EP7: How to Win the Amazon Buy Box
The holy grail of Amazon selling – The Buy Box! A staggering 80% of all Amazon sales go to Buy Box holders! In a hyper-competitive marketplace with over 2 million sellers and 350 million products, the Buy Box is the holy grail of Amazon selling. Find out what you need to do to win the Amazon Buy Box in 2020.
Raphael: Live from DataHawk studio in Paris, I’m your host, Raphael. Welcome to a new episode of the DataHawk eCommerce podcast. And we’re here today to discuss the holy grail for any Amazon seller. I’m of course talking about the Buy Box. In the post-COVID era that we’re living in right now, how can you win and secure the Amazon Buy Box for your products? To answer this question, I’m of course here with your, our, everyone’s favorite Amazon expert in the name of Pratik. What’s up, Pratik?
Prateek: Bonjour, Raphael.
Raphael: Thank you for being with us, Pat. Let’s start with the obvious question, okay? What is the Buy Box?
Prateek: Thank you for having me here, Raphael. As you said, the Buy Box is the holy grail of Amazon selling, right? On any given product’s listing, to the right of the page, you’ll see that one specific seller has been highlighted in a card kind of layout. The product could actually be getting sold by fifty sellers, but you won’t see them all in the listing. You will just see one. Right above the seller’s name, you will see two orange buttons: the buy now button and the add to cart button. This card layout along with the two buttons is referred to as the Buy Box. You can think of it as a way to highlight one specific seller.
Raphael: Okay. You say it’s a way to highlight one specific seller, the Buy Box? Okay. Can you tell us how being highlighted helps? I mean, in other words, why should our listeners care about the Buy Box?
Prateek: Sure. Just so you know, a staggering 80% plus of all Amazon’s sales go to Buy Box holders, which means that if you are an Amazon seller, your likelihood of making a sale for a particular product increases manyfold if you are the Buy Box winner for that product. Why you might ask?
Raphael: I ask why.
Prateek: Because of the ease of purchase. The two orange buttons I mentioned just a minute ago make it frictionless for the buyer to make the purchase. The Buy Box winner doesn’t risk losing the shopper. By the way, the 80% figure I just mentioned is even higher for mobile purchases.
Raphael: Yeah. I’m so not surprised. When you are on mobile you know you go crazy.
Prateek: Yeah. Exactly. So, like I’ve mentioned in our previous podcasts, there are not over two million sellers on Amazon, and close to 350 million products. As such, you will see that, not only are there several product alternatives to choose from, there are multiple sellers you can buy from too, which means not only is the competition between products, but between sellers for the same product.
Raphael: Yeah. Pat, I’m starting to go easy, man.
Prateek: Let me explain. If you are a shopper looking for Columbian ground coffee –
Raphael: Pat. Coffee again. You love coffee, don’t you? In every episode you mention coffee. Coffee, Peruvian Columbian, it’s okay. It’s okay.
Prateek: Raphael, at this point, my blood is coffee. So, if you’re a shopper looking for Columbian ground coffee, you have so many product choices, right? You have Starbucks Columbian coffee, Folgers, Maxwell House, New England Coffee, McCafe from McDonald’s, they’re all selling Columbian ground coffee so you can choose from either of those products. Let’s say you went with Starbucks Columbian coffee. Now when you click on the product, you will be taking to the product’s listing, or as industry insiders call it, the product detail page. There, right under the bullet points, you will notice something like five new from such and such price. That means that there are five sellers selling the same product. So, you see the level of competition here, Raphael. Not only do you have to compete with other brands before the shopper lands on your product’s listing, but once there, you have to compete with other sellers who also happen to be selling the same product. So how do you make the sale in such a competitive environment?
Raphael: Eye-level. Eye-level.
Prateek: The answer to that is the Buy Box.
Raphael: That’s really valuable virtual real estate. Pat, so how does a seller go about winning the Buy Box, really? As in, what determines who gets the buy box and who doesn’t? Is it the lowest price, I guess, that determines who has the Buy Box? Is it the seller who has the best star rating? Or the maximum number of clicks? What is it?
Prateek: It’s all of those and more.
Raphael: Just never a simple one-word answer to any question that has to do with Amazon. That’s what I’ve learned.
Prateek: Nope. So, as you’re well aware, Raphael, everything on Amazon is algorithm-driven, right? Including the Buy Box. So, Amazon’s Buy Box algorithm looks at several criteria to decide who to award the Buy Box to. First and foremost, you have to be a professional seller.
Raphael: So, if my grandma just wanted to sell some sweaters she knit- how to say that word? Knitted?
