Pricing Strategies Simplified: Understanding The Buy Box

Getting your products to Amazon is only half the battle. It turns out getting your items  live and getting your items to sell are two completely different stories. So today we’re going to kick off a series where we talk about pricing strategies to get your items moving. Before we can get into the specifics about these strategies we need to take some time and review some basics.

The Buy Box

Let’s take a look at an Amazon product page.

When a customer decides to purchase an item most times they have the option to purchase that item from more than one seller. Amazon helps simplify the selection process by choosing one particular seller and then featuring their products by putting their items into “The Buy Box” which is located on the top right hand side of every product page.

When a customer clicks add to cart the sale is attributed to the seller in the buy box. Every customer still has the option to choose to purchase the item from another seller by looking just below the buy box at the other options available. In fact on every product page there can be up to three other sellers featured in the “Other Sellers on Amazon” box located just below the Buy Box.

Any other sellers cannot be found on the main product page. Before a customer could make a purchase from them they would have to click on “Used & new” which would bring them to the offer listing page where all the different listings for an item can be found. So how important is the Buy Box really?

Winning the Buy Box

It turns out that winning the Buy Box is the single most important factor to generating sales on Amazon. Let’s put some numbers behind this so you can get a better idea of what I’m talking about. In 2015 Amazon generated $88 billion dollars in sales. Can you guess how much of that came from Buy Box sales? $72 billion dollars or about 82% of total sales. So as sellers it is paramount that we understand how to land our products in the Buy Box and keep them there.

The Buy Box is Amazon’s way of offering a premium experience to their customers. Remember simplifying the customer experience is a core business principle in the Amazon world. What Amazon does with the Buy Box is evaluate all of the different sellers for a particular item and choose one which they feel will offer the customer the best experience on Amazon. It’s important to note that best experience does not always mean lowest price. Here’s a list of things Amazon considers before a seller can win the Buy Box:

• Buy Box Baseline Requirements
  1. Professional Seller Account
  2. Buy-Box Eligibility
  3. Availability

• Additional Buy Box Criteria
  1. Fulfillment Method
  2. Total Price
  3. Seller Perfect Order Percentage Score
  4. Shipping Time
  5. Order Defect Rate
  6. Valid Tracking Rate
  7. Late Shipment Rate
  8. On-Time Delivery
  9. Feedback Score
  10. Customer Response Time
  11. Feedback Count
  12. Inventory Reserves vs. Historical Sales Performance
  13. Cancellation and Refund Rate

Pretty long list. Suffice to say it’s complicated. Amazon compares all of these metrics across the different sellers to determine who is eligible to win the buy box. Then what happens is the Buy Box is shared amongst the eligible individuals with those having better scores spending more time in the Buy Box which ultimately generates more sales. This process is called “Rotating the Buy Box.”

Over the course of this series we’re going to review lots of different things but there will be one central theme which will revolve around finding different ways to make sure we are maximizing our time in the Buy Box. Because let’s face it longer that your in the Buy Box the more sales you are going to get.