Introduction
Amazon’s Buy Box is a precious spot on product pages where buyers can easily add a product to their shopping cart. The Buy Box is the most important aspect of selling on Amazon since it increases visibility, sales, and overall performance on the platform. But what if third-party sellers, who list the same item for a very low price outside Amazon, influence your Buy Box? This article explores a real-world example where a brand lost its Buy Box because of pricing discrepancies across different retail channels.
In this article, we’ll delve into:
How Amazon monitors pricing across all retail channels
The consequences of price undercutting from external retailers
Real-world case studies and examples
Practical tips on how brands can protect their Buy Box and pricing integrity
What is the Amazon Buy Box?
Amazon Buy Box is likely the single most significant product listing feature on the platform. When a shopper visits an Amazon product page, the Buy Box shows the option to add the product to the shopping cart. It typically includes the highest-selling seller, taking into account price, shipping time, seller performance, and so forth.
Why Winning the Buy Box Matters
Winning the Buy Box directly impacts sales. According to a study by Feedvisor, about 82% of all Amazon sales come from the Buy Box. Sellers who don’t win the Buy Box can see a dramatic drop in sales, even if they’re offering similar or better products.
How Amazon Monitors Prices Across Retail Channels
Amazon is not only tracking prices in its own marketplace—it tracks off-platform channels, as well. This implies that if a product offered on Amazon is available elsewhere for less, Amazon will step in. Amazon has advanced algorithms that look for price discrepancies and can mark listings as having price variations.
How Amazon Monitors Outside Prices
Amazon employs its Machine Learning (ML) algorithms to monitor pricing information throughout the web. The site gathers pricing information from rival websites, such as independent retailers, e-commerce sites, and even marketplaces selling similar or identical products. This information is essential for Amazon’s automated systems to make pricing decisions.
The Importance of Price Consistency
Amazon discourages variability in prices among channels. If your product is being sold at a very low price elsewhere, the listing may indicate to Amazon’s algorithms that your listing is less competitive. Amazon can counteract this by suppressing the Buy Box, i.e., your product is no longer the first choice offered to potential buyers.
The Story: A Brand Loses Its Buy Box
Here’s an actual example of how third-party pricing can lead a brand to lose its Amazon Buy Box:
The Scenario
A reputable brand sold its product on Amazon at a certain price point, with the Buy Box secured for its listing. But a third-party seller listed the same product on another platform (outside of Amazon) at half the MSRP.
Amazon noticed this substantial price difference and realized that the product was no longer competitive. Therefore, Amazon repressed the Buy Box for the brand’s listing, rendering it much more difficult for them to make sales.
The Brand’s Response
The company soon wrote to Amazon, informing them that they were the original supplier, that they were the price leaders, and that they had already sold stock to the particular retailer. But Amazon denied the plea, saying that the price variance on outside channels made the product appear noncompetitive.
The Retailer’s Role
In a bid to fix the issue, the brand wrote to the low-price retailer. They requested that the retailer hike the price to stay in line with the Amazon listing. But the retailer declined, probably because they were out to clear inventory fast at a significantly cut price.
Amazon’s Decision
In spite of the explanation by the brand, Amazon chose to hide the Buy Box because of the price mismatch outside. The brand lost visibility and sales, showing how the action of one retailer outside Amazon could affect the brand’s chances of winning the Buy Box.
Why External Pricing Influences the Buy Box
There are a number of reasons why Amazon takes external pricing into account when establishing eligibility for the Buy Box:
1. Price Competitiveness
Amazon is concerned with offering the best value to its consumers. If the same product is offered at a considerably lower price on another platform, Amazon sees it as less competitive and may adjust the Buy Box eligibility.
2. Brand Trust
Amazon desires to have a high degree of trust with customers. If a product from a brand seems to be priced unevenly from one platform to another, it may damage the value perception of the product, which could decrease customer confidence.
3. Marketplace Integrity
Price consistency between channels keeps Amazon’s marketplace honest. Large pricing variations, if allowed by Amazon, would prompt sellers to price-match in ways that could hurt both the marketplace and the customer.
What This Means for Sellers
This case illustrates a key lesson for brands and sellers on Amazon: Price consistency across all channels is important. Here’s why:
1. The Importance of Price Consistency
Amazon algorithms anticipate consistent pricing. This doesn’t equate to the identical price on every platform, but huge price gaps between Amazon and outside merchants will hurt your Amazon listing’s visibility. Keep all your sales channels competitive in terms of pricing so that you do not get your Buy Box suppressed.
2. Retailer Agreements Are Essential
Brands frequently sell their stock to third-party retailers. These retailers can sell products at cut prices, however, which lower than the brand’s listing on Amazon. Brands must ensure such conflicts don’t arise through having clear agreements with these retailers. Consider having price guidelines or even collaborating with retailers to guarantee external pricing does not impact Amazon performance adversely.
3. Ongoing Price Monitoring
Brands must constantly keep an eye on pricing on platforms to prevent problems. Several third-party software solutions exist to track prices on outside channels and notify you when there are discrepancies. Constantly checking on pricing can allow you to react fast before Amazon downgrades the Buy Box.
How to Defend Your Buy Box: Real-World Tips
Sellers require a plan to defend the Buy Box from outside price problems. These are some real-world tips:
1. Have Clear Pricing Policies with Retailers
When selling through third-party retailers, have clear policies regarding pricing. Set out what price ranges are acceptable and make sure the retailer understands how important it is not to price the item too low, particularly if it impacts Amazon performance.
2. Monitor Third-Party Pricing
Monitor third-party software or manual tracking software to observe the price your product is being charged elsewhere on other platforms outside Amazon. Some of these software packages such as Keepa or CamelCamelCamel can monitor Amazon price history, but you can also use specialized software to monitor prices elsewhere on platforms such as eBay or Walmart.
3. Tweak Your Own Pricing
If your product is underpriced by another seller off Amazon, ask yourself if you can shift your pricing strategy to be competitive. That could mean discounts or bundles that make your Amazon price more appealing.
4. Price Match Automate
Some traders employ price matching technology to dynamically alter prices in response to the competition. Although Amazon’s algorithm may miss a minor price variation, a significant variation from competition may adversely affect your Buy Box potential.
5. Apply Inventory Control
If you’re providing inventory to third-party retailers, keep track of their inventory levels. Ensure that your pricing strategies align with your stock availability, and communicate with retailers to make sure their pricing reflects current market conditions.
Conclusion
In summary, there is a considerable influence that external pricing can exert on your win and retention of the Amazon Buy Box. Amazon’s algorithms consider price variations between channels, and a low-price listing elsewhere will make your Buy Box eligibility evaporate. To safeguard your brand, keep your prices consistent, develop strong relationships with retailers, and keep external pricing under tight control.
Lesson for Brands: Regardless of how much you manage your Amazon listings, channel pricing is key. A single low price somewhere can steal your visibility and sales on Amazon. Guard your Buy Box with effective pricing tactics, ongoing monitoring, and clear arrangements with third-party sellers.
