For many brands, success in e-commerce means success on Amazon, which depends on consistently winning the Amazon Buy Box, where over 85% of all sales convert.
In the e-commerce arena, Amazon receives the lion’s share of attention from business media, senior management and brand teams alike. Its reach is near-global, its impact on the retail channel is unprecedented, and its sales continue to grow rapidly. Understandably, for many brands, success in e-commerce means success on Amazon, which depends on consistently winning the Amazon Buy Box, where over 85% of all sales convert.
Buy Box Winners & Losers
The Buy Box is the seemingly innocuous section on the right side of an Amazon product detail page. It’s where the shopper adds a product to their cart or clicks for instant purchase with ‘1-click ordering’. Like most things on Amazon, the Buy Box is constantly updated, based on data and algorithms, but ultimately the product that wins the Buy Box wins the sale.
Items eligible for the buy box include products sold by Amazon and those by many third-party sellers. This means rival brands are not your only competition to be aware of on Amazon. Third-party sellers who also sell your products on Amazon, can compete directly with you via the Buy Box.
Losing the Buy Box can also reduce your return on investment from advertising on the Amazon platform. If you don’t own the Buy Box, your Sponsored Products ads for that product will stop running, and Sponsored Brands (formerly Headline Search Ads) could be delivering traffic to rival sellers.
Understanding Amazon’s Buy Box algorithms
The goal behind Amazon Buy Box and Search algorithms is to provide shoppers with the most relevant results for their search keywords, and in parallel create competition among products and sellers. By developing its Buy Box algorithm, Amazon has ensured that only the most trusted and competitive products and sellers win the space – resulting in optimum customer experience.
Criteria for winning the Buy Box are based on a combination of factors including price, availability, rating & reviews, sales track record, and profitability.
Price
It might be assumed that the product or seller with the lowest price wins the Buy Box – but that’s not always the case. It’s true that a competitive price is vital in any e-commerce platform including Amazon, where prices shift frequently throughout the day. Brands need to keep track of price variations to remain competitive with rival suppliers and products. But, price is just one of the sales fundamentals that determine Buy Box ‘ownership’ – and setting your product at the lowest ticket value across the board may not necessarily be the best policy for winning the Amazon Buy Box all the time.
Availability
Even more so than in traditional retail, managing inventory levels and product availability is crucial in online platforms such as Amazon. It is essential to avoid going out of stock or even running too low on inventory. It’s obvious a consumer can’t buy your product if it is not available – so it’s not going to get into the Buy Box, but the damage can last longer than time spent out of stock. Being out of stock for any length of time can lead to your product rapidly losing Search rank and therefore future Buy Box presence. Even when the product is back in stock, it can take some time to recover its previously held position.
Ratings & Reviews
Amazon leverages shoppers’ opinions as expressed through Ratings & Reviews to understand consumer preferences – in particular, the number of reviews posted. Therefore, having a high number of positive reviews in the previous 30 days, which effectively represents the up-to-date popularity of a product, will positively influence the Amazon’s Buy Box algorithm in your product’s favor. This is why it makes sense to monitor Rating & Reviews at a product-level.
Sales Track Record
Success breeds success. A product’s conversion history and its position on ‘bestsellers lists’ are also trusted indicators of shopper preference. Unsurprisingly Amazon gives preference to products that sell! So do what you can to create the virtuous circle that will keep your products at the top of the popularity parade.
Product Profitability
Put simply Amazon wants to make money on the items it sells – if it can’t, it will demote, or even de-list under-performing products. Amazon describes these products as CRaP, or Can't Realize a Profit. In physical stores, retailers place your most profitable products at eye level on the shelf. On Amazon, this equates to better Buy Box performance for the most profitable items in a category.
Timely Amazon Analytics
Always winning the Amazon Buy Box involves optimizing all of the above factors on a daily and even intra-day basis. Given the importance of Amazon as a retail platform, and the frequency with which prices and product listings change on the site, brands need to consider high-frequency monitoring of fundamentals that influence the Buy Box, such as Price, and Availability as they can fluctuate significantly over the course of a single day.
Read about what else brands need to do to succeed on Amazon: download the eBook, The Four-Stage Guide to Amazon Perfect Store Presence & Performance for Brands.
