Introduction
Anyone who has sold on Amazon can tell you that being in stock is the most important thing you can do for your business. Every stockout can cost more than a single sale missed–it could cause your listings to fall on the organic search results, diminish the performance of your ads, and damage the confidence of customers.
On the other hand, having excess inventory costs storage costs and reduces profits. Amazon has tightened up the rules by introducing limits on capacity, IPI scores, and new fee structures based on inventory, which make inventory management more complicated than ever.
This guide provides the steps to handle your stock effectively through 2025. Learn how Amazon assesses sellers, how mistakes can lead to penalties, and the best way to use inventory management software designed for Amazon sellers to ensure healthy margins.
Why Inventory Management for Amazon Sellers Matters in 2025
Amazon’s Stricter Policies
Amazon utilizes its Inventory Performance Index (IPI) to judge how effectively you manage your stock. Your IPI directly affects the amount of inventory you can put in FBA warehouses. A lower score means fewer storage spaces, and more sales that aren’t.
In addition, Amazon now applies fees for storage, place fees, and even low-inventory costs, which makes the wrong inventory planning more costly than ever before. In 2025, sellers will not “wing it” with supply chain choices.
The Risk of Mismanagement
- Insufficient inventory, Stockouts – Lower positions, no customers, advertising inefficiency
- Too much inventory, Higher fees, Cash tied up, less margins
- Bad listing health, Stranded inventory, Fees for stock that is not sellable
In short, sloppily managing your inventory means Amazon gets a larger percentage of your profit, and gives you fewer storage spaces.
Breaking Down Amazon’s IPI System
The Inventory Performance Index (IPI) is a 12 week-long rolling score that is used to determine the amount of storage Amazon provides you with. It is a measure of:
1. Excess Inventory %
Amazon will mark products with more than 90 days’ supply to be “excess.” This hurts your IPI and increases storage costs.
Step: Remove, discount, or market slow-moving goods before they accumulate.
2. Stranded Inventory %
Products are not sold because of listing errors or hazmat regulations or compliance issues.
Step: Check stranded inventory each week. Fix listings quickly before fees add up.
3. Sell-Through Rate
Units sold in the last 90 days, or the average number of units that are stored. A high rate of sales indicates that your business is consistently selling.
action: Make smaller and more frequent shipments to keep goods moving.
4. In-Stock Rate
It tracks how often your items have been available for purchase over the last 30-60 days.
Act: Maintain high in-stock rates for items that are moving quickly to ensure the rankings and increase sales speed.
Important point: Excess inventory and selling-through rates are the most important factors. Focus here to lift your score quickly.
Capacity Limits and Storage Fees (H2)
How Amazon Sets Your Capacity Limit
Amazon examines your IPI and sales record every month to determine the amount of space you can use. Professional sellers who have a low score face the strictest limits, while the individual plans are limited to 15 cubic feet, regardless of.
Storage Fees
- Basis monthly storage fee charged per cubic foot; it varies based on size tier, the time of the year, and hazmat classification.
- The Storage Utilization Fee is applied to inventory that has been aged for more than 30 days.
Low Inventory Fee
If you are in possession of less than 28 days’ supply of popular items, Amazon charges a per-unit low inventory charge. Yes–too little inventory could cost you more than excess stock.
A Smarter Framework: CALM Inventory Management
To withstand these rules, Amazon sellers need a systematic strategy. Here’s a proven framework of four steps I refer to as “CALM”:
- C Collaborate with suppliers. Know lead times and keep connections tightly to avoid delays when reordering.
- Automate the syncing of stock. Utilize inventory management software designed for Amazon sellers to keep track of levels across all channels.
- L – Lean on data plus physical checks. The software can forecast; however, you must manually check for mistakes.
- M – Track margins using GMROI. Ensure that each dollar invested in stock yields money, not just warehouse dust.
Tools That Keep Sellers in Control
The best software to manage your inventory for Amazon sellers is dependent on the size of your budget, as well as the complexity:
- SoStocked is A tool designed by a seller that comes with custom dashboards and forecasting.
- Helium 10. Inventory Manager is Excellent for reordering or creating new shipments.
- RestockPro (by eComEngine) – End-to-end software for forecasting labels, shipping, and forecasting.
- Seller Labs – AI-powered monitoring, SKU forecasting, and sustainability reports.
Pro tip: begin using software that seamlessly integrates into your workflow instead of trying to fulfill “all-in-one” promises you won’t be able to fully utilize.
Recommended Actions to Improve Your IPI
Cut off excess inventory. Pull back non-saleable products, discounted seasonal items, or use push advertisements to eliminate them.
- Increase the rate of sales. Prioritize SKUs that are moving quickly and ship smaller, less frequent batches.
- Fix listings that are stranded fast. Make sure to check every week and fix any issues prior to them affecting your score.
- Keep the top products in inventory. Maintain buffer inventory for bestsellers in order to safeguard positions.
- Monitor your metrics every week. Weekly monitoring of metrics on Seller Central’s Inventory Performance dashboard reveals exactly how far you’re falling.
FAQs
Q: What’s the inventory management process for an Amazon seller?
It’s the method of planning, tracking, and optimizing stock in order to keep costs down, prevent shortages, and maximize profits on FBA.
Q: What is the most effective inventory management software available for Amazon vendors in the year 2025?
SoStocked for forecasting, RestockPro for FBA workflows along with Helium 10 for automation, are highly rated choices.
Q What is the time it will take to increase the IPI scores?
It typically takes between 2 and 12 weeks. Concentrate on reducing inventory and boosting sell-through to achieve the best results.
Final Thoughts
Amazon has set the bar higher. Management of inventory is no longer just about having enough stock; it’s about observing Amazon’s guidelines while preserving your margins.
Here’s the 2025 game plan:
- Learn the way IPI is working and follow it every week.
- Adjust stock levels to prevent penalties for overage and low inventory.
- Utilize your CALM framework to ensure that you are following a consistent process.
- Consider investing in inventory control software to manage inventory for Amazon sellers that fit your business’s model.
If done correctly, Amazon sellers: managing inventory is less about fighting fires and more about creating an efficient, profitable system that grows according to your business’s growth.
Also Read:- How to Choose the Best Ecommerce Website Builder in 2025
