IPI Score: The Metric That Controls Everything
The Inventory Performance Index (IPI) is Amazon's scoring system for your inventory management. Measured on a scale from 0 to 1,000, it aggregates four factors:
- Sell-through Rate: How quickly do you sell through your stored inventory? Amazon compares your sales velocity with the quantity you have in the warehouse.
- Excess Inventory: Do you have products in storage that barely move? Amazon identifies these items based on coverage and demand.
- Stranded Inventory: Stock sitting in the warehouse but not linked to an active listing. This happens, for example, when your listing gets deactivated.
- In-Stock Rate: How often are your top sellers in stock? Running out of your best sellers pushes your IPI down.
Why does the IPI Score matter so much? Because once you drop below a certain threshold, Amazon restricts your storage capacity. As of 2026, the critical boundary sits at an IPI of 400. Fall below it, and Amazon slashes your available storage volume dramatically. That means you can store less inventory, miss sales opportunities, and enter a downward spiral.
An IPI above 550 is considered solid. Above 700, you are in excellent shape with no restrictions from Amazon.
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Understanding Restock Limits
Since 2021, Amazon has operated with restock limits instead of fixed storage capacities. Your available storage volume is calculated individually, based on your IPI Score, your sales history, and the current utilisation of Amazon warehouses.
Restock limits are split by storage type:
| Storage Type | Description | Typical Limit |
|---|---|---|
| Standard-Size | Normal-sized products | Varies by IPI |
| Oversize | Large/heavy products | Separate limit |
| Apparel | Clothing | Separate limit |
| Footwear | Shoes | Separate limit |
You can find your current restock limits in Seller Central under "Inventory Dashboard." There you can also see how much capacity you have already used and how much remains available.
Practical tip: Plan your replenishment so you never use more than 80% of your restock limit. Keep the remaining 20% as a buffer for fast-moving products or seasonal peaks.
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Avoiding the Low-Inventory-Level Fee
Since April 2024, Amazon charges a Low-Inventory-Level Fee for products whose stock level is too low relative to demand. The reasoning: if you store too little inventory, Amazon cannot distribute the products efficiently across its fulfilment centres. This leads to longer delivery times and poorer customer experiences.
The fee is calculated based on historical demand (sales velocity over the last 7, 14, 30, and 90 days) relative to your current stock level. If your inventory has less than 28 days of coverage, the fee kicks in.
How to avoid the Low-Inventory-Level Fee:
- Maintain at least 4 weeks of coverage for every active product. Calculation: average daily sales x 28 = minimum stock level.
- Monitor your sell-through rate weekly. If a product suddenly sells faster than expected, reorder immediately.
- Use Amazon's restock recommendations. Under "Restock Inventory," Amazon shows you when and how much to reorder.
- Factor in lead times. Between ordering from your supplier and having available FBA stock, 2-4 weeks often pass (shipping time plus Amazon inbound processing).
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Calculating Optimal Order Quantities
The perfect order quantity balances four factors: storage costs, ordering costs, sales velocity, and capacity limits. Here is a practical formula:
Optimal order quantity = (daily sales x target coverage in days) - current stock + safety buffer
An example: you sell an average of 5 units per day of a product. You want 60 days of coverage. You currently have 80 units in stock. Your safety buffer is 20%.
Calculation: (5 x 60) - 80 + (5 x 60 x 0.20) = 300 - 80 + 60 = 280 units to reorder
Variables to consider:
- Seasonal fluctuations: Before Q4 (October-December), increase your standard coverage to 90 days.
- Supplier lead time: If your supplier needs 3 weeks, you must order correspondingly earlier.
- Amazon inbound time: During peak periods, allow 2-3 weeks until your stock becomes available at Amazon.
- MOQ (Minimum Order Quantity): If your supplier has minimum order requirements, adjust your order accordingly.
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Avoiding Long-Term Storage Fees
Amazon charges monthly storage fees for every unit in FBA. On top of that, long-term storage fees apply for inventory stored longer than 181 days:
| Storage Duration | Fee (Standard-Size) | Fee (Oversize) |
|---|---|---|
| 0-180 days | Regular monthly fee | Regular monthly fee |
| 181-270 days | EUR 1.50 per cubic metre | EUR 1.50 per cubic metre |
| 271-365 days | EUR 3.60 per cubic metre | EUR 3.60 per cubic metre |
| 365+ days | EUR 6.90 per unit or 15 cents per cubic metre (whichever is higher) | Same calculation |
These fees can quickly destroy your entire margin. A product with a EUR 3 margin that sits in the warehouse for 12 months has no margin left by the end.
How to avoid long-term storage fees:
- Generate an Aged Inventory Report in Seller Central. Filter for products with more than 120 days of storage time.
- Set deadlines. Products over 150 days storage must either be sold through price reductions or removed from the warehouse.
- Use Removal Orders. Have inventory that will not sell returned or disposed of before long-term fees apply.
- Launch a selloff strategy (see next section) for slow movers before the 181-day threshold hits.
