What is Amazon Buy Box?
After getting started with your Amazon Seller Account and you decided what to sell on Amazon, every seller has to answer the question of how to sell on Amazon successfully. The answer starts with the Amazon Buy Box.
Since Amazon’s business model is “Providing the best customer experience”, an algorithm-based selection occurs to pick the seller, who deserves the top spot among many sellers competing for the same item. In other words, Amazon decides who is the best seller to make the sale so that when the customer clicks the “Add to Cart” button, the order goes to that lucky seller. Therefore, it is extremely important for every Amazon seller to be fit to be eligible to be in the Buy Box and then meet the criteria to be selected to win the Buy Box.
When Amazon picks the seller to be in the Buy Box, the sellers name appears next to “Sold by….” And the price is displayed above the “Add to Cart” button in the top right corner of the page. This is the area that is called the “Buy Box” and the information displayed here becomes key for Amazon customers to make the buying decision.
The terms to be familiar with are “Buy Box eligible” and “Winning the Buy Box”. And we will study both here in this post.
How to become a Buy Box eligible Amazon Seller
A new seller account is a completely unknown entity to Amazon. This is to say that Amazon has no idea who the seller is, whether or not their products are of good quality or the pre-sale and post-sale services are satisfactory enough. This way Amazon will ascertain that Amazon customers will receive the “Best Customer Experience” from this new seller. Therefore, the best protection Amazon has is to limit the capability of new sellers, first to receive orders, and then limit the number of orders a new seller can receive on daily basis.
Some of you may have seen some Amazon listings, where Amazon does not show a price on the page, but it simply says, “Available from these sellers”. (See below)
When your item listing does not show you as the seller but displays your listing, it simply means that you are not yet “Buy Box eligible”. Alternatively, Amazon may also display the same notation when they are reviewing the price submitted due to being too high or too low. Believe it or not, many sellers mismanage the Buy Box and they get caught up in automatic discounting, which drives the prices way too low. In such cases, Amazon displays this notation to avoid flooding the system with orders at unrealistic prices.
In order to be Buy Box eligible as a new seller, the quickest route is to be an FBA Seller. If you do not wish to use the Amazon FBA Service, you will simply need to establish your seller account before Amazon feels confident that you are a legitimate seller. You may ask “How do I get orders if I am not in the Buy Box?”. Amazon will actually promote new sellers by displaying “Just launched” tag next to their name. The best advice I can give for new sellers is to make sure that you stay on top of your seller ratings. Since you will receive a limited number of orders, it is easy to hurt your ratings by receiving 1 or 2 negative feedbacks or claims. If you receive 10 orders in total after you launch and 1 or 2 of them post “unfavorable” for you, your negatives will hit 10%-20%. This can get very dangerous and take a long time to clean up. So, for those out there, who are focused on driving sales only, I would recommend caution and make sure you have set up the kind of monitoring every seller must have in place to achieve the kind of seller ratings Amazon expects you to have.
For non-FBA Sellers, the amount of time to allow to build up a steady order volume should be at least 6 to 12 weeks. The more orders you receive and the better your seller ratings are, the higher the likelihood of becoming Buy Box eligible. `
- Start as an FBA Seller and stay on top of your seller ratings
- If FBA is not an option, allow yourself enough time before you expect to build up a steady stream of orders.
- Stay on top of ALL your seller ratings. Your negative feedback is NOT the only seller rating that counts.
How win the Buy Box on Amazon?
This is the most popular question, for which every Amazon Seller needs to have the answer. Unfortunately, there is no simple or single answer to win the Buy Box. For those, who may think it is a matter of deep discounting, the answer is a partial yes but then one needs to ask whether the goal is to win the Buy Box or to win the Buy Box at a price that makes a profit. And that is where it gets complicated. When you add to this goal the capability to retain the Buy Box, kind of like losing weight and then keeping the weight off, the challenge becomes greater.
The first thing to keep in mind is that if you plan to generate a steady stream of orders on daily basis AND grow your sales, you MUST automate your pricing. This is called dynamic pricing and you will need to either subscribe to one of the many “Repricers” available in the SaaS marketplace. Repricers will simply change the price you assign to an item based on the rules you have set up and who is in the Buy Box at the time. We will cover dynamic pricing in a different article. For now, suffice it to say that you must employ a Repricer with a set of sound business rules in order to retain the Buy Box.
When a seller is trying to win the Buy Box, the seller is basically going up against someone already in the Buy Box. So, the goal is to knock them out and become the new Buy Box seller. And this comes down to answering the question “Which seller is better at providing the best customer experience to Amazon customers?”. Amazon has the entire selection automated using an algorithm that takes ALL your seller ratings into account. Based on how strong your ratings are (or how weak) AND how strong (or weak) the current Buy Box seller’s ratings are, the Amazon algorithm requires a nominal rate of discount the new seller must apply to the current price. So, the higher the ratings of the new seller AND the weaker the current seller ratings are, the smaller the discount needs to be. Or, if you reverse the scenario, the new seller has to discount the current price heavily in order to win the Buy Box. When I operated my seller account, I used to be able to knock my competition out without even having to discount the current price. In some cases, we could in fact increase the price.
So, the trick is not in the price but your seller ratings, which are controlled by many moving parts and strong ratings take a long time to establish. However, sellers, who achieve high ratings, can grow exponentially as higher ratings make it easier to win the Buy Box. In addition, increased order volume makes it harder for the ratings to take a serious hit.
If you become a Buy Box eligible seller, achieve great seller ratings and have competitive pricing, you will win the Buy Box. However, this is not enough for new sellers.
The nightmare scenario Amazon would do everything to avoid is for a new seller to quickly win the Buy Box and receive many orders in a short period of time, which is then followed by a large number of returns. Returns may be caused by reasons such as late shipments, item not as described, substandard quality, less than satisfactory and many others. Amazon would want to avoid defective orders, especially from the same seller. Therefore, they place a cap on how much business a new seller can receive before such a cap can be lifted. Again, the answer depends on many factors but suffice it to say that new sellers will not be able to open a seller account and generate millions of dollars in sales in a few months regardless of how much demand there is for their products and/or how competitive their prices are.
These are just some of the important points, but there is much more to the story than we can cover in a few lines. Here’s where our Amazon experts come in should you have any specific questions. Ask for a FREE evaluation of your opportunity to start an Amazon Business HERE
Also, since we tend to do a deep dive into specific and technical areas in my articles, if you have any questions, ideas or comments, reach out to me via Twitter, Facebook or LinkedIn. I would love to hear from you.
Next, we will cover how to put the information on the Product Details to good use, which is key to become one of the Amazon FBA Success Stories, stay tuned for our next blog post.