Who’s Sitting atop your Amazon Listings?

You’re shopping on Amazon and find a product you like. You’re satisfied, and you’re done looking—this is it. You click “Buy Now” or “Add to Cart” from the product page, then another few buttons at most, and recline in your chair.

You just used the buy box. That is, you bought the product from the seller who at that moment owned the buy box for that product page. Were there other sellers offering the same product there? Maybe—but you didn’t look. Were some of them even offering it at a lower price? Again, maybe. If that seems shortsighted, rest assured that you didn’t do anything weird. E-commerce agencies and industry watchers report that somewhere between 80%-90% of sales on Amazon go through the buy box.

If you’re an Amazon brand, the buy box system can induce some anxiety. That’s because there’s usually only one offer that you want the shopper to buy. It’s the offer from the seller who best protects your brand and product experience, who adheres to the pricing policies that you set, and whose success safeguards the relationships and strategy that you’ve relied on to grow and thrive.

Suppose you sell to Amazon (which means you use Vendor Central). In that case, you want shoppers to buy the “Shipped and Sold by Amazon.com” offer; the quality of your relationship with Amazon depends on Amazon being able to sell the inventory they’ve bought from you consistently.

If you as a brand sell on Amazon (you use Seller Central), you want the shopper to buy your product from your seller account. You, after all, know you can provide your brand customers with the best experience, and you’ll keep your price at the right level. It’s also true that Amazon shoppers are less likely to bounce from your product page to a competitor’s if they see “Sold by [your brand name]” rather than an offer from a random shadowy dealer with a name like “5uper5ellerBestPrice“.

And, if you don’t use Seller Central yourself but have a trusted Amazon sales partner, you want that seller-partner to get the sales.

In every case, you can protect your business goals by taking steps to get the right offer in the buy box.

Think as Amazon Thinks

There are over 75 million products sold on Amazon.com, so, as you’d expect, the question of who is in a product page’s buy box at any given time is entirely decided by an algorithm.

How the Amazon buy box algorithm works, in its details, is a mystery. It’s proprietary, and Amazon provides very few details. It is, we can guess, a complex piece of code that processes many values in order to output a decision, but Amazon’s description of its workings is opaque and brief:

“There are two steps to selecting offers to feature. First, we determine which items are eligible to be featured based on criteria that are designed to give customers a great shopping experience. Second, we select compelling offers to feature from among this pool of eligible offers.”

Huh? Luckily though, we can still say a lot about the buy box algorithm’s general principles—from Amazon’s few provided details, our observations, and understanding what Amazon wants for its customers.

Let’s work from the last point here. Amazon is famously “customer-obsessed,” and the logic of the buy box algorithm (its official Amazon name is the “featured offer”) flows from this corporate priority. What kind of experience do you, as a customer, want when you’re considering buying a product on Amazon? If you’re like most people, you want it at a great price and trust that you’ll be able to quickly resolve any problems with your purchase when you receive the item, and of course, you want it fast.

Here are Amazon’s published recommendations for “Becoming the Featured Offer“:

  1. Price your items competitively
  2. Offer faster shipping and free shipping
  3. Provide great customer service
  4. Keep stock available

The first three points follow from “customer obsession”—from Amazon’s understanding of how it provides the best experience to people who want to buy goods on its site. The last point, “Keep stock available,” is mostly common sense: if you or your preferred seller doesn’t have an offer, then no one can buy it, so it can’t be in the buy box. You should also know that if, while the “right” offer is out of stock, the “wrong” offer starts selling well at a competitive price with available Prime shipping and no indications of customer dissatisfaction, it might be hard to subsequently knock it down from the buy box. If the Amazon buy box algorithm is satisfied that Amazon customers are having a great shopping experience, then why should it change anything?

I’m Worried about my Prices

Note that price is only one of the components of the algorithm. It’s easy to find Amazon product pages where the lowest-priced offer isn’t in the buy box. Often it will be an offer without a Prime shipping badge or one whose seller has a poor feedback score (and thus is less likely, in Amazon’s view, to provide for a good customer experience).

But price is a crucial aspect of the algorithm, and if the other variables are roughly equal between two offers, you should count on the lower-priced offer winning the buy box.

And this can be uniquely lousy news for a brand because it can screw up sales performance not just on Amazon, but all over the internet, and by doing so, throw your multi-channel e-commerce strategy into disarray and sour relationships that you’ve spent a long time building.

You need sellers of your product to maintain a level retail price across channels. When they do, everyone can maintain an acceptable margin, and everyone feels that they have an equal chance of selling in their channel.

But if the buy box price on Amazon falls, the sales partners who uphold your intended price can feel cheated. Sales may be siphoned off from other channels to Amazon—and if there are multiple sellers on your Amazon listing, siphoned to the seller among them with the new low price. Worse yet, those left-behind sales partners may decide to lower their prices in order to compete better. Prices can spiral lower and lower, continually compressing margin. Complaints can grow louder inside and outside your organization.

What’s worse, a significant downward price spiral can happen very suddenly—in the course of a few hours—because the process that produces it is in some cases, automated. These days, Amazon and other major platforms constantly crawl the web to monitor prices, to establish their own platform’s prices as the lowest. If Amazon finds a lower price on your product in this activity at, say, Walmart, it may decline to award the buy box to any offer on Amazon unless it matches that low price. When Amazon recommends that you “price your items competitively,” it means “with regard to all other domestic e-commerce”. And by “competitive,” it means “at the lowest going price.”

The Light above the Buy Box

Clearly, this situation needs a systematic solution. Everyone who sells your product on the internet needs to be subject to the same understanding about pricing, and the prices need to be equivalent across all sales channels, and this understanding needs to be formalized. This is the only reliable way to mitigate the power that Amazon can exert over your profitability, brand equity, and network of valued partners through its customer-obsessed buy box algorithm.

That formalized agreement is a minimum-advertised-price (MAP) policy. You as a brand can unilaterally introduce a MAP policy, having all authorized sellers agree contractually not to advertise products at prices lower than a given level for each of your products. You can also stipulate penalties. For instance, you might decide that a specific volume or frequency of MAP violations from a seller will give you the right to void sales agreements with that party.

Enforcing MAP can be challenging, especially for brands with large catalogs and brands sold across the web. Again, because of automated price-matching, price erosion can happen fast. MAP Policy Partners’ monitoring and enforcement services let you proactively solve problems across your catalog and channels, so you can act sooner to resolve MAP violations and so preserve margin and good vibes throughout your valued accounts. We said earlier that Amazon crawls the web to find low prices. Well, so does MAP Policy Partners, but our crawling benefits you by showing you when and where prices on your products changed—giving you insights from which you can choose further actions that strengthen your e-commerce hand.

Let us help you make Amazon’s buy box work for your business all the time.