IMPORTANT NOTE: Amazon announced that effective January 1, 2020, the IPI threshold is 400. Read to see how this can also affect you in 2019.

Amazon rolled out the FBA program to ease the life of third-party sellers. This program comes with lots of advantages and one of them is that it allows sellers to store their products in Amazon’s fulfillment centers.

To make sure that available storage spaces are used efficiently, Amazon introduced the Inventory Performance Index (IPI), a metric that helps sellers forecast their stock levels and manage their inventory. Let’s take a closer look at what IPI is, why it is important and how to measure and improve it.

What is Amazon Inventory Performance Index (IPI)?

Amazon states, “Your IPI score combines three months of historical sales, inventory levels, and costs into a single metric.” Amazon looks at y