IPI scores (Inventory Performance Index) are in the hot seat as inventory policies update once again, so it's crucial now more than ever that you're up to speed (if you're not already) because nobody wants to get blindsided - ahem!
Your IPI score is the metric of how your inventory health is measured. It reveals how efficient your inventory movements are and will indicate whether they are moving well with good turnover, OR whether it's been sitting in the warehouse for a year. Currently, the threshold for a good Amazon IPI score is 450.
If yours has and maintains a score higher than that, then you're in good shape! However, if you're finding that your score falls below the advised number, you're in for a rough ride. Don't freak out, though - it's not unsalvageable! Amazon updates your IPI score every quarter, and before any permanent damage is done, they will give you a warning and recommend solutions to turn it all around. All in all, preventing these issues is always better than facing the hardships later, so consider these methods below to keep your IPI score in check and avoid any long-term complications:
Improve your Sell-Through Rate
Your sell-through rate highly influences your IPI score. If your products are moving slightly slower than expected, you might consider taking some action to get things moving and dodge a ding in your IPI score. Advertising with paid ads, running promotions, and optimizing your listing is a great way to get the ball rolling. Once your sales are up, and your idle inventory gets moving, you'll see some improvements to your score.
Reduce Overstock Inventory
Amazon's inventory management system calculates the run-rate for your stock to help you stay ahead of replenishment. Therefore it can recognize when you have too much inventory based on your sell-through rate. IF this is the case, you'd better find a way to reduce your inventory fast enough to avoid long-term storage fees that can get pretty heavy. These fees are implemented after one year with no moment, so you should be able to see it coming before your 365 days are up. Amazon Outlet is a great way to move your inventory out quickly if need be - otherwise, you can consider placing a removal or disposal order.
Fix Stranded Inventory
Stranded inventory occurs when you have items in stock for an inactive listing. Listings become inactive when there's something wrong with it, so address it ASAP. These issues are typically quick fixes as the problem and remedy are prompted for you.
Please don't neglect your inventory health because it's 100% your responsibility to keep track of your products in your selling account. Avoid waiting for the notifications to tell you when your IPI score is low when you can regularly track the status of your inventory and keep a healthy account.
If your IPI score dips below the threshold, expect limitations on your storage availability. Not having the space available when you need it could affect your sales, and that's an easy no-go for us! If your IPI score is healthy, you're in an excellent position for long-term selling on Amazon.
THIS WEEK'S BITES
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Why You Fail to Scale on Amazon | Jayce Broda
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How Much It ACTUALLY Costs To Sell On Amazon FBA In 2021 | Project Life Mastery3 Ways Amazon Sellers Decrease ROI and How To Change It | Orange Klik
May 3, 2021 - Upcoming changes in shipment confirmation: Amazon will validate tracking details (including the carrier name and tracking ID) for all seller-fulfilled orders and show warnings for invalid tracking details.
May 26, 2021 - Change to Returnless Refunds for international seller-fulfilled orders: Effective May 25, 2021, if you fulfill customer orders in the US from a country outside of the US, you must provide a valid US return address (for items under $25).
May 31, 2021 - Extended disbursement reserve period: Sellers who continue to use a bank account from a non-participating PSP after this date will be subject to an extended disbursement reserve period of up to 21 days after the latest estimated delivery date.
June 21, 2021 - Update to Amazon US referral and FBA fees: Amazon is making modest increases (about 2-3% on average) to fulfillment fees, in line with or below industry averages. We will also reduce certain fees, like the returns processing fee.July 15, 2021 - Disbursements stop for non-approved PSP to sellers using non-participating PSPs until they switch to a participating PSP or use a bank account directly issued by a deposit-taking bank
NEW ON AMAZON
Sellers are thriving on Amazon, and it's no doubt as e-commerce continues to shape modern-day shopping. So how do you get your message across to the right people at the right time through the noise? Amazon Advertising.
Amazon ad sales surged 77% year-over-year to $6.91 billion in Q1, and why you might ask? Easy. Amazon is the hotspot for people ready with their cards out. When people shop on Amazon, they're already in the mindset to purchase. Click, cart, checkout - boom, and advertisers are aware. Did you know that Amazon has become the starting point for 74% of consumers? Or that when asked "if you were only allowed one store to shop from for the rest of your life", that 56% of US consumers answered 'Amazon'? It's no wonder ad spend is flying through the roof. With information like that, everyone wants real estate on this marketplace to get the right set of eyes on their brand.If you've considered upping your spend on Amazon Ads, you're not alone. One-third of Amazon sellers plan on increasing their advertising dollars on Amazon, and for good reasons too. Advertisers are spending more money now than ever on ads, and FYI, they're shifting towards Sponsored Display and Brand ads - so consider this as part of your 2021 Amazon selling strategy!
TRENDS TO FOLLOW
Pricing your products appropriately on Amazon is incredibly important to your success in the marketplace. Prices are too high, and shoppers won’t give it a second glance, but prices are too low and ruin the credibility of your products. According to Bigcommerce.com, 70% of sales made on Amazon were derived from results on the first page, which is why it’s essential to ensure that your pricing strategy is in line with your optimization so that you have a fighting chance against all the listings.
The key is to price your products so that they are both profitable and competitive - so you’ll need to consider all your costs, including shipping, FBA fee, storage fees, and anything incurred throughout your process.
Here are some pricing strategies to consider when selling on Amazon
The strategy you decide on should complement your overall goals and spend on your products. It may take a couple of tries and possible mistakes here and there, but once you find that perfect balance, you’re on the road to success.
If you're a small business on Amazon, then you know just how important it is to support mom-and-pop shops like yours in the marketplace. Competition is high, and retail giants become continuously threatening, making it even more impactful when you shop small. Did you know that SMBs are responsible for approximately 50% of all items on Amazon? So there's no shortage of shops to support! Whether they do private label, wholesale, arbitrage, dropshipping, or even hand make their products, there is an opportunity to boost your fellow entrepreneurs in this crazy e-commerce world.
Ways to Shop Small on Amazon
The list goes on, and you can find the full JungleScout article here about different ways you can support small products; however, it doesn't look so different from what we as sellers desire for our storefronts! So consider these options when shopping on Amazon and support small businesses like yourselves!