In our first Digital Retail Glossary post, we focused on product content—above the fold, below the fold, A+ content, and enhanced manufacturer content.
Here, we delve into an Amazon-specific term, the Buy Box, where Amazon highlights a merchant (or itself) as the default seller for a product.
When you win the Buy Box, shoppers who click the most prominent “Add to Cart” button on a product page will be buying from you. For brand manufacturers selling directly to Amazon, how often you win the Buy Box will determine how much of the demand for one of your products is captured directly by Amazon versus how much is captured by third-party merchants.
The Buy Box: An Introduction
The Buy Box is the box on a product page where customers add a product to their shopping carts with the simple quantity dropdown and “Add to Cart” button. It’s often accompanied by an option to join Amazon Prime or Amazon Mom for non-members.
When a shopper chooses the default “Add to Cart” option on a product page, they are choosing to buy a product from the seller Amazon has designated as the default for this product at this moment. For sellers, we call this “winning the Buy Box,” and it’s critical to first-party vendors selling directly to Amazon and third-party resellers alike.
The Buy Box winner is dynamic and changes frequently, which ensures competition between sellers and, ideally, the best possible deal for a shopper at any given time.
Anatomy of an Amazon Add-to-Cart Decision
Let’s review the ways Amazon shoppers can choose a seller for a product they’ve decided to purchase.
First, the default buy box option. For many Amazon shoppers, the selection of a seller begins and ends here—perhaps without even noticing that a seller has been chosen. The example below shows a third-party seller, Court House Supplies, who has temporarily won the Buy Box for a Crayola product.
Second, a shopper can look just below the default Buy Box for Amazon’s selection of other highlighted sellers.
Third, a shopper can browse the offer-listing page and choose any seller with inventory.
The Buy Box seller has a significant advantage here and will likely gather most of an item’s sales. Often, as in the example below, Amazon itself is the buy box winner:
For brands selling most of their products to Amazon directly, third-party sellers will still sell many of your products. The more Amazon wins the Buy Box, the more consumer demand you capture for yourself (and your Vendor Manager at Amazon), rather than third-party resellers.
You may find it helpful to benchmark how many third-party sellers are competing with Amazon for a given SKU. Our Amazon FastMovers reports benchmark the average number of 3P sellers in more than 10 categories and show detail for the top 100 products in a given month.
Factors Influencing the Buy Box Winner Selection—And What You Can Do
Although Amazon is tight-lipped about its exact formula for choosing Buy Box winners, a few factors clearly influence who wins:
- Competitive Pricing: In line with Amazon’s customer-centric ethos, competitive pricing is the most important factor in selecting a Buy Box winner.
Although first-party sellers don’t have direct control over Amazon’s algorithmic pricing, brand manufacturers need to sell to Amazon at as low prices as possible so that Amazon can remain competitive against aggressive third-party sellers.
Working with our customers, we’ve seen third-party merchants undercutting Amazon by up to 40% to win the Buy Box. When you notice this pattern, we recommend bringing the data to your Amazon vendor manager to discuss strategies for putting Amazon back in the Buy Box.
- In-Stock Inventory: A seller without in-stock inventory can’t win the Buy Box, and it’s possible that a history of erratic availability hurts a seller’s chances. Monitoring your product availability and implementing smarter inventory planning practices can help here.
- Fulfillment by Amazon and Prime eligibility: Amazon favors its own fulfillment options. For brand manufacturers selling largely through Amazon directly, this is an advantage over third-party resellers, but many resellers do fulfill their products through Amazon.
- Merchant ratings: For third-party merchants, a track record of a positive customer experience is key. Amazon won’t promote a merchant that has caused problems for customers.
How Often Are You Winning?
Do you know how often you (through Amazon) are winning the Buy Box for your products?
Profitero’s daily Buy Box analytics determine where you are losing the Buy Box to third-party resellers, how your pricing compares to theirs, and on which products you’re at greatest risk of losing the Buy Box.
Identifying these problem products and drivers enable you to make better, smarter, faster decisions.