Google, Bing & Amazon’s 2024 Shopping Ad Changes & How To Navigate Them

Inventory has always played a important relation successful the mode you sell connected Amazon.

Running retired of inventory tin interaction your integrated ranking and tin interaction your advertizing strategy.

Besides the imaginable nonaccomplishment of sales, mediocre inventory power besides impacts the magnitude of inventory Amazon volition let you to nonstop into the Fulfillment by Amazon (FBA) program.

Keep speechmaking to larn much about:

• How your Inventory Performance Index (IPI) people impacts your disposable retention volume.
• What the IPI is, and however it’s calculated.
• Recommended actions for improving your IPI score.
• Tips for Amazon sellers who are caller to Seller Central.

Amazon Limiting Sellers Storage Based On Storage Utilization

Amazon controls your retention capableness limits based connected retention utilization and your income history: 

Total Capacity Limit

This limits the magnitude of inventory you tin restock to Amazon’s FBA warehouses successful 1 shipment and the wide maximum fig of units you tin store astatine Amazon.

Accounts that person been progressive for little than 39 weeks are not taxable to these restrictions.

It is important to enactment that this is lone existent for those accounts connected the Professional Seller Plan.  Those with idiosyncratic Seller Plans are constricted to 15 cubic feet per month.

This limits the maximum cubic feet of storage abstraction you person astatine Amazon. These limits are reviewed and adjusted monthly.

Any changes you tin expect for your retention capableness for the pursuing period volition beryllium announced connected the 3rd Monday of the month.

Included successful your retention usage are the inventory presently stored astatine Amazon, inventory en way to Amazon, and immoderate shipments that person been prepared but not yet sent to Amazon.

Screenshot from Amazon Seller Central, February 2024

The Storage Volume is highly impacted by your IPI (Inventory Performance Index).

We volition further sermon however your IPI is calculated aboriginal successful this article.

Screenshot from Amazon Seller Central, February 2024

Sellers who fall beneath the minimum criteria tin person their retention limited. Operating with specified constricted retention tin importantly undermine your income forecasts.

We volition outline the steps you tin instrumentality to guarantee you person capable retention for your high-demand season, maximizing your income connected Seller Central.

We’ll besides reappraisal what you tin bash if you autumn beneath Amazon’s acceptable criteria.

You tin find your bounds by going to Seller Central, selecting Inventory, navigating to the Inventory Dashboard, and past selecting Inventory Performance nether the dropdown for Inventory.

Screenshot from Amazon, February 2024

Your IPI people volition beryllium adjacent the apical of the page.

To scope your retention capacity, scroll to the bottommost of the leafage and click connected the tiny grey container labeled Capacity Monitor.

Success connected Amazon Means You Have To Manage Your Inventory Levels Proactively

Amazon says that it considers the pursuing criteria for your retention levels:

• IPI Score and Sales Performance: Higher retention capacities are granted to accounts that consistently execute a precocious IPI score.
• Storage Utilization: In determining retention limits, Amazon considers your existent inventory, inbound inventory, and shipments that are prepared but not yet dispatched.
• Sales Volume: Amazon volition besides look astatine income measurement implicit time.

Improving Your IPI

If you person a debased IPI score, cognize it volition instrumentality clip to amended your score.

IPI is simply a rolling average. It tin instrumentality anyplace from 2 to 12 weeks to summation your people connected Amazon, truthful readying up of clip is essential.

This means if your IPI is beneath the 400 Amazon requires, you request to commencement taking assertive enactment today.

This nonfiction volition outline however to debar having detrimental retention limits, however it happens, and what to bash erstwhile you’re already beneath the threshold.

For those funny successful Restock Limits, we’ll research this taxable successful much item aboriginal successful the guide.

What Is The IPI (Inventory Performance Index), And Does It Affect Me?

The IPI will lone impact those utilizing Seller Central and FBA warehouses.

It does not impact those utilizing Vendor Central, Kindle Direct Platform, oregon those selling connected Seller Central by Merchant Fulfilling oregon utilizing Seller Fulfilled Prime for their items.

Inventory Performance Index (IPI)

The Inventory Performance Index (IPI) manages however good you power and negociate your inventory astatine Amazon.

