU tanks this.
2. Sell-through rate. Units sold and shipped over the past 90 days divided by your average inventory for that period. Higher velocity, higher score. This rewards lean, fast-moving inventory.
3. Stranded inventory. Stock that's in a fulfillment center but not attached to an active, buyable listing — usually a listing error, suppressed listing, or pricing issue. It's the easiest factor to fix and the one most sellers ignore. That inventory costs you storage and earns you nothing.
4. In-stock rate for popular products. Whether your high-demand ASINs are actually available to buy. Going out of stock on a hero SKU hurts twice: lost sales now, and a lower IPI that limits restocking later.
There's no public formula with exact weights — Amazon keeps that closed — but in practice excess inventory and stranded inventory move the score the most. A simple mental model: IPI rewards sell-through speed and the availability of your winners, and punishes the excess you're hoarding and the stranded dead weight you forgot about.
Why IPI Matters for Your Profitability
A bad IPI bleeds your P&L in three places at once, and none of them show up in your ad reports.
Storage fees. Every month that excess inventory sits in FBA, you pay monthly storage. Sit past ~9 months and Amazon adds long-term storage fees on top — a 22.5%+ aged-inventory surcharge that turns slow stock into a guaranteed loss. Excess inventory is the #1 IPI killer and the #1 storage-fee source. Same root problem.
Capital lock-up. Capital tied up in slow inventory is capital not buying your fast movers. If 8 lakh is sitting in 6-month cover of a B-grade SKU, that's 8 lakh you can't put into your hero product that turns every 30 days.
Lost sales from caps. This is the one nobody prices in. When your IPI restricts capacity, your best SKU goes out of stock during a sales spike — and you can't refill it. You lose the sale, you lose organic rank, and the rank loss costs you for weeks after restocking.
Run it through the real profit equation: Revenue minus Amazon fees minus ad spend minus returns minus COGS minus storage equals actual profit. Most sellers skip storage entirely. A healthy brand runs 20 to 25% margin post all deductions. A bloated IPI quietly eats 3 to 5 points of that through storage and dead capital before you've spent a rupee on ads.
Common Mistakes Sellers Make with IPI
Over-ordering to be safe. Sellers send 4 to 6 months of inventory to avoid stockouts, then wreck their excess-inventory factor. The fix is the opposite instinct: send 2 to 4 weeks of cover per replenishment, more often. Lean and frequent beats deep and slow.
Ignoring stranded inventory for weeks. Stranded stock is free IPI points sitting on the floor. A suppressed listing or pricing error can strand units for a month before anyone notices. Most sellers never check the Stranded Inventory report. Check it weekly — it takes 10 minutes and is the fastest IPI win available.
Treating IPI as one number instead of four levers. Your score dropped — okay, which factor? Sellers panic and run a fire sale across everything when only the excess-inventory factor on two SKUs is the actual problem. Diagnose by factor, fix the specific one.
Advertising products that are about to go out of stock. Pushing ad spend at a low-stock hero SKU drives a stockout, which hammers in-stock rate and rank at the same time. Don't advertise what you can't keep on the shelf.
How to Use IPI the Right Way
Check your IPI weekly, not when Amazon emails you. Open the Inventory Performance dashboard and read the four factors individually. The trend matters more than the snapshot.
Kill stranded inventory first. It's the highest-ROI fix. Pull the Stranded Inventory report, relist or reprice, and recover those units. Do this before anything else.
Liquidate true excess. For SKUs sitting past 90 days of cover with no velocity, run a sale, use Amazon's Outlet or liquidation, or create removal orders before long-term storage fees hit. A small loss now beats a bigger one later.
Restock lean and often. Send 2 to 4 weeks of cover for steady SKUs. Use sell-through data, not gut feel, to size each shipment.
Protect in-stock on your winners. Forecast your top 20% of SKUs tightly and never let them hit zero. They carry your IPI and your rank.
Diagnose by factor. Every IPI move traces back to one of the four levers. Find the lever, pull the lever — don't blanket-discount your whole catalog.
How Sellerview Helps You Track IPI
Sellerview ties storage fees and slow-moving inventory directly to each SKU's real margin — so you can see which excess inventory is quietly eating your profit before it ever shows up as an IPI penalty.
Stop guessing whether your inventory is making you money. See your real profit, SKU by SKU, on Sellerview.ai and start your free trial.