Your bestseller just went out of stock on Amazon. Not because you ran out of inventory — you have 6,000 units in your warehouse. Because Amazon won't let you send more in. Your IPI score dropped below 400 last quarter, and now Amazon has capped your FBA storage at a fraction of what you need. Competitors are taking your buy box position while pallets of sellable product sit in your 3PL, waiting for a gate that won't open.
This is the IPI trap. And it catches CPG brands harder than almost any other category.
Amazon's Inventory Performance Index (IPI) is a score from 0 to 1,000 that measures how efficiently a seller manages FBA inventory. Scores below 400 trigger storage capacity limits. Scores above 500 unlock premium storage allocation. Recalculated weekly based on four factors — excess inventory percentage, sell-through rate, stranded inventory percentage, and in-stock rate — the IPI governs how much FBA space Amazon allocates to your account each quarter.
Here's what the IPI actually measures, why CPG brands disproportionately struggle with it, and the four levers that move the score from 350 to 500+ in 4-8 weeks.
What is the Amazon IPI score, and why does it matter?
IPI is Amazon's way of rationing FBA warehouse space. Rather than just charging more for space (they do that too), Amazon uses IPI to decide who gets how much room.
IPI Score | Storage Impact |
|---|---|
Below 350 | Severe limits — often 50-70% below previous allocation |
350-400 | Caps enforced — reduced capacity, overage fees of $10/cubic foot |
400-500 | Standard storage — no caps, no bonus |
Above 500 | Premium — expanded capacity, priority restock windows |
The score is evaluated quarterly and the resulting limits apply to the following quarter. A bad Q2 IPI constrains your Q3 capacity — meaning a rough spring can choke your Prime Day inventory. Amazon recalculates weekly, but the storage decision is quarterly. That lag is where the trap lives.
Why do CPG brands struggle more with IPI?
CPG brands have structural characteristics that work against every IPI factor.
Deep catalogs with variable velocity. A brand with 80 SKUs might have 15 driving 70% of revenue. The other 65 sit at lower velocity, accumulating excess inventory flags.
Seasonal demand patterns. Pet treats spike in December. Sunscreen spikes in May. Brands that stock ahead of demand look like they have excess inventory during the ramp-up — exactly when IPI gets evaluated.
Long-tail SKU proliferation. Adding flavors, sizes, and variants without pruning older ones creates potential stranded or excess inventory on every new launch.
Return-driven stranded inventory. CPG products with 5-8% return rates generate units in "unfulfillable" status — damaged packaging, opened products — that count as stranded and drag the score down.
CPG brands with 15%+ excess inventory or 5%+ stranded inventory are typically below the 400 threshold. That's not a small population.
How do you improve your IPI score fast?
The Four IPI Levers
Lever 1: Excess inventory reduction. Run promotions on slow movers (Lightning Deals, coupons, Subscribe & Save discounts), create removal orders for discontinued SKUs, and pause replenishment for any ASIN selling fewer than 10 units per week. Target: excess inventory below 10% of total FBA units within 30 days.
Lever 2: Sell-through rate improvement. Sell-through = units sold over 90 days divided by average on-hand units. Increase advertising 15-25% on top-velocity SKUs, adjust pricing on mid-velocity items, and temporarily pause replenishment on low-velocity SKUs to let stock sell down. Target: sell-through above 3.0.
Lever 3: Stranded inventory resolution. The fastest lever. Stranded inventory is FBA stock without an active listing — the product can't be sold. Check the "Fix stranded inventory" tool daily, relist suppressed ASINs, create removal orders for units that can't be relisted. Target: stranded below 1% within 14 days. Most issues are fixable in 24-48 hours per ASIN.
Lever 4: In-stock rate maintenance. The counterweight to excess reduction — you can't just remove everything. Focus in-stock efforts on your top 20 ASINs by revenue, set automated alerts at the 14-day supply threshold, and use FBA restock recommendations as a starting point (adjusting upward 10-15%, since Amazon's estimates often undercount).
Recovery timeline: 4-8 weeks of focused work. First two weeks are cleanup (stranded inventory, removal orders). Next four are velocity acceleration (promotions, advertising, repricing). Final two are stabilization.
What happens when your IPI stays below 400?
The consequences compound. Quarter 1 below 400: storage capped, forcing you to choose which SKUs stay in FBA. Quarter 2: overage fees of $10/cubic foot kick in while out-of-stock SKUs lose organic rank. Quarter 3: lower revenue means lower sell-through, which means lower IPI, which means tighter limits. The flywheel reverses.
Brands below 400 for three consecutive quarters typically see 25-40% Amazon revenue decline — not because demand dropped, but because they couldn't keep products in stock.
Does moving to 2P affect your IPI score?
It removes the problem entirely. Under 2P, the IPI score belongs to the partner's seller account. The partner manages inventory levels, replenishment, and all four IPI factors across their portfolio.
At Neato, we run dedicated inventory operations — Neato's Flow forecasting engine, automated removal workflows, promotional velocity management — that keep IPI scores consistently above 500. Managing IPI across a portfolio with shared infrastructure is fundamentally easier than managing it brand-by-brand with manual processes. The brand's products stay in stock, storage stays uncapped, and the brand focuses on making great products.
The Neato point of view
IPI is a solvable problem. The Four IPI Levers framework works. But it requires 4-8 weeks of focused operational work — the kind that competes with product launches, marketing campaigns, and everything else on a brand manager's desk.
Neato manages IPI as part of our core 2P eCommerce accelerator model. We maintain IPI scores above 500 by running daily inventory health audits, automated stranded inventory resolution, and promotional velocity programs for slow movers. CPG brands on Neato's 2P model don't think about IPI — because it's not their score to manage.