This metric is a 12-week rolling average. It looks astatine respective components implicit 3 months.

Four components make up the Inventory Performance Index (IPI):

Excess Inventory

This is the astir important metric arsenic it measures wherever your profitability whitethorn instrumentality a deed owed to retention fees and holding costs for slow-moving FBA inventory.

Excess Inventory percentages assistance sellers program erstwhile to restock much oregon region inventory from FBA.

An point is considered to person excess inventory erstwhile it has implicit 90 days of proviso based connected the forecasted demand. 

Sell Through Rate

This metric is conscionable however it sounds. The look that Amazon uses to cipher Sell Through rates is:

(Units Shipped In the Last 90 Days)/(Average Units connected Hand Over the Last 90 days)

Stranded Inventory

This provides accusation connected products that aren’t selling owed to listing issues.

This occurs erstwhile your listing doesn’t conscionable Amazon guidelines.

In these instances, your products go stranded and incapable to determination portion inactive incurring FBA retention fees.

In-Stock Inventory

Amazon looks astatine the percent of clip your products person been successful banal during the past 30 days, with further value fixed to items that person sold much units implicit the past 60 days.

If you support a precocious in-stock inventory, it volition effect successful less mislaid sales.

Screenshot from author, February 2024

It is important to item that these components are not weighted equally.

Excess Inventory

Excess Inventory and Sell-Through Rate are the parameters that person the astir important interaction connected IPI, portion Stranded Inventory and Restock Rates tin play a insignificant relation successful the wide score.

This means you volition get much question focusing solely connected the archetypal 2 components alternatively than spreading your efforts arsenic crossed each 4 elements.

During the height of the pandemic, Amazon changed the minimum IPI to 500. IT has since reduced the minimum IPI backmost to 400.

However, Amazon tin summation oregon alteration the minimum IPI desired people astatine immoderate constituent successful time.

For this reason, we counsel our clients to purpose for a full IPI of 600.

Your minimum goal should beryllium achieving astatine slightest 50 points implicit the existent IPI requirement.

Some merchandise mixes marque maintaining a precocious IPI easier than others. For example, if you are a tiny marque with galore products that determination consistently, your IPI volition mostly thin to beryllium higher.

If you are a seller with a ample merchandise premix that changes often, it is the astir challenging to manage.

Combatting Capacity Limits

If you’re currently experiencing a capableness limit, Amazon tin summation your capableness bounds for a circumstantial play of clip by submitting a petition taxable to Amazon’s approval.

It is important to retrieve that if the retention bounds summation petition gets approved, your relationship is taxable to paying a “reservation fee” for each cubic ft of capableness requested, and it volition get charged astatine the extremity of the specified period.

Such interest is taxable to a recognition depending connected your income achieved during the play (performance credits are earned astatine $0.15 for each dollar of income you make utilizing the further capacity.)

Another alternate is to proceed selling items via merchant fulfillment oregon utilizing different third-party sellers to determination your inventory oregon nonstop tiny shipments of your fastest, astir profitable inventory to Amazon.

Further down in this article, we volition item what you tin bash erstwhile your inventory show is low, you are facing imaginable inventory limits, oregon if you’re caller to Amazon.

Why Would Amazon Do This?

It seems like it would beryllium counterintuitive for a institution that is truthful focused connected having arsenic galore products connected its level arsenic imaginable to bounds the magnitude of inventory you could sell.

However, arsenic more sellers joined the level and with rising FBA and Prime offers, overcrowding astatine the warehouses started to go a larger occupation for Amazon.

Amazon sellers were attracted to FBA due to the fact that of the debased outgo of retention rates. Sellers were utilizing the FBA programme arsenic a inexpensive mode to warehouse ample amounts of inventory.

At first, Amazon tried to summation retention fees. Adding semipermanent retention fees dramatically accrued the retention outgo for merchandise aged implicit six months.

However, adjacent with those changes, Amazon couldn’t curve the overcrowding and request successful its FBA warehouses.

As a result, it started to present retention limits successful 2019.

From Amazon’s perspective, it wants to guarantee customers person favorable buying experiences and rapidly get the products they want.

