The Challenge
Our client was experiencing a wide range of performance issues, and the account had fallen into “red” on Amazon’s Inventory Performance Index (IPI) scale. Key challenges included:
Low IPI Score
The account’s IPI score was just 304 on a scale of 1,000, and had dropped 5 points in the week prior to our takeover. A poor IPI score – below 350 – can result in a number of penalties, including excess inventory fines and limits on a Seller’s ability to send more inventory to Amazon warehouses in Q4.
Excessive Inventory
Our client scored lowest on the IPI scale in “excess inventory percentage” and “sell-through,” indicating slow sales and an excessive amount of inventory in Amazon warehouses.
The excess inventory was causing a number of issues. For example, the client had spent $196.90 on long-term storage fees in the month prior to our takeover, or 41% of total sales. Moreover, nearly 98% of its inventory was considered “excessive,” e.g. more than 90 days of supply or units that have been in storage for more than 90 days.
Poor Sales Rank
Not only were the products selling poorly, but sales were also trending in the wrong direction. The brand’s monthly sales volume was dropping compared to its competitors within the category.
Ineffective Advertising
One reason for the excess inventory: The client’s Amazon advertising strategies weren’t working. In Q4 2019, the client spent $4210.56 on advertising, but netted just $2903.25 in sales, a net-negative ACOS.
Our Approach
Improving the Seller’s IPI score was a top priority. That required quickly moving stagnant inventory and improving sell-through rates on existing inventory. Key strategies we used included:
Reduce Excess Inventory
We took a number of measures to quickly reduce stagnant inventory, including liquidating the brand’s slowest-selling products.
Improving Sell-Through
We encouraged the client to streamline its product line-up and focus on its best-selling SKUs. Prices were also adjusted to more closely align with competitors.
Increase Ad Profitability
We developed a custom advertising strategy for the brand that was hyper-focused on the brand’s target audience. Using a number of Amazon advertising tools, we more successfully targeted the brand’s audience.
Improving Listings & Content
We revised and improved the client’s product listings by:
· Developing Amazon-friendly bullet-points and descriptions
· Optimizing listings for SEO
· Revamping product images to be more appealing
Results
In just three months, our strategies helped the client significantly improve sales volume, reduce excess inventory and improve its IPI score. Some key results included:
IPI Score Improvements
The client’s account improved to “green” on the IPI scale, which allowed unlimited Q4 in-bound shipments and storage. This was vitally important for our client, who was shipping from China and had long lead times on inventory.
Rapid Sales Rank Improvement
Sales rank jumped from a position of No. 1,000,000+ to about No. 40,000 in 90 days. That result was aided in part by the 3170% sales growth the client experienced during the trial.
Profitable Advertising
Our advanced targeted efforts paid off. The client’s ACOS went from 143% to 43%, and has since moved closer to 20%. During the trial period, our advertising generated 340 orders, resulting in more than $10,000 in sales.
Improved Conversions
The client experienced a 7.2% lift in conversions, as well as a 1560% increase in impressions.
Conclusion
For Amazon Sellers, excess inventory is a sales killer. An overabundance of inventory can lead to diminishing margins, rising costs and can even stop sales in their tracks (if shipping/warehousing limits are imposed).
Fortunately, there’s a simple solution for ineffective inventory management: Sales.
Optimizing stagnant inventory requires steady sales, and fortunately, there are a variety of tools Amazon Sellers can use to fix this problem and generate sales. In this campaign, we used a variety of techniques – including advertising optimization, Amazon SEO, content development, liquidation and product line optimization – to completely rebuild a brand’s sales strategy. The result: A 3000% increase in sales in just 90 days.
Is your business struggling with inventory management on Amazon? Mile High Online can help. Contact our team today to learn more about improving your IPI Score on Amazon.