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29 September 2025How to Stay Compliant with Amazon’s Inventory Performance Index (IPI)
The e-commerce landscape is in a constant state of flux, and for Amazon sellers, this is acutely felt through the continuous evolution of Fulfilment by Amazon (FBA) policies. At the core of Amazon’s strategy to maintain warehouse efficiency and profitability is the Inventory Performance Index (IPI). For 2025, the pressure to maintain a high IPI score has intensified, with more stringent capacity limits, new storage surcharges, and a renewed emphasis on streamlined inventory flow.
Ignoring your IPI score is no longer an option; it is the gatekeeper to your ability to store, restock, and ultimately sell on the Amazon platform. A low score can lead to severe restock limitations, unexpected surcharges, and logistical headaches that cripple profitability. This comprehensive guide is designed to serve as your authoritative roadmap, helping you navigate Amazon’s intricate warehouse performance rules to keep your IPI high and your business thriving in the competitive European market.
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Understanding the Core of Amazon IPI
The IPI score is a metric ranging from 0 to 1,000, which Amazon uses to measure how efficiently and productively you manage your FBA inventory. It is a rolling, 12-week average designed to encourage better inventory health across the entire network. A consistently high score rewards you with ample storage space and restock capacity, while a low score results in mandatory capacity limits.
The current minimum IPI threshold to avoid storage limits is generally 400, though Amazon reserves the right to adjust this at any time, as seen during periods of peak capacity strain. Sellers should aim to keep their score significantly above this minimum—ideally in the mid-500s or higher—to build a buffer against inevitable market fluctuations and policy changes.
The Four Pillars of IPI Performance
Your IPI score is determined by four primary components, each designed to reflect different aspects of your inventory management efficiency:
Sell-Through Rate: This is arguably the most critical component. It measures your sales relative to your average on-hand inventory over the past 90 days. A higher rate indicates that your inventory is moving quickly, reducing Amazon’s storage burden and boosting your IPI.
Excess and Aged Inventory: This component assesses the percentage of your inventory units that Amazon deems ‘excess.’ Inventory is considered excess when the projected cost of holding it exceeds the projected profit from selling it. Crucially, any inventory aged 181 days or more now falls under the highly scrutinized 'aged inventory surcharge' category, significantly impacting your IPI health.
Stranded Inventory: This is inventory sitting in the Fulfillment Centre (FC) that is not available for purchase due to a listing or compliance issue. It is dead inventory taking up valuable space. Fixing these issues is the easiest way to earn quick IPI points.
FBA In-Stock Rate: For your replenishable ASINs, this tracks how often you have been in stock over the past 30 days. Maintaining a high in-stock rate prevents lost sales and demonstrates reliable inventory planning, contributing positively to your score.
Navigating the 2025 Thresholds and Penalties
The policies and penalties surrounding Amazon FBA have only grown more complex in 2025. The overall trend is clear: Amazon is heavily incentivising a just-in-time inventory model and severely penalising any use of its FCs for long-term storage.
Capacity Limits and Restock Restrictions
The most direct consequence of a low IPI score is the imposition of storage capacity limits and restock limits.
Storage Capacity Limits: These restrict the total volume (measured in cubic feet) you can store in Amazon’s FCs at any given time. If your IPI falls below the minimum threshold, your capacity may be severely curtailed for the next quarter.
Restock Limits: These govern the quantity of units you can send to FBA, regardless of cubic footage. These limits are now often influenced by new storage-type allocations (Standard-Size, Oversize, etc.), requiring granular management across your entire product catalogue.
While Amazon eliminated the automatic overage fees in the latter half of 2024, the penalty is now much simpler: If you hit your capacity limit, you are simply blocked from creating any new FBA shipments. This can lead to critical stock-outs of your best-selling items, a scenario far more damaging than a fee.
The Aged Inventory Surcharge
In 2025, Amazon continued to evolve its fee structure to target sluggish stock. The aged inventory surcharge, which replaced the older long-term storage fee, has become more aggressive.
| Inventory Age | Fee Structure (Per Cubic Foot Surcharge, in addition to monthly storage fees) | Implication |
|---|---|---|
| 181-270 Days | Tiered Surcharges Apply | The clear signal to move stock before it becomes a major cost centre. |
| 271+ Days | Surcharge significantly increases | The danger zone. The cost of holding slow-moving stock now dramatically erodes profit margins. |
| 366+ Days | Highest Surcharge (or a per-unit fee, whichever is greater) | Maximum penalty. Using Amazon's warehouse as a long-term storage solution is explicitly no longer financially viable. |
These fees are assessed monthly on the 15th, making continuous, proactive inventory management indispensable.
Practical, Actionable Strategies to Boost Your IPI
Improving your IPI score is a process that requires consistent attention across four key areas of your Amazon operations.
1. Mastering Inventory Sell-Through
To increase your sell-through rate, you must focus on both increasing sales velocity and decreasing on-hand inventory, especially for underperforming SKUs.
Accurate Demand Forecasting: This is the bedrock of IPI success. Utilise historical sales data, seasonal trends, and promotional plans to predict demand with precision. This allows you to ship only what is necessary, avoiding future excess stock.
Run Targeted Promotions: Use Amazon’s promotional tools (Coupons, Deals, Outlet) specifically to clear out slow-moving inventory identified on your IPI dashboard. A temporary margin hit is almost always preferable to a long-term storage penalty.
Optimise Listings for Conversion: Ensure your A+ Content, images, and bullet points are highly effective. A well-optimized listing will convert more traffic into sales, naturally improving the velocity of your products.
2. Aggressive Reduction of Excess and Aged Stock
This is the fastest route to IPI improvement, as excess inventory is heavily weighted in the calculation. You must be ruthless in auditing and actioning slow movers.