Raphael: Knitted. She knitted, she won’t get the Buy Box.
Prateek: Well, she’s French, right? So, they’ll probably make an exception for her. I’m sure. I’m sure somewhere in their algorithm there’s a line if nationality equals French and age greater than 70 and gender equals female, override all rules and award Buy Box.
Raphael: Oh my god. That’s so good.
Prateek: So, as I was saying, they look at several factors, right? Like the seller’s order defect rate, the performance metrics like the pre-fulfillment cancelation rate, the customer service quality, and that would include the turnaround time vis-à-vis customer emails, how long the seller has been on Amazon, and so on.
Raphael: Are all the factors equally important, or are some more important than others?
Prateek: That’s a good question. The two most important factors determining who gets the Buy Box are product pricing and fulfillment methods.
Raphael: Ah. Product pricing and fulfillment methods.
Prateek: Exactly. And let’s not be naïve here because we’re talking about professional sellers who do thousands of units a day which is why there’s not much separating them in terms of pricing. What I mean is they are all selling at competitive prices. If we were to go back to the Columbian coffee example, you won’t see one seller selling it at $5.99 and $7.99. It’ll be more like $5.99 and $6.01. That’s how small the differences are. Literally just a few cents.
Raphael: That’s why there are some crazy prices on Amazon all the time. Okay.
Prateek: This is the more interesting part, the fulfillment method. You could either use FBM or FBA.
Raphael: Pat. Think about my grandma here, okay? So, she wants to start selling sweaters. What language are you speaking right now? She won’t understand FBA, FBM. What is all this?
Prateek: It’s not that complicated, Raphael. So, FBA stands for Fulfillment By Amazon, while FBM stands for Fulfillment By Merchant. Half your problems already disappear if you choose to go with FBA. When you choose FBA, you store your inventory at Amazon’s warehouses. When an order is received, Amazon packs your order and ships it to the customer. Given Amazon’s mammoth fulfillment infrastructure, you are, without a doubt, more likely to fulfill orders faster using FBA than if you were to fulfill orders on your own. Amazon knows this too, right? This is why if you use FBA for a particular product, you have a higher likelihood of winning the Buy Box for that product.
Raphael: You know what, Pat? That actually reminds me of something I read recently. Not only has Amazon stopped receiving new applications for entering into their FBA program but they also raised the bar for those who are using it.
Prateek: Exactly. Exactly. Because Amazon knows that, when it comes to fulfilling orders, there’s no way you or I or your grandma could do it better than them. After all, they operate hundreds of fulfillment centers across America each being a million square feet in size, and employ hundreds of thousands of people whose sole responsibility is to pick, pack and get orders out as fast as possible.
Raphael: I love it. Pick, pack, and get orders. That completely makes sense.
Prateek: Of course, there might be situations or products where you’re better off using FBM. For example, if you sell perishable products, then you don’t want to risk having them sit inside a warehouse for months, right? You’re better off fulfilling them on your own.
Raphael: Yeah, that completely sounds reasonable. Is there anything else that might impact the Buy Box decision?
Prateek: Oh yeah. We’re just getting started.
Raphael: Oh my god, really?
Raphael: Okay, then. Go on, Pat. Please tell us.
Prateek: So, in addition to pricing in your fulfillment method, you need to have a good grip on your overall account health. So, like I said a while ago, Amazon has a bunch of metrics in place to assess your performance as a seller.
Raphael: Yeah. You mentioned the order defect rate, and customer service quality, if I recall correctly?
Prateek: Yes, exactly. So, let’s talk about those, now. The order defect rate has three components: the negative feedback rate, the A-Z claim rate, and the chargeback rate. All put together, the ODR, or Order Defect Rate, should be less than 1%. If it is, your likelihood of winning the Buy Box is higher. You know, I remember a few years ago, when I was working for one of the largest 3P sellers on Amazon, our order defect rate was beyond 1% and Amazon actually removed us from the Toys category. They didn’t allow us to sell toys on Amazon during the holiday season because they wanted only sellers with, you know, who were meeting their 1% ODR standard.
Prateek: Yeah. So, and then you have the fulfillment metrics. By making sure you have sufficient stock when you’ve listed a product on Amazon and getting the products out of your warehouse as fast as possible from the time you receive an order and updating the tracking number on Amazon immediately thereafter, you’d be surprised what the impact can be. Already, Amazon requires professional sellers to have a pre-fulfillment cancellation rate of under 2.5%. So, they’re already setting the bar pretty high. You can really increase your likelihood of winning the Buy Box if you are meeting Amazon’s standards here.
