When e-commerce analysts discuss the incredible success and massive growth achieved by Amazon, the conversation invariably mentions the crucial role that the Amazon Standard Identification Number has played in terms of revolutionizing the online retail world. ASINs are more than just product codes, they are the building blocks of the Amazon product catalog, which in 2018 is estimated to contain more than 500 million items.
ASINs introduced by third-party metrics represent a significant portion of the Amazon Marketplace, and they are also intrinsic to maintaining a good score on the Inventory Performance Index. As an independent Amazon seller, you should be paying close attention to this metric.
Understanding the Amazon Inventory Performance Index
In essence, the Amazon IPI scores the ability of sellers to increase sales by means of practicing good inventory management. The IPI is presented as a range between zero and 1,000; in late 2017, Amazon began testing a beta version of this index, which appears as a colorful bar when you access your Seller Central dashboard.
As Amazon explains it, a high IPI score is indicative of sellers who strive to stock popular items, and who also practice efficient inventory management techniques. This is a highly technical indicator that can be of great help to sellers whose first e-commerce experience unfolds in the Amazon Marketplace.
The IPI score is calculated for sellers who use the Fulfillment by Amazon service, and it is based on the following three factors:
In-Stock Rate
Amazon considers three metrics when assigning a score for this factor: lost sales, ASINs that are running low and must be restocked soon, and the products that are leading in terms of sales.
Excess Inventory
ASINs that are not selling well are considered to be taking up room at FBA centers; for this reason, Amazon will display a “Manage Excess Inventory” on your dashboard when your products are failing to sell.
Stranded Inventory
When your ASINs have been suspended for any reason, your products will become part of FBA stranded inventory, which means that they may be subject to storage fees and could even be returned if you fail to take corrective action. Stranded inventory can be highly detrimental to your standing as an Amazon third-party seller.
Interpreting Your Amazon IPI Score
It is in the best interest of FBA sellers to keep a close eye on their IPI scores for the purpose of applying improvement strategies. There may be cases when you do not want to restock some ASINs because you may be preparing to introduce new items to replace loss leaders, but you generally want to keep your IPI score as high as possible.
What is certain about your IPI score is that stranded inventory will drag down your Amazon sales experience. Having to deal with high FBA storage fees is not the only downside of stranded inventory, there’s also the matter of your seller rating: repeated instances of stranded inventory will lessen your Amazon Marketplace presence.
Suppressed or suspended ASINs are the most common cause of inventory becoming stranded at the FBA centers. In some cases, these product listings are deactivated because they are duplicates, restricted items, or because there may have been a hijacking attempt by rogue sellers.
Protecting Your ASINs
Aside from inadequate inventory management, suppressed ASINs will also reflect negatively on your IPI score. To avoid falling prey to counterfeiters and unauthorized sellers who may seek to hijack your ASINs, you need to keep an eye on them.
Brandlox is a cloud-based service that constantly monitors your ASINs and notifies you whenever hijackers come near them. To learn more about protecting your ASINs and boosting your IPI score, get in touch with one of our e-commerce consultants today.
