Amazon Inventory Management Guide

Why It Matters

Poor inventory management costs sellers 20-30% in lost profits annually.

Understanding IPI

What Is IPI?

Amazon scores inventory health 0-1000 based on:

•Excess inventory (30%)

•Sell-through rate (30%)

•Stranded inventory (20%)

•In-stock rate (20%)

IPI Score Thresholds

•Excellent: 700+ (no storage limits)

•Good: 500-699 (standard limits)

•Warning: 400-499 (risk of limits)

•Critical: Below 400 (restrictions likely)

Improvement Strategies

Reduce Excess:

•Run promotions on slow movers

•Create removal orders for 180+ day stock

Improve Sell-Through:

•Optimize listings

•Use advertising to boost velocity

Fix Stranded:

•Check stranded report weekly

•Relist suppressed items

Restock Formula

Basic Calculation


Restock Quantity = (Daily Sales × Lead Time) + Safety Stock - Current Inventory

Example

Product: Wireless Headphones

•Daily sales: 15 units

•Lead time: 30 days

•Safety stock: 200 units

•Current inventory: 180 units


Restock = (15 × 30) + 200 - 180 = 470 units

Seasonal Adjustment

Multiply daily sales by seasonality factor:

•Q4 (Oct-Dec): 2.0-3.0x

•Prime Day month: 1.5-2.0x

•January: 0.5-0.7x

Storage Fee Optimization

Monthly Fees (Jan-Sep)

Size

Standard

Oversize

Fee/cu ft

$0.75

$0.48

Monthly Fees (Oct-Dec)

Size

Standard

Oversize

Fee/cu ft

$2.40

$1.20

Long-Term Storage

•180-365 days: $0.15/unit or $6.90/cu ft

•365+ days: $0.15/unit or $6.90/cu ft

Reduction Strategies

Ship August-September for Q4

Review aged inventory monthly

Just-in-time ordering

Removal orders before 180 days

Handling Slow-Moving Inventory

Warning Signs

•90+ days in FBA

•Less than 1 unit/week

•Storage fees exceeding profit

Action Plan

Week 1-2: Reduce price 10-15%

Week 3-4: Launch PPC campaign

Month 2: Create coupon or Lightning Deal

Month 3: Removal order or donation

FAQ

Q: How much safety stock?
A: Minimum 2 weeks, ideally 4 weeks for bestsellers.

Q: When to use removal orders?
A: Before 180 days if velocity under 1 unit/week.

Need Help Planning? [Schedule inventory consultation](/contact).

Amazon Inventory Management: Avoid Stockouts and Overstock