Ride the Bull – Winning the Buy Box on Amazon

In his April 2017 letter to shareholders, Amazon Founder and CEO Jeff Bezos said the following:

“There are many advantages to a customer-centric approach, but here’s the big one: customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great. Even when they don’t yet know it, customers want something better, and your desire to delight customers will drive you to invent on their behalf. No customer ever asked Amazon to create the Prime membership program, but it sure turns out they wanted it…” – Jeff Bezos

If you are considering starting an Amazon based business, or you simply want to take advantage of this huge marketplace to grow the business that you already have, I have some good news for you. The Amazon Marketplace is a great platform that allows you to not only establish a brand, but to sell your products and to earn a lot of money – if you know how to Win the Buy Box.

The buy box is not simply awarded to one seller, but instead, several sellers often share the buy box. In order to determine who will be listed in the buy box, Amazon uses an advanced algorithm, honed and tuned via trillions of clicks and customer interactions. And while some people may claim that you can beat the system and get listed in the buy box by doing specific things, the best way to win the buy box is to be a good seller, with highly rated products and not charge unreasonable prices (gouging).

When no one is listed in the buy box, or you simply do not see on a product page, it’s often because none of the sellers have met the requirements of the buy box. This is an example of an item with no Buy Box.

In April 2017, Sofia Vergara from ABC’s Modern Family posted a video on her Instagram where she interacted playfully, with this product in her pool. That video went viral, receiving a few million views, and the product became a red-hot search on Amazon.

In these situations, it really is simply Economics 101 – supply and demand. What was a $39.95 item on Amazon one day, started to sell very quickly (you often see 1,000’s of units move in a 24-48 hour time frame) and sellers reacted, trying to maximize margin and take advantage of a unique opportunity. Just one day later, the low price was above $100.

Amazon’s reacts to this by often ‘pulling the buy box.’ See example above, there is no Buy box, you have to click to see all the prices.

The item is still for sale, but Amazon forces an extra click so customers can see that there are other options, and while they may not be lower priced, that is what the marketplace dictates.

In order for a seller to be listed in the buy box, the product that they are selling has to be new. It cannot be used because used items will have their own ‘buy used box.’

The product must be in stock in order to win the buy box. If the product is not in stock, then the seller will not win the buy box. In other words, the buy box is not going to show products that are out of stock, instead, they are going to rotate to the next seller in line for the buy box.

The only exception to this rule is when a product is listed as back ordered. If a product is back ordered, it means that the seller is accepting orders for the product, however, the product is not ready to be shipped and it will be mailed out at a later date. Amazon.com (the seller) often employs this tactic; stockpiling orders against stock they believe will arrive shortly into their own warehouses. More on that later…

Excepted from my soon to be released eBook, Selling on Amazon – Strategy and Tactics that Help You Succeed.

Have you seen anything else ‘strange and unusual’ with your Amazon listings? As always, if you have any questions you can contact me at timothyscottburns@gmail.com or visit my Blog at timothyscottburns.wordpress.com

Help Selling on Amazon – Fulfilment by Amazon

I already discussed some of the key point with regards to selling on Amazon in terms of creating good listings, and how to show Amazon that you are a good seller as well as the importance of price.  Now it’s time to get our hands around the third leg of the Amazon stool, and maybe the most important, FBA.

With Fulfilment by Amazon (FBA), Amazon handles all the inventory, packaging, shipping and customer service needs related to your sales on their marketplace. The program also allows you to use Amazon to ship orders received via other marketplaces (but you own the customer service on those orders).

But in addition to these logistics, FBA also substantially enhances the visibility of your product listings and ultimately, your access to the Buy Box. The Buy Box is a key concept to understand, and I will spend more time on it in future posts.  But for now, get your head around the idea that Fulfillment by Amazon sellers get almost-exclusive access, to the millions of consumers who spend a lot of money through Amazon Prime.

More than 25 million customers are currently subscribed to Amazon Prime worldwide, with Prime members, on average, spending twice the amount per year as non-Prime shoppers. That is a lot of spending.  Amazon Prime members often filter search results by Prime-eligible offers, after which only Amazon-fulfilled and FBA products are shown. That is why they come to Amazon.  They want to use the Prime account they paid $99 for, to get FREE 2 Day Shipping on millions of different items.  And by utilizing FBA as a seller, that is the market you are tapping into every day.

If you’re signed up with FBA, you increased the chances that your products will be seen by Amazon’s busiest shoppers with the biggest wallets.   You also get you best chance at winning the Buy Box.  Sellers who have the Buy Box on any given product page, realize up to 8X better conversion rates that sellers with the #2, or worse position.  And as I mentioned before, Amazon is a very competitive marketplace.

