Amazon started as online book store and has grown to be the worlds largest online retailer.
New FBA Amazon IPI score thresholds and new Monthly Overage Fee
As Amazon continues to manage available capacity, they have announced two changes to the FBA storage policy that will help them more efficiently receive inventory and deliver products to customers – Amazon IPI Score threshold requirements and a new Monthly Overage Fee.
This is effectively the carrot and the stick – Manage your stock well and you can have unlimited stock in FBA. Manage your stock badly and they are going to sting you with additional fees.
Amazon IPI Score Threshold Requirements
The Amazon IPI score (inventory performance index) is a number between 0-1000 that’s used to measure inventory health (low stock, over stock, stranded inventory where it’s not selling due to a listing problem etc). Amazon have raised the IPI threshold requirement for storage limits from 350 to 400 as of the 14th of May 2020 (week 20). If you had an IPI score of 400 or more as of week 20, you will receive unlimited storage for Q3. If you had an Amazon IPI score of less than 400 as of week 20, you may have Q3 storage limits if your score does not improve.
Amazon are notifying you now to give you time to improve your score, if needed, to avoid the limits and associated storage fees. If you have an Amazon IPI score of less than 400 as of week 26 (21st of June), your potential storage limits will apply from the 1st of July through until the 30th of September.
You can see your potential storage limits on the storage monitor at the bottom of the Inventory performance dashboard, or during the shipment-creation workflow. For more information, including how you can improve your IPI score, see Inventory performance and IPI frequently asked questions.
New Amazon Monthly Overage Fee
Starting from the 1st of August 2020, Amazon are introducing a monthly overage fee of £7.80 per cubic foot (excluding taxes).
If your Amazon IPI score needs to improve but does not, and your inventory in Amazon’s fulfilment centres exceeds your storage limit during any day of the month, you will be charged a monthly inventory storage overage fee for the extra inventory. This is in addition to monthly inventory storage fees and, if applicable, long-term storage fees.