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Seasonal Inventory Planning
Demand on Amazon fluctuates significantly throughout the year. Ignoring this means you either sit on mountains of unsold stock or have nothing available at the decisive moment.
Q1 (January-March): After the holiday season, demand drops sharply. Order conservatively and focus on clearing Q4 leftover stock. Many sellers make the mistake of reordering too optimistically after a strong Q4.
Q2 (April-June): Demand stabilises. This is the right time to clean up your catalogue, clear slow movers, and prepare for the second half of the year. Use Prime Day (typically July) as a planning anchor point.
Q3 (July-September): Prime Day drives demand up briefly. From August onward, you should start pre-producing for Q4. Amazon increases storage fees from October, so you need to time your inbound shipments precisely.
Q4 (October-December): Black Friday, Cyber Monday, Christmas — the highest-revenue period of the year. Plan at least 90 days of coverage for your top sellers. Note: Amazon's inbound deadlines for Q4 typically fall in September. Those who ship too late have no stock available in November.
Pan-EU consideration: If you sell across multiple European marketplaces, you need to factor in seasonal differences per country. Prime Day runs EU-wide, but local holidays and buying habits vary.
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Repricing for Slow Movers: The Selloff Strategy
This is where inventory management and repricing meet. When a product sells slower than expected, you have two options: pay storage fees and hope, or lower the price and deliberately clear the stock.
The intelligent solution is an automated selloff strategy via your repricer:
- Identify slow movers. Products with more than 120 days of storage time and a sell-through rate below 1.0 are candidates.
- Calculate the break-even price. This is the lowest price at which you make no loss after deducting all Amazon fees. Upcoming storage fees for the following months must be factored in.
- Set an aggressive minimum price. For selloff products, the minimum price can even fall below your usual purchase price, if the alternative is expensive long-term storage fees plus disposal costs.
- Use a STEP-down strategy. Your repricer lowers the price gradually until the stock sells out. This way, you maximise revenue without immediately dropping to the lowest price.
A concrete example: you have 50 units of a product in the warehouse that has been there for 140 days. The purchase price was EUR 12, the current selling price is EUR 24.99, and Amazon fees total around EUR 8. In 40 days, the long-term storage fee will apply.
Without selloff: you pay long-term storage fees on 50 units from day 181 onward, while the product continues to barely sell. After a year, the accumulated fees exceed the inventory value.
With selloff: you lower the price over 30 days in stages to EUR 18.99, then EUR 16.99, finally EUR 14.99. You sell 45 of the 50 units before the long-term fee kicks in. The remaining 5 units are returned via a Removal Order.
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Frequently Asked Questions (FAQ)
What is a good IPI Score?
An IPI Score above 550 is solid. Above 700, you are in the upper tier and do not need to worry about capacity restrictions. Below 400, it becomes critical because Amazon restricts your storage volume. Focus on the four factors (sell-through rate, excess inventory, stranded inventory, in-stock rate) to improve your score.
How long does Amazon take to receive and process my inbound shipment?
Under normal conditions, inbound processing takes 3-7 business days. Before peak periods like Q4, it can take 2-3 weeks. Always plan a buffer and send your inventory to Amazon well in advance. Use the "Shipping Queue" in Seller Central to prioritise shipments.
Can I get long-term storage fees refunded retroactively?
No. Long-term storage fees are assessed on the 15th of each month and are non-refundable. Prevention is the only solution. Monitor your aged inventory regularly and act before the 181-day threshold. For more on Amazon fees and how to factor them into your repricing, read our guide to FBA fees 2026.
Is FBA worthwhile for slow-moving products?
It depends on the numbers. If a product sells fewer than 1 unit per week and has a margin below EUR 5, FBA is often not sensible. The monthly storage fees plus long-term storage risk will consume your margin. For such products, FBM (merchant fulfilment) may be the better choice. Also read our guide to FBA reimbursements to reclaim lost fees.
How do I calculate the optimal coverage for my product?
As a rule of thumb: 30-60 days of coverage for steadily selling products, 60-90 days for top sellers in Q4. Factor in your supplier lead time plus Amazon's inbound processing time. If your supplier needs 2 weeks and Amazon needs 1 week for processing, your reorder point should be at least 21 days of coverage, so you never hit zero stock.
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Summary
Inventory management is not a side show — it is one of the biggest margin levers in your Amazon business. The key takeaways:
- Your IPI Score determines how much storage capacity Amazon allocates to you. Keep it above 550.
- The Low-Inventory-Level Fee penalises you for too little stock. Maintain at least 28 days of coverage.
- Long-term storage fees penalise you for too much stock. Act by 150 days of storage at the latest.
- Calculate optimal order quantities based on daily sales, coverage targets, and safety buffers.
- Plan seasonally: Q4 requires 90 days of coverage; Q1 requires conservative reordering.
- Use a selloff strategy for slow movers instead of accumulating storage fees.
The combination of forward-looking inventory planning and intelligent repricing is the difference between a profitable and an unprofitable Amazon business. For more on how repricing and margin optimisation work together, read our guide to repricing strategies.
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