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Why Have My Amazon Sales Dropped?
If you’re asking this question, one of the first things you should check on is if there are other sellers in your Amazon listing. If so, are they occupying the buy box? Were they before? If there weren’t other sellers in the listing before, or they weren’t winning the buy box before, you may have just found your answer.
What is the Amazon Buy Box?
If you haven’t heard this term before, it’s one you’ll want to remember. The buy box is simply the section of an Amazon product detail page containing the product price, shipping information, inventory availability, seller name, fulfillment details, and the “Add to Cart” and “Buy Now” buttons.
Whichever seller’s name appears on the “Sold by” line will win the sale. If you’re the only seller in the product listing, then you’ll always win the buy box.
If There are Multiple Sellers, Who Wins the Buy Box?
If there are multiple sellers in the listing, then each seller is competing for the buy box. Only the seller who is in the buy box at the time of conversion will capture the sale.
How to Win the Amazon Buy Box
This begs the question: how do you get the buy box if you’re competing against other sellers?
Amazon’s algorithm reviews multiple factors to determine who will win the buy box. As you’ll see, each of the factors keeps customer experience at top of mind.
What Factors Determine Who Wins the Amazon Buy Box?
- Amazon Retail presence. If Amazon Retail is in the listing, they will win the buy box. The house always wins.
- Price after shipping. The lower, the better.
- Shipping method. FBA is favored over FBM because it typically offers faster shipping. If a seller has Seller Fulfilled Prime, they can compete better against FBA.
- Delivery speed. Faster is better. This is another reason FBA is prioritized over FBM, though more FBM offers are reaching FBA-equivalent speeds.
- Percent of successful orders. The higher, the better.
- Defect rate. The lower, the better. Amazon built its empire by curating a great customer experience.
- On-time delivery rate. The higher, the better.
- Late shipment rate. The lower, the better.
- Percent of orders with valid tracking numbers. Shoppers want to be able to track where their order is. This is another reason FBA is often favored.
- Seller reviews & rating. How many reviews does the seller have, and what is their average seller rating? The more reviews and the higher the ratings, the better.
- Customer response time. How quickly do you get back to customers when they ask a question?
- Available inventory. If you’re out-of-stock, you’re not even in the running. The more often a seller has stock outs, the less likely they are to win the buy box in the future.
- Cancellation rates. How often do customers cancel their orders from the seller? Lower is better.
- Refund rate. How often are products returned to the seller, and how quickly does the seller resolve them?
Product Price & Shipping Method are King
While all of these factors are important, Amazon seems to rank product pricing and shipping speed as the most important. As a result, sellers sometimes engage in a “race to zero,” where each continues to drop their prices in order to win the buy box.
This is a win for shoppers, who get a better deal. However, this can disadvantage smaller sellers who cannot afford to withstand narrowed margins for as long as larger sellers.
Create a Winning Amazon Buy Box Strategy
With these factors in mind, here are some best practices sellers should observe to win the Amazon buy box:
If You’re the Manufacturer, Control Distribution
If you are both the manufacturer and the seller, strive to maintain tight control over your distribution network. If you ensure that you’re the only Amazon seller with inventory, you will always win the buy box. If you have a leaky distribution network, you may lose the buy box to unauthorized third-party sellers and retail arbitrage who come in and undercut your pricing.
Minimize Stock Outs with Inventory Forecasting
You always need to have inventory available, but you don’t want to store too much inventory at FBA, otherwise you risk incurring long-term storage fees. You must strike a balance of constantly having enough inventory, but never too much.
To achieve this, you may need to invest in inventory forecasting software. You may get by with an Excel spreadsheet and macros for a time, but as you scale, you will need software.
Inventory forecasting software should factor in production times, lead times broken out by segment (on the water, in port, transporting to warehouse), inventory currently available, forecasted sell-through date, location and expected arrival of new inventory, current sales velocity, year-over-year trending and seasonality, and more. It should give you all the details you need – in real-time time – to throttle up or throttle down marketing as needed to maintain inventory levels through replenishment.
Check Buyer-Seller Messaging Twice per Day
Amazon requires sellers to respond to customer messages quickly. If you fail to respond quickly enough, your score will decrease.
Fulfill via FBA when Possible
Fast delivery is a key driver behind Amazon’s success with consumers. As such, Amazon favors offers that can guarantee fast shipping, and that typically means FBA.
Thanks to third-party logistics providers (3PLs), sellers can deliver fast shipping through FBM in many cases, but Amazon still favors FBA. This is the source of some regulatory scrutiny, so it may change in the future. Until it does, brands should always try to have an FBA offering live, supported by a FBM backup.
What If the Amazon Buy Box is Missing?
In some cases, you may notice that the buy box … isn’t there. At least, not fully there. This is called “buy box suppression” or a “rolled buy box.”
As you can see, the “Add to Cart” and “Buy Now” buttons are hidden from view. To see the standard buying information and place an order, shoppers must click “See All Buying Options.”
What Causes Amazon Buy Box Suppression?
Amazon, along with other major online marketplaces, enforces a Marketplace Fair Pricing Policy. This policy effectively allows Amazon to penalize sellers if a given product is offered at a lower price elsewhere online by collapsing the buy box.
Suppressed Buy Boxes Cost Sales
While a suppressed buy box seems like a relatively simple difference, it can have substantial effects. By disrupting the standard Amazon shopping experience by concealing information behind additional clicks, Amazon effectively makes shoppers pause and question why the experience is different. Because there is a wealth of options of Amazon, many shoppers choose to exit the atypical listing rather than click through. As a result, sales plummet when the buy box is suppressed.
Normal vs Suppressed Buy Box
How Do You Prevent Amazon Buy Box Suppression?
The only way to prevent a suppressed buy box is to standardize your pricing across online marketplaces. This is another reason why controlling your distribution network is extremely important. Even if other sellers don’t appear in your Amazon listing, they can still trigger a suppressed buy box by selling the product elsewhere online.
The Buy Box & Amazon Advertising
One final consideration before we end: Amazon advertising.
A seller’s Amazon Sponsored Product ads only run when that seller is in the buy box. If there are multiple sellers competing for the buy box, Sponsored Product ads will only run if the currently winning seller is running them.
If you’re a manufacturer that sells through multiple third-party sellers, this means that your products will only have marketing for some of the time. If competing against a rival product sold by a single seller that runs advertising, that single seller has a distinct advantage. Their ads run 100% of the time, meaning they continue to build traction when your ads are off. If you have multiple sellers and all of them run ads, your product is still at a disadvantage compared to a solo rival seller, because each of your sellers’ ads build traction independently from each other.
Sponsored Brand ads will run regardless of whether the seller is in the buy box, but the seller may be less inclined to run Sponsored Brand ads that feed another seller’s sales.
The Solution: Have an Exclusive Seller or Require all Sellers to Run Marketing
To overcome these obstacles, the best practice is to have only one exclusive seller for the product. This can be you if you run your own Seller Central account or a third-party seller you partner with.
If you recognize the importance of the buy box for sales growth but still wish to partner with multiple third-party sellers, then your next best option is to require all sellers to run Amazon advertising campaigns. That way, your listings always have ads running to compete with rivals, no matter which seller occupies the buy box.
If you’re interested, you can learn more about pros and cons of seller strategies in our post, Should You Sell to Multiple Sellers or an Exclusive Seller?
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