At first, selling on Amazon seems like a great idea. After all, with its massive customer base of 100 million, product discoverability is sure to be worth the time investment, right?
Here’s the thing: launching on Amazon without a proper strategy or understanding exactly how you will generate ROI from the platform is a mistake. Perhaps even one as costly as going into the actual Amazon prepped with only a compass and a water bottle.
One of the major ROI generators for sellers on Amazon is winning the buy box. Now, this only applies to your brand if you are selling items which can already be found on Amazon. In other words, if you are selling unique goods through Amazon, this article isn’t as relevant for you.
For everyone else, know that many brands use Amazon to bolster product discoverability and subsequently brand awareness, especially for products with a high margin or on which a brand can take a bit of a loss. These are often third-party items, or goods already being sold elsewhere online.
You don’t want to put an item on Amazon that already has tons of other brands selling it, but you may want to try it out if there are only two to three brands having a go. And, if that is the case, in order to make Amazon work for you, you’ll need to win that Buy Box.
The Buy Box Allure
Why is the Buy Box so important? For starters, this box on product pages accounts for 90% of sales on Amazon, which makes the cutthroat nature of the marketplace a bit clearer. It’s a matter of showing up or risking irrelevance.
Amazon is possibly the most competitive online marketplace for a few reasons. First, low barriers to entry help new competitors pop up daily. Many sellers don’t even have to worry about overhead costs. A third party retailer could use Fulfillment by Amazon (FBA) and never actually have to touch the products they sell or step foot into a warehouse. Second, Amazon is as much a competitor as it is a marketplace. Amazon has access to all seller data and often begins selling products that have proven to be popular. As a trusted brand, they are able to move unthinkable amounts of product, making it easy to get a bargain from suppliers and undercut competitors.
The last reason, though, is because of the mysterious way that the Buy Box is won. While Amazon doesn’t disclose the exact formula to win it, there are a number of factors that impact the likelihood of landing in it.
Here are what we know some of the most important factors are and how you can implement them to increase the likelihood of your Buy Box placement.
Seller Status
Amazon is a status-conscious marketplace and if you aren’t a featured merchant, you simply can’t compete for the Buy Box. In order to become a featured merchant, you’ll have to maintain a great approval rating (think 98%), low returns and defect rates, and fast shipping. We’ll get into the details of these below.
Seller Rating
This gives a glimpse into customer satisfaction with a retailer. I don’t know about you, but when I see an Amazon seller with a low rating, I’m automatically wary. I’d rather pay more to a seller with a higher rating because it’s much more likely that I’ll have a better overall customer experience. After all, others gave them a high rating for their service. If your ratings are suffering, consider using FBA to improve your positioning.
Seller Performance
This one is slightly more out of a seller’s control than their rating because it is made up of the percentage of returns, exchanges, claims, refunds and more. Retailers that are dubbed “good” or “excellent” have a high-performance rate and a low return percentage. On the other hand, if a retailer’s return rate skyrockets, their status will drop and put them at risk of having their account suspended.
Shipping and Handling Time
No one wants to wait for a package forever, especially since they could have received it immediately if they visited a store. As evidenced by their Prime program, Amazon wants to gain and maintain customers by providing products quickly at low prices. Sellers that aren’t able to keep up with this are given lower Buy Box priority.
However, even this is relative, as some products might take longer to get ready and ship out. In that case, the retailer with the shortest shipping estimate will have a better chance of winning the Buy Box, instead of there being an across-the-board rule with a specific number of days being prioritized.
On top of that, FBA (Fulfilled By Amazon) merchants have an advantage here because Amazon takes care of their shipping and handling. Amazon always puts their customers first and makes sure they get all of their orders out in a timely manner.
In-stock consistency
If a seller is often out of stock, Amazon does not want to promote their products because there’s a chance that it could end in a disappointed customer. Therefore, it’s important to keep stock levels consistently high to keep both Amazon and your shared customers happy. Reorder often to keep stock levels from fluctuating too much.
Price
The competitive nature of the marketplace and common idea that Amazon has the lowest prices on the internet means that the Buy Box price will often be the lowest available. But that’s not always true because Amazon wants to keep up their reputation of providing quality products, alongside a great experience and customer service. So, if a seller doesn’t have the lowest price but is the top of their category in all the other areas, they still have a great chance of landing in the Buy Box.
While many of the factors that go into winning the Buy Box might seem daunting and require sellers to change the way they do business, one factor that is fully under their control is pricing. Try decreasing your price slightly to see if you can land in the Buy Box. Once you win it, try increasing it until you lose it. That way, you’ll have a good idea of the range of prices that is available for that product. This way, you can win the Buy Box to increase sales while also maximizing profit.
Conclusion
When comparing your business with competitors to assess your Buy Box positioning, it’s important to note that they aren’t all worth your time or precious margins. Focus only on those competitors which have similar ratings as you and especially those that are featured sellers. These will be your main competitors for the Buy Box because they are already prioritized in Amazon’s search algorithm.
The Buy Box on Amazon is the ultimate trophy and it isn’t won easily. It takes a seller that puts the customer experience first, keeps up with the competition and consistently improves their marketplace presence. But, with the Buy Box winning 90% of the conversions on Amazon product pages, it is certainly well worth your time to A/B test your way into it.
Photo: Flickr, MIKI Yoshihito
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