This means ensuring that the products most apt to merchantability are available.

Amazon looks at however you person managed inventory successful the past and whether customers are purchasing your products to find however overmuch abstraction is allocated to you.

The amended Amazon feels you are astatine managing your abstraction astatine Amazon’s FBA warehouses, the much retention abstraction you volition beryllium allowed.

What If My IPI Is Below The Current Threshold?

If your IPI is presently beneath the threshold oregon wrong 50 points of the lowest threshold, these are the actions we recommend.

The archetypal step is to cheque the existent threshold. As of the penning of this article, the existent threshold for IPI is 400.

However, here’s the nonstop nexus to the argumentation truthful you tin find the existent threshold, arsenic Amazon tin alteration this astatine immoderate time. You tin find the existent required IPI successful Seller Support nether the heading FBA Inventory Storage Limits (login required).

You tin review your existent IPI people successful Seller Central by going to Inventory, Inventory Planning, and past clicking connected your IPI score.

Screenshot from Amazon Seller Central, February 2024

Even with aggressive tactics, changing the IPI importantly tin instrumentality 2 to 12 weeks.

Recommended Actions To Improve Inventory Performance Index (IPI)

Excess Inventory – Dump Slow Moving Items

Excess inventory is mostly 1 of the apical 2 reasons your IPI people could beryllium low, since it is the astir heavy weighted metric.

The archetypal step to addressing excess inventory is to propulsion backmost inventory you don’t expect to sell.

Focus connected stock-keeping units (SKUs) that person gone retired of manner oregon merchandise experiencing a important request drop, similar seasonal products.

If you don’t expect it to merchantability wrong 3 months, you should propulsion backmost the inventory to merchantability connected a antithetic transmission by creating a removal order.

You tin besides commencement to usage the Multi-Channel Fulfillment (MCF) to fulfill your website orders from your Amazon stock.

Sometimes, it makes much consciousness to discount and/or advertise products to assistance them merchantability faster to region them from your inventory alternatively than telephone backmost inventory from Amazon.

Optimizing a listing that is not moving tin besides assistance summation the sell-through rate.

A speedy note connected having Amazon destruct products – sometimes, the institution volition liquidate that merchandise alternatively of destroying it.

If inventory control is an indispensable origin for your brand, we urge pulling backmost the inventory adjacent though it costs more.

While Amazon is large astatine logistics and moving items done its process, it isn’t large astatine returning items to sellers.

Often, items get damaged oregon mixed SKUs successful aggregate boxes, clogging up receiving departments.

If possible, we privation to guarantee that we’re proactively taking enactment to debar pulling backmost inventory and hazard inventory being damaged oregon unavailable to beryllium sold for a agelong time.

Sell-Through Rate – Send Fast-Moving Items

Amazon looks at this to place whether the items you’re selling are things customers privation to purchase.

The mode that we amended the sell-through complaint is to nonstop successful tiny shipments of items that volition merchantability retired precise quickly.

If you’re currently utilizing LTL oregon FTL, we urge that you determination to tiny parcel shipments during this process truthful that you tin nonstop much predominant shipments without going retired of banal for agelong periods.

As you’re restocking items, you privation to prioritize those that volition determination quickly, sending tiny quantities of items that volition merchantability retired arsenic soon arsenic they get oregon soon after.

This allows your wide sell-through complaint to summation dramatically and importantly interaction your wide IPI.

It is vital that nary substance however accelerated you deliberation a merchandise volition determination through, arsenic you nonstop these products in, you’re investigating tiny batches to marque definite that things volition merchantability astatine the gait you anticipate.

Stranded Inventory

Inventory that’s being held successful FBA warehouses and not disposable for merchantability affects your wide IPI.

Fixing stranded inventory tin marque a flimsy difference; however, if you request to determination your IPI significantly, this constituent of the wide metric volition lone marque a flimsy difference.

It would be champion to code stranded inventory play oregon bi-weekly, depending connected your wide sell-through rate.

In-Stock Inventory

This is probably the astir frustrating metric of the IPI because, basically, Amazon is telling you that you can’t restock items due to the fact that they’re not selling accelerated enough.

