Amazon Buy Box Algorithm: Understanding how it works in order to leverage it
If you came here thinking that you’ll get an Amazon buy box algorithm hack, I’m sorry to disappoint. Because if you did your homework about Amazon, you would know by now that winning the buy box is a very complicated undertaking. There are just way too many factors at play to come up with a magic bullet.
But if you came here to try and understand how the Amazon buy box algorithm works, well that I can do for you.
Shall we start?
Amazon Buy Box Algorithm: The purpose
“To provide customers with the best shopping experience” that’s the main purpose behind the the Amazon Buy Box.
How you ask? Well the Amazon Buy Box algorithm ascertains which listing provides the best value in terms of price and seller performance. In short, it tells you that you’re not paying for something overpriced, and that you’re buying from a competent seller.
There are some that believes the Buy Box algorithm only factors in pricing. And though there really isn’t no proof, unless Amazon reveals their algorithm parameters, I believe that assumption to be incorrect.
Why you ask? Well, sellers are not the reason behind Amazon’s success. It’s the buyers. So the better the experience for buyers are, the higher the sales. Besides, if you think about it, sellers are on Amazon because they know that the platform is oozing with buyers.
So, do you really think they would jeopardize that?
Amazon Buy Box Algorithm: How it works
First, the algorithm lists all eligible sellers and takes note of their performance (more on this later). It then compares sellers providing the same product using several variables (more on this later) The seller that can provide the best value to consumers for a specific product is awarded the Buy Box.
The variables I mentioned changes per product and/or category. So even if a seller may lose out to a rival on a specific product, he/she may win over said rival on another.
Quite fair if you ask me.
Buy Box Eligibility
Yes, you read that right. I did mention the word “eligible”.
I know, rules. Amazon has lots of them. It can be a headache, but that’s the price we all have to pay to use the world’s largest online retail platform.
In order to be eligible to win the Buy Box, you need to have an Amazon Featured Merchant status. This means that you need to be a subscription-based Pro Merchant with excellent performance metrics.
Some of the criterias Amazon use are:
- Seller account tenure
- Performance metrics
- Fulfillment options, pricing, shipping speed, etc
- Customer feedback
In the end, the determining factors narrows down to volume, product availability, price etc. Keep in mind though that all the factors I mentioned are always in flux. Thus the winner of the Buy Box also changes.
Top Tip: Formula for winning the Buy Box
- Ascertain your product’s current lowest selling price
- Subtract 2.7%
- Subtract an additional penny
Lowest price – 2.7% – $.01 = Potential Buy Box win
Take note that this is only a formula, and that you need to factor in your performance as a seller and you having a Amazon Featured Merchant status to actually win the Buy Box.
Winning The Amazon Buy Box: Other things you should consider
Aside from just trying to provide excellent customer service and competitive prices, there are some other ways to get you noticed by Amazon – and hopefully be considered to fight over the coveted Buy Box.
Using Fulfillment By Amazon (FBA)
Paid Amazon system which allows sellers Amazon to handle the entire fulfillment process for every order they close.
The plus points you get when using FBA in influencing a Buy Box win are:
- Shipping Time
- On-Time Delivery Rate
- Inventory Depth
Consider Your “Landed Price Variables”
This is about assessing the price of your listings. And by price, I mean the total “cost” the buyer will have to pay before receiving his/her order. Basically, this includes handling, shipping, paying the listing price etc.
If you want a fighting chance in winning the Buy Box, you need to consider your:
- Amazon Seller fees
- Return cost
- Amazon budget
Take Care Of Your Seller Rating (must be above 98%)
Seller Rating is a seller performance rating based on customer feedback, customer response rate and shipping performance.
This is self explanatory actually. Provide great service, and customers will love you. The more love they give you, the better the relation you will have with Amazon.
Seller Rating variables:
- Perfect Order Performance (POP)
- Order Defect Rate (ODR)
- Pre- Fulfillment Cancellation Rate
- Last Ship Rate
- Percent of Orders Refunded
How fast you can ship an order to your customer is a determining factor in winning the Buy Box. The formula Amazon uses for this is:
Projected shipping time and actual shipping time
In short, your customer satisfaction rating. The better your feedback is, the better your chances of winning the Buy Box.
Computation for the rating system takes into account orders from the last 365 days, but places more emphasis on order made from the last 90 days.
To ensure that you have the best chance of winning the Buy Box, you need to have a 100% feedback Score.
Always Be Well Stocked
Amazon sums things up nicely on this one, and I quote:
“If you have no current stock for a product, you cannot win the Buy Box.”– Amazon
In short, make sure to do an inventory of your stocks from time to time.
Too many things to consider right? Yeah, I agree. Way too many factors to consider for a chance to win something that is temporary. But then again, that’s the nature of business. You need to do everything just to be one step ahead of the competition. If you’re not doing it, your competition is, so might as well, yeah?
Anyway, I hope that this article about Amazon buy box algorithm, though it morphed into a how to win the Amazon buy box article, taught you a thing or two about how it works.
If you have any question, suggestions, or if you just want to share anything related to article, feel free to do so in the comment section below.
As always, have a great day, and see you next time.
Johann is a Psychology major turned online writer and branding/marketing consultant since 2008. He now happily calls SellerLift home, and is the person behind their blog content.
In his spare time, and to remind himself that there is more to life than his computer monitor, he throws himself down steep country roads on his longboard, takes black and white photos, and produces lounge music for an independent music label.