Selling through online platforms has become one of the trends today and it will continue and seize to exist until there will be another better way of selling but as of now, this is the greatest thing you can ever imagine. With just a few clicks and ticks and you are done. There are a lot of online shops or what they call as e-commerce business where they are licensed to conduct the business online. Amazon is one of the top e-commerce shops in the world as of today. And it has been gaining a lot of sales compared to the brick and mortar stores. Amazon is an online shop which produces a wide variety of products and services. It is considered one of the top online selling stores in the world today.
You can find anything on Amazon, be it the most needed product for the most unnecessary product you can easily find. Amazon does not only sell their products but as well supporting other small businesses by letting them sell their products as well. Over the past years of Amazon reign, there have been many jobs offered to people who are lucky enough to have a stable career in the said company. Amazon is a company made by builders and sellers and inventors. If you belong to one of those mentioned, then maybe you got the right skills for Amazon. This company is not a product-based company that does not have a high-quality standard but this company maintains a name that their products will sustain and last for years.
One of the challenges an online seller always does come across is the delivery method and time of delivery. This is not just some challenge you can always find a solution to. This is more of an undying problem. And it is not in the seller’s hands why the delivery is such a shame. The problem is that of the delivery agency. But do not always put hands on the agency because most of the time it is because of the weather. But here is the catch, regardless of the reason for the delivery delay, people will understand if the agency and the seller will always keep the buyer updated and that is why Amazon, as the world’s top seller have planned and come up with the solution which they named it as Amazon’s Fulfillment by Amazon. Amazon’s FBA is a service available to you when you sell on Amazon. With FBA, you can store your products in Amazon’s fulfillment centers, and they will be the one to pick, pack, ship, and provide customer service for the buyers. FBA starts working after you send your products to Amazon. They will be the one to store your product, whenever a customer orders your product then FBA will pick and pack your product thus ship and provides support after.
But because of the limited space of the warehouse, there is only limited space as well for the stocks an FBA seller can have. And in order to know how much an FBA seller is alotted with space, Amazon IPI is programmed. IPI means inventory performance index. Starting on July 1, 2018, it has been implemented for sellers with an IPI of less than 350. But for sellers with an IPI of above 350, Amazon offers unlimited space for their storage. But if the IPI is not maintained to more than 350 by the end of the quarter, the limits will apply in the next quarter. and if every the IPI will decrease to less than 350, sellers will receive an email from Amazon six weeks before the end of the quarter with information about potential storage limits. Regarding sellers who stock their products longer than expected, Amazon will impose storage limit or storage fees. Thus, they will encourage the sellers to move out their products. But how does an IPI get calculated? For sellers who have been there longer and does not have an IPI, you can see a score on your Seller Central home page at the bottom right. you have to expand the widget for Inventory Planning if you will not automatically see your IPI. Amazon stated that most sellers have an IPI of 400 to 800. Here are the metrics Amazon is looking in IPI:
- Excess inventory
- Stranded inventory
- In-stock inventory
Once you click on the “Performance” tab on your Inventory Dashboard, you can see a breakdown of your scores for each of those four subcategories. The subcategory scores are shown as a numerical score and as a sliding scale with green, yellow, and red zones to indicate whether the score is healthy or needs improvement.
What to do to improve your IPI?
- You need to make sure to check for stranded inventory thus solve this problem in an instant. You can hire people responsible to deliver this or take responsibility to move out the products.
- Do not stock too much inventory in the warehouse. You will know your inventory age at the “Inventory Age” tab of your Inventory Dashboard to help you make decisions about how to deal with your aged or excess inventory.
- You need to restock inventory for products that sell well. Amazon wants to have people visiting their site with a happy place thus bringing home their product needed.
What happens if an IPI is too low?
“If your Inventory Performance Index is less than 350 six weeks before the end of the quarter, you will be notified of your potential storage limits. If your Inventory Performance Index score is still less than 350 at the end of the quarter, those limits will apply for the next quarter.” Amazon said in their guidelines. The storage types are for standard size inventory, oversized ones, apparels, and footwear. If you will be given a storage limit then you can not create shipments unless your inventory drops below the storage limit given to you. Thus overstayed inventory will be charged $10 per cubic foot plus monthly or long-term fees.