Managing your inventory effectively is crucial for scaling and maintaining profitability as an Amazon FBA seller. One key aspect that many sellers overlook is the Inventory Performance Index (IPI) score, which directly impacts your FBA capacity limits.

In this article, we'll explore everything you need to know about IPI-based capacity limits, how they function, and strategies to improve IPI score Amazon to prevent issues that could hinder your business growth.

What Are IPI-Based Capacity Limits?

Amazon evaluates your inventory health using the Inventory Performance Index (IPI). Based on this score, Amazon assigns storage limits to your FBA account.

If your IPI score falls below the Amazon IPI threshold (typically around 400–500), you may experience:

• Restrictions on inventory storage
• Limitations on FBA shipments
• Potential overage fees for exceeding capacity

These limitations can significantly affect your ability to maintain stock levels, expand during peak seasons, and preserve your profit margins. 📊

Why Does Amazon Enforce Capacity Limits?

Amazon's fulfillment centers face high demand. To ensure efficient use of warehouse space, Amazon allocates more space to sellers who demonstrate effective inventory management—and less to those who don't.

Your IPI score serves as Amazon's primary metric for making this determination

What Factors Influence Your IPI Score?

Amazon calculates your IPI score using four essential metrics:

1. Excess Inventory Percentage 📦
   When unsold inventory accumulates in FBA, your excess inventory percentage increases, lowering your IPI score. Regular inventory assessments can help address this issue.
2. Sell-Through Rate
   This measures how quickly you sell inventory compared to how much you store. A low sell-through rate indicates poor demand or excessive stocking.
3. Stranded Inventory
   Inventory that cannot be sold due to listing issues is considered stranded. These items negatively impact your IPI until resolved.
4. Amazon In-Stock Rate- Maintaining stock of your best-selling ASINs improves your Amazon in-stock rate, benefiting your IPI score. Frequent stockouts harm both sales and your IPI.

How to Avoid IPI-Based Storage Limits

A low IPI score affects more than just storage space—it can restrict your business growth. Here are effective strategies to stay above the Amazon IPI threshold:

✅ 1. Monitor Your IPI Score Regularly:

Visit your Inventory Performance Dashboard in Seller Central and track changes weekly. Pay attention to Amazon's recommendations and implement them promptly.

✅ 2. Increase Your Sell-Through Rate

Utilize discounts, advertising, or product bundles to accelerate the movement of slow-selling inventory. Consider price adjustments or removal for non-performing items.

✅ 3. Remove or Liquidate Excess Inventory

Don't allow products to remain idle. Leverage Amazon's removal or liquidation programs to minimize long-term storage fees and enhance efficiency.

✅ 4. Address Stranded Inventory Promptly

Review the Stranded Inventory Report frequently. Resolve listing errors or relist affected ASINs to maintain healthy inventory levels.

✅ 5. Prioritize Restocking Best Sellers

Focus on maintaining stock for high-demand, fast-moving products. This enhances your Amazon in-stock rate and overall account health, helping you improve IPI score Amazon metrics significantly.

 

Final Thoughts

Amazon's IPI-based capacity limits can either support your business or become a significant obstacle. The key lies in proactive management. By maintaining a strong IPI score and implementing strategic inventory practices, you can secure additional FBA storage space, improve cash flow, and position your business for sustainable growth. 🚀

🔍 Need Help Navigating IPI Scores or FBA Inventory Management?
Whether you're working to recover from a low IPI score or expand your FBA business without encountering storage limitations, our team is ready to assist. Contact us today for specialized support in optimizing your Amazon operations.