IPI score increases to 400 as of January 1, 2020
How will this impact your business?
Many of our customers are currently struggling with inventory management at Amazon. You may be as well. A recent change in the Inventory Performance Index (IPI) has many sellers worried. It will now be harder to meet the minimum score which is being raised from 350 to 400. This could negatively impact sales in the first quarter of 2020 since this regulates how much inventory you will be allowed to send in for Q 1 – 2020.
If you need a review on how the IPI currently works, here is a link to the official Amazon help page on inventory limits.
Amazon Storage Rates are Soaring
Added to this are seasonally adjusted storage rates for October, November and December which go up over 300% during this time. A product has to perform very well to survive profitably at Amazon…..they are in the business of selling items, not storing products. We are in business to help you with product prep and inventory control. We would be happy to talk to you about ways to reduce costs, while staying in stock, with the shared goal of keeping your IPI score healthy.
Stressed Out About Excess Amazon Inventory?
If you find yourself with slow moving inventory you will need to either sell it off within the next few weeks, or remove it in order to safeguard your IPI. Amazon will update scores during the week of November 11th with a final assessment Dec 31st. One solution for improving your score, is to place a removal order. Beware of hidden costs with that option.
Removal Order Hidden Costs
Amazon charges a per unit removal fee plus freight costs. Once removed, the stock will incur a storage cost somewhere. If you plan to send it back later, the stock will probably need some prep such as replacing FNSKUs or refreshing damaged packaging. You will have to determine if this is viable for you and if not, look into other ways to reduce non performing inventory.
We have 13,000 sq. ft. of storage at $1 per pallet per day
Inventory control is risky and difficult if the supply chain starts in Asia and ends at Amazon. One way to relieve your stress is to have an intermediate staging warehouse and distribution center that can pivot quickly according to your needs. Here at Zebrapals, we have a 13,000 sq. ft. warehouse to store your products – which is just a few miles from a major UPS depot. Our crew can handle any FBA prep needed and will alert you to any defects found when receiving your goods.
Maintaining a healthy IPI score
It is obvious that Amazon is putting the pressure on sellers to manage their inventory on a ‘just in time’ model. Having the ability to replenish inventory quickly means you can have a very small footprint at Amazon’s storage facilities. This saves costs all year, particularly during the last quarter or if your items are oversized. Your IPI score will not suffer because of slow moving or aging inventory.
Shipping your goods to Amazon within 24 hours
We recently lowered our storage rates to $1 per per day for a 60 cu. ft. pallet. Our strategy for doing this is to provide a Southern California base for storage and FBA prep needs. Our customers send their stock to us to store until needed. Our storage rates are stable and we provide vital inspection and product prep services with the goal of you getting your stock to Amazon quickly so you don’t run out of stock.
Detecting problems BEFORE they get to Amazon
Another benefit of having your own warehouse and distribution partner is we can detect most issues before they get to Amazon. We know Amazon’s strict packaging and weight requirements, so if your shipment arrives in a non conforming condition, such as too many units in a box or missing required labeling, we will notify you and remedy this according to your instructions. This insures your inventory gets placed into inventory smoothly with no delays at the distribution center.
What to do now…
First of all, we recommend that you make an objective assessment on your non performing products. Determine if it is it cost effective to remove and store these items for several months before they can be resent or if it is time to cut your losses now and move on.
Competition and advertising costs
One thing to consider is your advertising budget. If your overstocked/underperforming items are in a highly competitive niche, it might simply cost too much for PPC and other promotional actions for these products to be viable. Driving traffic to your listing is a good strategy to increase sales velocity but if the niche is too crowded, as in cell phone covers, it might be better to dispose of these items.
Salvage or liquidate?
Once the decision has been made to either salvage the inventory or off load it, there are a few options. Consider an aggressive discount or promo campaign to quickly sell these products. Amazon loves promotions and deep discounts and will likely help you by giving you some free advertising.
You can also reach out to liquidation companies to recoup some of your costs. We work with several in our area and can provide you with contact information if needed. Call us during business hours to discuss your situation – using Whats App is free and we can also Skype.
Charitable donation is possible
Another option is to simply donate surplus stock to a charity. Amazon works with a charity called Good360 who distribute items to other local charities throughout the US. Only inventory stored at US fulfillment centers is eligible for this. They still charge the disposal fee of .15 for a standard size item or .30 for oversize items whether the goods go to a charity or are just disposed of. This is a 501(c)3 registered US charity and you should be able to at least get a tax deduction out of this. Check with your tax professional.
Non performing products are not failures – they’re learning experiences
The founder of Zebrapals is a successful Amazon seller. This business grew out of other sellers reaching out to him asking for help with product prep, storage and forwarding. He didn’t become successful without a couple of misses and over the past 5 years we have seen many hits and misses. Getting rid of the misses, as painlessly as possible is part of the process. It’s all a learning experience in the ever changing world of online commerce.
Improve your IPI – stage your inventory close to a distribution center
We can help you improve your IPI by providing a perfectly located warehouse and distribution company that allows you to pivot quickly when you need stock sent to Amazon. Contact us by email, Skype or What’s App – we are here to help and love talking to Amazon sellers!