Winning the Amazon Buy-Box: What You Need to Know
21 February, 2023
Having your products on the Amazon platform can make a world of difference to your brand’s revenues, profitability and visibility. However, the world’s most prominent online marketplace comes with a set of challenges all on its own. Navigating these challenges and mitigating their effect is vital to your brand's success on the platform.
Arguably the most important of these challenges to be aware of, and address, is the Amazon Buy Box, as the Buy Box is where the majority of sales take place.
This article aims to give you a deeper understanding of the role the Buy Box plays in Amazon listing optimization, including a few myths and criteria for winning the Buy Box.
The Amazon Buy Box: A modern-day battlefield
According to [Statista](https://www.statista.com/statistics/266289/net-revenue-of-amazon-by-region/#:~:text=In 2021%2C Amazon's total consolidated,net sales during the year.), in 2021, Amazon’s sales revenue reached over $469 billion, with more than $389 billion coming through the Buy Box alone — the equivalent of 83% of sales. This demonstrates the importance of winning the Buy Box and creates context for why the Buy Box is the most intensely contested space on the platform.
The [Amazon Buy Box](https://www.helium10.com/amazon101/what-is-buy-box/#:~:text=Amazon Buy Box%3F-,What Is the Amazon Buy Box%3F,Buy Box gets the sale.) is essentially the ‘Add to Cart’ and ‘Buy Now’ section of the product listing. As an online shopper, when you click on ‘Buy Now,’ you have actually chosen—most likely without fully realizing it—one seller among many that sells the item you have decided to purchase. You have also activated a confidential Amazon algorithm that selects this one single seller—who can be either a third-party seller or Amazon itself (Amazon 1P).
This algorithm has selected the seller that, according to Amazon, will provide you with the best possible Customer eXperience (CX) you may get on the platform. It is mostly based upon criteria of (i) price, including shipping fees, (ii) speed of delivery, and (iii) expected customer satisfaction, based upon the past ratings of other shoppers that each seller gets. Therefore at any moment one seller “owns” the Buy Box for one item. This “Buy Box owner” will be the default seller proposed to shoppers, and Amazon insiders know that North of 80% of transactions will go to the “Buy Box owner.”
Essentially, the Buy Box defines which seller is most likely to get the transaction, simply because most shoppers trust Amazon’s algorithm and will not investigate to compare the offers of individual sellers.
But there’s another factor that comes into play: When two offers are identical in terms of price and shipping conditions, one by Amazon 1P and another by a Fulfilled By Amazon (FBA) seller (a seller that has outsourced its fulfilment operations to Amazon, therefore aligning its customer experience with the CX provided by Amazon 1P itself). In such cases, the Buy Box algorithm also considers how profitable the transaction will be for Amazon, either through Amazon 1P or through the FBA seller. As Amazon will charge both a commission fee and a fulfilment fee if the transaction is made by the FBA seller, Amazon may decide to allocate the Buy Box to the FBA seller. This situation explains why Amazon may hand over the Buy Box to an FBA seller whereas Amazon 1P has a similar offer in terms of price and shipping conditions.
Buy Box Myths
Here are four popular myths about the Buy Box:
- Amazon keeps the Buy Box for itself
While it’s true that Amazon does win the Buy Box frequently on listings that it fulfils and sells on, it’s important to understand that there is no conspiracy on the part of the platform in this regard. Third-party sellers are also able to win the Buy Box as frequently as what Amazon does — as explained above, FBA sellers may beat Amazon 1P sellers to the Buy Box in some instances.
The main reason that third-party sellers may lose out to Amazon is because Amazon “ticks all the boxes” of providing the best CX while also coming in with low prices.
- The lowest price always wins
While price does play an important role, the lowest price does not necessarily guarantee success. Rather, competitive pricing and a state-of-the art CX combined are much more desirable.
- You can keep the Buy Box for yourself
Owning the Buy Box is not possible as it continually changes due to a number of factors. Sellers wanting to regularly win the Buy Box need to ensure that they meet the criteria and continuously offer the best deal.
