From January 1, 2020, Amazon has updated the IPI score of sellers’ FBA inventory, and the IPI score of storage restrictions has been increased from 350 points to 400 points. That is, sellers can only have unlimited storage capacity when the IPI score is higher than 400 points. If it is lower than 400 points, Amazon will limit the total amount of FBA shipments, and may also generate excess storage fees due to excessive existing FBA storage capacity.
According to Amazon’s regulations, the calculation formula for excess storage fees is as follows:
Excess storage fee = (existing storage capacity – given storage capacity) X monthly warehouse rent excess fee of $10 per cubic foot
This has happened before. A seller’s store is a multi-SKU distribution model. There are a lot of stocks sent to the FBA warehouse, but the sales volume is very poor. The sales-to-inventory ratio is too low, resulting in an IPI score of less than 350 points. Amazon charged more than $10,000 in excess storage fees at one time. The seller said that when he saw the bill, he really wanted to cry but had no tears.
Facing the new standard of IPI score, sellers can only avoid excessive storage fees due to low IPI score by “grasping inventory + selling quickly”.
In terms of grasping inventory, there are two suggestions.
Ship and replenish in small batches and multiple batches. Don’t be blindly optimistic in operation. Ship and replenish according to sales volume, which can not only avoid the decline of IPI score due to low sales rate, but also speed up capital turnover.
Select products with high quality and create hot items with refinement. Amazon operation is more suitable for the model of creating high-quality and hot items. If you blindly distribute goods, there will inevitably be unsaleable goods under multiple SKUs, and the large inventory will lower the IPI score, which will inevitably put your account into a bad state. After selecting high-quality products, if you can work hard to promote the sales of goods and increase the sales rate, you can not only solve the problem of low IPI score, but also launch hot items to make operation simpler.
In terms of fast sales, it is recommended to make the creation of hot products the core goal of operations, fully evaluate various factors in the creation from the beginning of product selection, and conduct refined screening; after the product is selected, optimize the product as perfectly as possible, and remember that “for consumers, product details are the product itself” and do not relax any product details; in terms of operations, after the product is put on the shelves, use some resources and means, such as early reviewer programs, coupons, and flash sales on-site advertisements, to promote product sales
For sellers with low account IPI scores, it is recommended to adopt the method of “price reduction promotion + advertising promotion” to improve the IPI score. Through price cuts and advertising, sales growth can be promoted and inventory can be quickly digested. As sales increase, the sales rate will increase, and the IPI score will gradually increase.