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The Amazon Ecosystem - Winning the Buy Box

The Amazon ecosystem consists of three primary components: owned media, paid media, and earned media. Optimizing each piece of that ecosystem is necessary to run a successful Amazon program. However, there’s a key component that also underlies success on Amazon and doesn’t necessarily fall into any of those three categories: winning the Buy Box.

Winning the lucrative Buy Box, or being the seller prominently displayed to customers on an Amazon product page, provides a major competitive edge. According to Big Commerce, Amazon reports that 82% of sales come through the Buy Box, and that the percentage is even higher for mobile purchases.

So how do you win the Buy Box?

Thankfully, many of the best practices for winning the Buy Box overlap with general best practices on Amazon. Not surprisingly, Amazon wants to promote experiences that will make shoppers happy and align with their customer-first mentality. While not an exhaustive list, here are some of the key components that factor into winning the Buy Box:

1) Account Health

Amazon looks at several aspects of account health when determining Buy Box eligibility. The key metrics they call out specifically are Order Defect Rate (ODR), Cancellation Rate, and Late Shipment Rate. These metrics can be accessed in the Account Health section of the user interface (UI). The idea is to keep these metrics at or as close to 0% as possible, but there are distinct key thresholds for each:

  • An Order Defect Rate above 1% can result in account deactivation. Negative Feedback A-to-Z Guarantee Claims, and Credit Card Chargebacks all contribute toward your Order Defect Rate. Note: if a buyer withdraws negative feedback, it is not counted as part of ODR, so following up with customers that post a negative rating to improve their experience can help reduce ODR issues.
  • Cancellation Rate must stay below 2.5% to sell on Amazon. Note that this is only for seller-initiated cancelled orders since those create a poor customer experience and often indicate a seller’s inability to maintain accurate inventory levels.
  • Late Shipment Rate above 4% may result in account deactivation. This figure represents the percentage of orders that ship after their expected ship date. Please note that this is different from Late Delivery Rate.

2) Order Volume

To become Buy Box eligible, Amazon “requires that you have sufficient order volume” so they can accurately assess your performance. The exact volume of orders is not specified, but we do know it varies by category.

3) Competitive Pricing

Part of Amazon’s value proposition is offering low prices to its customers and a low price on the Buy Box is more likely to drive conversions, so it’s no surprise that this is a key component. Amazon looks at “landed price”, which equates to unit price plus shipping fees. Amazon offers several tools and reports to understand how your price compares to competitors, including the Manage Pricing page, the Pricing Dashboard, and the Selling Coach Pricing Report.

While having a low price is helpful for winning the Buy Box, it’s important not to think of your Amazon strategy in a bubble. Offering lower prices on Amazon than on your site could cause overall site conversions to decline and harm the success of other programs, like Google Shopping, where your own site’s products may show alongside your products on Amazon. It’s also important to have internal strategic pricing discussions around whether lowering prices on Amazon is aligned or in conflict with your brand’s broader pricing strategy.

4) Shipping

Sellers that offer more attractive shipping options, like Prime or free shipping, are more likely to win the Buy Box. Better shipping options increase the likelihood of a product to convert while also benefitting the customer. Different fulfillment methods can play a part as well, with Amazon typically favoring advertisers using Fulfillment by Amazon.

The Buy Box’s impact on Paid Media

Winning the Buy Box is required to run Sponsored Product ads on a given product. Because of the order volume aspect of winning the Buy Box, this often means that a product needs to show at least some promise organically before it can be pushed via Sponsored Product advertising. Having strong owned media, like product details and images, can help improve your organic ranking on Amazon to get that traction.

If you’re driving customers to a product detail page for an item where you’re not winning the Buy Box, you’re essentially helping to increase sales for whichever competitor is winning the Buy Box. To make matters worse, your reporting will still show that a click on your ad drove a sale on that product, even if the sale went to a competitor.

The Buy Box’s impact on Earned Media

As mentioned earlier, 82% of sales happen through the Buy Box. Several key pieces of earned media, including reviews and order volume, can be greatly enhanced by generating more sales. Winning the Buy Box also creates opportunity to increase another earned media element, detail page views, by enabling Sponsored Product advertising and creating an ideal scenario for Sponsored Brand advertising. These ads play a key role in driving customers to your product detail pages.

Want to learn more about the Amazon ecosystem? Download our new Amazon Advertising Strategy Guide to find out earned, owned, and paid media interplay to form an Amazon ads program.

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