Raphael: Always follow the rule. That’s it.
Prateek: Exactly. Though this is easier said than done, because if you have a huge catalog and are selling thousands of SKUs, you know, across channels like eBay and Rakuten in addition to Amazon, there’s a reason why inventory management is such a big deal. And of course, it’s not enough to just fulfill orders. You must also ship them timely. Otherwise, you risk not meeting the late shipment rate metric. Amazon set that at 4%, which means you must ship at least 96% of all orders timely, and timely means in two days from the day you receive the order. And that’s not all. You must also submit a valid tracking number for 95% of your orders. And then, you also have the buyer/seller contact metrics. This metric measures the percentage of customers’ messages you responded to in under 24 hours, and you are required to answer 90% of messages in under 24 hours.
Raphael: Those are some ambitious goals there, huh?
Prateek: Well, if you want the Buy Box, you know. I mean, look. The fate of your Buy Box, and therefore that of your business, depends on all of these metrics. Something to keep in mind, Raphael, is that the Buy Box rotates between sellers.
Raphael: Okay. Can you explain, please?
Prateek: Of course. What I mean is it’s possible that multiple sellers of the same product meet Amazon’s eligibility criteria for winning the Buy Box, in which case every seller is allowed to have the Buy Box for a certain time period. Now, how long or how little you get to have the Buy Box, depends on your performance metrics. You can impact that, hence the term rotating because it rotates between sellers, though not equally. If one seller is performing better than the rest, the length of their Buy Box win sessions will be higher. So, for example, the top-performing seller of a product could hold the Buy Box for 70% of the time on a given day, while the low-performing seller could hold it for just the remaining 30% of the day.
Raphael: I see. Within the same day?
Prateek: Yes. Exactly, yeah.
Raphael: Okay. Thank you so much, Pat as always you share some really helpful insights. Thank you so much.
Prateek: No problem.
Raphael: And now, it’s time for our pro-tips from Wafa.
Wafa: Hey, guys.
Raphael: Hey Wafa. Thanks for joining us, today.
Wafa: Thank you for having me.
Raphael: Would you please be so kind as to share some actionable tips with our listeners on how they can win the Buy Box in these uncertain times?
Wafa: Yes, of course. Happy to, Raphael. So hey, listeners, I hope you’ve got a pen and paper ready. Maybe a keyboard since that’s simpler and faster. So, pro-tip number one, ** FBM are fulfilled by the merchant. So if you’re just starting out with a new seller central account and you’re not using FBA, you’re going to notice a lag time before your products start to win the Buy Box. So, this is because Amazon doesn’t have evidence that you actually have the products or will be able to fulfill orders. However, if you use FBA, you’ll be approved for a Buy Box much faster. Essentially, new seller central accounts not using FBA are not eligible for the Buy Box until they have reached sufficient sales volume. Pro-tip number two, if you’re selling your products for a lower price on your own website or another channel, you could be penalized by Amazon and may not be awarded by the Buy Box. Pro-tip number three, use a pricer that automatically adjusts the price of your products based on what your competitors are selling for, and what your floor and ceilings are. This will help you stay on top of one of the most important criteria determining Buy Box eligibility. Tip number four, just so you know, when a product loses the Buy Box, all sponsored ads for the product stop running, and if you’re running headline search ads, you’re pretty much just paying for traffic to a page where another seller is going to get the sale. Pro-tip number five, you might be meeting all of Amazon’s eligibility criteria for the Buy Box and yet, not be winning. This can happen if there is a dramatic price increase or decrease. Well, that’s because Amazon is suspicious when there is a massive price fluctuation. They think it could be a counterfeit product and want to protect shoppers. So, avoid sudden huge fluctuations. And that’s it for me.
Prateek: That was amazing.
Raphael: Tip four is really interesting, I feel, about the headline search ads that are running if you don’t have the Buy Box. I didn’t know that.
Prateek: In this particular case, I think all the tips are pretty good, I mean, there were some very specific things. Yeah.
Raphael: Exactly. Great job.
Wafa: Thank you.
Raphael: That’s a wrap, people. More than ever, winning the Buy Box, we know, is paramount for any serious Amazon seller. So, if this episode was not enough for you, if you have any questions about this episode, about the Buy Box or winning the Buy Box, securing the Buy Box, and anything around the Buy Box, go to our LinkedIn page, DataHawk, and simply ask. Wafa, Prateek, and I will answer all of them. See you for our next episode. In the meantime, stay safe, and sell well. Bye-bye.
Wafa: Bye, everyone.