- You need to turn on eligibility
There is an assumption in the market that you need to turn on your ‘eligibility’ to feature in the Buy Box. However, there is no way to turn on ‘eligibility’ for the Buy Box. Amazon algorithms decide the Buy Box and the best way of being successful or ‘eligible’ to win the Buy Box is for sellers to focus on their Amazon listing optimization and seller logistics.
The Buy Box Criteria
We will now briefly identify and unpack a few of the criteria sellers need to meet in order to be ‘eligible’ to win the Buy Box. It’s important to note that the criteria listed are not exhaustive in nature, as there are many more variables that are taken into account by Amazon’s algorithms.
However, these are considered to be amongst the most important.
- Competitive pricing
Just like on any eCommerce platform, prices on Amazon change rapidly and generally consist of a number of factors, including landed price, shipping fees, and profit margin. Keeping track of competitor pricing and adjusting selling prices to remain competitive ensures healthy competition on the platform. Undercutting the market by offering the lowest price can work against sellers.
- Fulfilment method
Fulfilment choice is one of the most important factors as it plays a key role in customer experience. Amazon scores the different fulfilment methods based on the shipping method and speed of delivery. Sellers who make use of FBA receive a perfect score as Amazon handles everything, which naturally ticks all the boxes they’re looking for.
- Customer eXperience (CX)
Delivering favorable experiences is a major objective for Amazon and is reflected in the customer reviews section. Amazon ranks sellers that deliver [optimal performance indicators](https://outvio.com/blog/amazon-buy-box/#:~:text=Requirements to be Buy Box eligible,-To obtain Buy&text=Have optimal performance indicators including,depending on the product category.) including an order defect rate below 1%, a cancellation rate below 2.5% and a late shipment rate below 4%.
- Amazon’s profitability
Products that give Amazon greater profit margins are favoured to products that don’t. As mentioned above, when two offers are identical in terms of price and shipping, one by Amazon 1P and another by a FBA seller, the Buy Box algorithm also considers how profitable the transaction will be for Amazon. In some cases, this may be the FBA seller as Amazon will charge both a commission fee and a fulfilment fee on that transaction.
Why your partners lose the Buy Box
As a brand, you want your preferred partners, whether that’s approved 3P sellers or Amazon 1P, to win the Buy Box as often as possible. So, it’s important that you know why they may be losing out on it and what can be done to get them on top again.
For every seller on the Amazon platform, losing the Buy Box to an alternative seller is a reality that’s going to happen. However, when this happens, data on the reason for the occurrence is more vital than ever. Yet, the analytics provided by Amazon doesn’t give you the clarity needed to make informed decisions.
Amazon will tell you the number of times or the percentage of occurrences that you failed to win the Buy Box. However, the main reasons they provide generally revolve around price. This works in their favor, as it forces the seller to revise their pricing downwards. Meanwhile, the reality is that there may be a myriad of reasons why the Buy Box was lost, including unapproved sellers swooping in and selling your products.
Having access to a root-cause analysis on the Buy Box is extremely valuable in order to negotiate effectively with Amazon and make strategic business decisions. Partnering with an Amazon analytics company such as Ayolab offers you clarity on the Buy Box. Including a root-cause analysis as to why the Buy Box was lost, as well as a whole host of other equally important insights that not only give you an advantage on the platform, but also allows for greater efficiency within your business strategy as it relates to your value chain.
Conclusion
For any brand looking to increase their sales revenue on the platform, becoming an expert on the Buy Box as well as the criteria that leads to success, will pay dividends multiple times over. However, in order to do this, you can’t rely on the platform giving you the data and information that you need. From this perspective, having a strong analytics partner such as Ayolab is equivalent to having a solid, non-erodible competitive advantage in the market, and every business person understands the value of competitive advantage.
Click here to understand the “House Always Wins: Amazon’s Business Model vs Your Own”