Automated Removals: Enable Amazon's automatic removal setting for unfulfillable inventory to ensure damaged or returned items are swiftly cleared out. In 2025, Amazon has tightened its unfulfillable inventory policy, with plans to dispose of or donate inventory after a short notice period if automated settings are not enabled in Europe.
Immediate Removal/Liquidation: For units identified as ‘Excess’ or ‘Aged’ in your Inventory Health report, create removal or liquidation orders immediately. The moment a removal order is created, those units generally stop counting against your IPI, even if they have not yet been physically removed. This buys you crucial time.
Offloading to a 3PL Partner: Instead of liquidating at a loss or incurring high removal fees and a three-month restock restriction, transfer the stock to a reliable Third-Party Logistics (3PL) partner. This is a game-changer for IPI compliance. You retain full control, avoid the IPI penalty, and can use the stock for FBM, other marketplaces (eBay, Kaufland), or future, smaller FBA replenishments.
3. Eliminating Stranded Inventory
Stranded inventory is often an administrative failure rather than an inventory mistake. Fixing it is simple but requires daily diligence.
Daily Report Checks: Make it a non-negotiable part of your daily routine to check the Stranded Inventory report in Seller Central.
Promptly Resolve Errors: Most stranded inventory is caused by fixable issues—listing errors, product category restrictions, or missing information. Resolve these problems within hours, not days, to immediately make the stock available for sale. If a fix is not possible, create a removal order right away.
4. Protecting Your In-Stock Rate
For your high-velocity, high-demand ASINs, preventing stockouts is key to protecting your IPI score and maximizing sales.
Set Restock Alerts: Utilize Amazon’s Restock Inventory tool to set alerts and monitor lead times. This tool, combined with your own accurate forecasting, helps you determine the ideal replenishment window.
The FBA/3PL Hybrid Model: The most powerful strategy for a high in-stock rate without risking excess stock is leveraging an external warehouse. Keep minimal, high-velocity stock in Amazon FCs for quick shipping, and maintain your primary, bulk inventory with an external partner. This allows you to drip-feed small, frequent shipments to FBA, keeping your utilization low and your IPI healthy.
The Strategic Role of Overflow Logistics with FLEX. Logistik
The tightening grip of Amazon’s IPI and capacity limits in 2025 underscores a clear message to European sellers: a single-channel FBA inventory strategy is now a liability.
For businesses that experience seasonal peaks, run high-volume marketing campaigns, or deal with long supplier lead times, having a stable, affordable off-Amazon buffer is no longer a luxury—it is a necessity for compliance and sustained growth. This is where a specialized logistics partner becomes indispensable.
Managing Seasonal Overflow and Bulk Stock
Amazon’s system is designed to penalize you for carrying the necessary extra stock required for peak season preparation (e.g., Q4/Christmas or Prime Day). By using a reliable 3PL like you can:
Store Bulk Inventory Safely: Ship your full container loads or pallet quantities directly to a dedicated, secure warehouse. This inventory is entirely off-Amazon’s balance sheet and has zero impact on your IPI score, restock limits, or aged inventory surcharges.
Avoid Removal Fees and Bans: Instead of paying Amazon's removal or disposal fees and facing the associated three-month restock ban on removed ASINs, simply transfer your excess stock to a neutral facility. This preserves your capital and your ability to sell.
Optimizing the Hybrid FBA/FBM Strategy
The most efficient operational model in 2025 is a smart blend of FBA and Fulfilment by Merchant (FBM).
FBA for Velocity, 3PL for Stability: Use FBA capacity solely for the expected 4-8 weeks of sales, ensuring fast turnover and a high IPI. The rest of your stock should sit safely at your 3PL.
Agile FBA Replenishment: As your FBA stock dips, a responsive partner like FLEX. Logistik can provide express FBA prep and forwarding services. They can receive your official Amazon shipping plan, process, label, and dispatch small, perfectly sized replenishment shipments on demand. This allows you to top up your FBA inventory with precision, keeping your utilization low and your IPI consistently high, while ensuring your best-selling ASINs never run out of stock.
Multi-Channel Fulfilment: Leverage your 3PL partner for all FBM and non-Amazon sales (Shopify, eBay, etc.). By selling the same stock across multiple platforms from one central location, you improve your overall sell-through rate across your business, reducing the overall volume that would otherwise become Amazon excess.
FLEX. Logistik is perfectly positioned to provide this critical overflow and agile replenishment service. We understand the stringent demands of Amazon logistics and act as the intelligent buffer between your supplier and the Amazon FC, ensuring your inventory strategy is not just compliant, but optimized for profitability and maximum operational flexibility in the ever-evolving 2025 e-commerce climate.
Key Takeaways for Your 2025 IPI Strategy
Staying compliant with Amazon's IPI in 2025 requires vigilance, precision, and a strategic separation of your inventory streams.
Prioritise Sell-Through and Excess Reduction: These two components have the greatest impact on your score.Act immediately on excess and aged inventory, using the IPI dashboard's recommended actions as your to-do list.
Aim High: Do not settle for the minimum 400 IPI threshold. Aim for a 500+ score to insulate yourself against Amazon's dynamic capacity restrictions.
Embrace a Hybrid Logistics Model: Use a trusted 3PL partner for long-term storage, seasonal overflow, and agile FBA replenishment. This allows you to maintain peak inventory levels for your business without triggering Amazon’s capacity limits or aged inventory surcharges. FLEX. Logistik is your expert partner for navigating the complexity of European Amazon logistics and converting potential penalties into profitable opportunities.
The rules of Amazon are complex, but the strategy is simple: Treat Amazon's FCs like a high-turnover retail shelf, and use your 3PL partner as your secure, compliant, and cost-effective stock room. Mastering this balance is the key to achieving Amazon IPI success in 2025.