Better conversion rates and higher sales volumes realized via FBA, help offset the lower prices often required to get the sale.  This was noted often when Amazon talked about the “Prime Day” which was held July 15th as a celebration of their 25th Anniversary.  Amazon claimed its “Sellers who used Fulfillment by Amazon (FBA) enjoyed the biggest day ever with record-breaking unit sales growing nearly 300% worldwide, the company revealed on Thursday. These sellers included local retailers and businesses of all sizes.”

Impressive results.  But you had to be a participant in FBA to get a piece of that action.

There are some other factors to consider beyond the sales boost that comes with FBA listings.  You are dealing with inventory.  And are sending it to a third party warehouse, so there are additional freight charges (but these may be offset by Amazon’s lower shipping costs to the consumer, and the fact that Amazon lets you tap into their very competitive UPS rates when creating these shipments). And you will probably want to have a conversation with your Controller.  This inventory will be off-site, with only paper and reports to show you how much of what, is where.  The accountants are not always thrilled with that idea.  It’s additional work.

Amazon’s logistics are world class, and your customers are getting all the benefits of that unparalleled experience. And again, regardless of your size, as an FBA seller, you get exposure to more prospective buyers than your might ever hope to attract on your own. But FBA does have a real learning curve for third-party sellers, and it pays to enter FBA relationship knowing what Amazon expects of you.

Some other items to consider are sales tax compliance, and nexus (you might have it in places you don’t want by using FBA), and comingled inventory (your stuff may be right next to your competitors stuff).  But if you’re serious about selling on Amazon, you have to seriously consider FBA.

As always, if you have any questions you can contact me at timothyscottburns@gmail.com

What Manufacturers Need to Know about Selling to Amazon

What Manufacturers Need to Know about Selling to Amazon

Head Buyer X: “Hey, come take a look at this. ‘Insert Supplier Name Here’ is selling directly to Amazon.”

Me: “Oh boy. What does the pricing look like?”

Lately, this is how a lot of uncomfortable conversations start in my office. In fact, over the last 12 months I have had this conversation with my Buyer, Product Manager, Sales Team and CEO dozens of times. And it’s becoming more frequent.

If you are a supplier, distributor, or manufacturer you might think “So what? I sell to lots of different retailers.

I get that, I really do. But Amazon is different.

Selling your product line directly to Amazon has a unique and direct impact on your other retail partners/dealers/resellers. And the impact is unlike anything else going on in your marketplace.

Let me explain.

Amazon sells over 300 Million unique products through its marketplace. That may sound like a huge number, and it is. But if you think about just books and cell phone accessories, there are almost 100 Million unique listings in those two categories alone. But whatever Amazon product category your product line falls into, you can be confident that there are at least a few million product listings. The point of talking numbers here is that it’s very likely someone, a current retailer/dealer/reseller is already selling you products on Amazon.

So you get the call – in Amazon’s case it’s almost always an email:

 

Exciting stuff! One of the world’s largest retailers is interested in you. They are chasing you and there could be a six figure purchase order on the other end. But hold on cowboy, selling directly to Amazon could be a game changer. A game changer for your other retailers.

I see the supplier/manufacturer point of view. You make a product. You sell that product. You sell it a lot of different places. You have many different relationships. Your product is in big box retailers like Target and Home Depot, but you also do well with specialty retailers like catalogs and with a few regional niche resellers. You may even sell that item in grocery stores like Wegmans or Trader Joes. But I think selling to Amazon is different. They are not just another retailer.

It’s not about size. It’s not about reach. It’s not about price. It’s not about service. It’s not about convenience. All those different markets you sell product through already compete on those pieces of the value chain. What is different about Amazon is – control. Amazon has all those things – size, reach, price, service, convenience. They offer the widest selection of products, to the entire world (well almost) at the lowest prices all delivered for free (almost) in two days. The bar is really high from a competitive standpoint. And because of that – Amazon has control.

Seeing your products sold on Amazon is often followed by a loss of control. Maybe that is not all that important to you? I don’t know. But understand that Amazon now exerts influence over all the other “traditional” channels you sell through. Consumers showroom your products. They shop prices on their mobile devices, and that starts with Amazon. Customers read review – reviews from Amazon customers – about your products when in the store or on other websites or flipping through catalogs. Amazon controls all that media related to your product.

It’s not necessarily a bad thing. It’s just something to consider when you are chasing that six-figure purchase order dangling in the wind.

Oh – and your current retailers probably hate the idea of selling direct to Amazon. We can talk more about that later.

As always, if you have any questions you can contact me at timothyscottburns@gmail.com

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