Efficiency is the name of the game at Amazon. And to achieve this the company, which stores items for third-party sellers, wants these sellers to move items more quickly.
As eCommerce continues its exponential growth Amazon it’s experiencing a lot of congestion and looking to these third-party sellers, which now account for more than half of products sold on Amazon’s site, to become more efficient, according to Eugene Kim, of CNBC.
The company recently created an Inventory Performance Index, which the company says is the “first step in setting a bar” on inventory performance. The IPI measures how well each merchant manages its inventory and removes products that aren't selling and fixes its listings as needed.
A customer will be rated based on how long products stay in inventory. If a customer scores below 350 they will be prevented from sending more products into Amazon’s warehouses and will incur a monthly “overage fee” on the inventory that exceeds their storage limits. Sellers above 350 won't have any restrictions on storage space.
Before this, the policy was that sellers could rent unlimited storage regardless of how effectively they managed their inventory.
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