At the same time, it’s trying to promote you to guarantee you enactment successful stock.

We person found that this metric is precise lightly weighted, and you’re amended disconnected focusing connected the 2 cardinal metrics of excess inventory and sell-through rate.

There has been immoderate statement astir whether deleting erstwhile SKUs tin summation this; however, we person not seen that this importantly impacts the full IPI.

General IPI Notes

As you’re working to summation your wide IPI, it is important to retrieve that it tin instrumentality respective weeks to increase.

The IPI is an mean calculated implicit 12 weeks.

You indispensable springiness the IPI capable clip to determination earlier determining whether your actions are making a difference.

It tin be tempting to cheque your IPI often. However, your IPI people is lone recalculated erstwhile a week.

If you need to rise your IPI rapidly oregon by a important amount, you whitethorn request to instrumentality overly assertive actions successful pruning your inventory and pumping fast-moving items done your relationship to summation your people to the required amount.

You mightiness person to besides bid for a capableness increase.

You should lone bash this if you person the information to enactment being capable to merchantability done that higher quantity of items truthful you bash not incur other charges.

Additional Options To Combat Low IPI and Storage Capacity Issues

Sometimes, this means utilizing third-party sellers to guarantee that inventory tin beryllium disposable to customers with a Prime offer.

Some of the brands we enactment with person focused connected selling their fastest-moving SKUs portion they amended their wide IPI people and capableness limits.

Then, they utilized third-party sellers to transportation their slower-moving items portion they worked connected expanding their averages.

We person respective reliable third-party resellers we notation our clients to if it’s ever an issue.

This means that those accounts saw a faster summation successful retention capableness arsenic they were sending successful inventory that was selling astatine a overmuch faster complaint and restocking regularly.

If you don’t privation to utilize third-party sellers, the alternate is to summation your full fig of merchant-fulfilled offerings.

Remember that Merchant Fulfilled offerings mostly don’t vie good against FBA offers, truthful ticker your contention to find feasibility.

While galore brands debar third-party sellers due to the fact that it whitethorn trim power implicit their brand, successful this instance, it tin beryllium an fantabulous instrumentality to guarantee that you don’t suffer imaginable marketplace stock to different competing merchandise lines.

Another measurement you tin instrumentality is to allocate your FBA warehouse abstraction to items with the highest borderline and smallest dimensional size, arsenic they are highly profitable and merchantability quickly.

Leaving items with little profitability oregon moving slower done Merchant Fulfilled (MF).

Tips For New Amazon Sellers

If you’re a caller seller coming to Amazon oregon moving from Vendor Central to Seller Central, commencement by sending tiny quantities astatine first.

You person a grace model of 39 weeks erstwhile opening your account.

However, you want to guarantee you nonstop successful tiny amounts of inventory. A fewer cases per merchandise tin assistance you place the wide sell-through rate.

There is no minimum for sending inventory into Amazon FBA. So, it is imaginable to trial arsenic small arsenic 1 portion astatine a clip to trial products connected Amazon.

Sending successful small shipments does summation your wide shipping outgo and tin trim profitability successful the abbreviated term.

However, erstwhile you’re archetypal investigating the platform, sending successful smaller quantities tin assistance you amended recognize your product’s request and assistance debar further fees that tin beryllium required to telephone inventory backmost oregon wage for retention fees.

Once you have a amended thought of your sell-through rate, you tin commencement to summation the full sizes of your inventory.

It is a delicate equilibrium to person capable inventory truthful that you don’t tally retired of banal but besides that you don’t person excess inventory.

While, successful general, you privation to aggressively debar stockouts, the interaction of a debased IPI people should instrumentality priority.

Monitoring Inventory Matters

To win connected the platform, you must take an progressive relation successful your Amazon inventory management.

In anterior years, simply avoiding restocks was enough.

However, these new requirements necessitate a greater absorption connected monitoring your sell-through complaint and retention utilization connected Amazon.

Prepare present to enactment your Amazon selling and income goals for the coming vacation season.

More Resources:

• Amazon SEO: A Comprehensive Guide For Sellers
• A Guide To Getting Started With Amazon’s Affiliate Program
• Ecommerce Marketing: The Definitive Guide

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