Welcome to Basilio Inc. Build. Grow. Exit Big: The Professional’s Guide To Selling On Amazon. If you’re thinking about starting up your own business as an Amazon seller, stick around, because you’ve come to the right place.
Amazon is the world’s largest ecommerce site. As of 2018, Amazon had $233 billion in revenue, and more than 5 million third-party sellers currently operate across Amazon’s 12 worldwide marketplaces. So selling on Amazon represents a huge opportunity—if you know where to start and what to keep in mind as you build your Amazon seller business. In this comprehensive guide, you’ll learn everything you need to know about selling on Amazon. Here’s what to expect as you make your way through it!
Advanced Buy Box Considerations
When it comes to winning the Buy Box on Amazon, sellers need to consider advanced strategies that can give them a competitive edge. One important rule to remember is that if a seller has the opportunity to quickly improve a specific metric and move up a bracket, it is always preferable to doing extensive work on another metric to move between brackets.
Let’s take an example to illustrate this concept. Imagine a seller who currently has an average Customer Response Time of less than 14 hours and a Shipping Time of 7 days. If this seller manages to improve their response time to less than 12 hours, they will move up a bracket, leading to a significant positive impact on their Buy Box share.
On the other hand, if the seller aims to jump a bracket in Shipping Time, they would need to reduce their shipping time from 7 days to 2 days. This kind of improvement may require significant investment in resources, making it a more expensive and challenging endeavor.
By prioritizing metrics that offer a quick jump to a higher bracket, sellers can optimize their efforts and increase their chances of winning the Buy Box without incurring excessive costs or efforts in other areas. It’s all about identifying the most effective strategies that yield the greatest results in the shortest amount of time.
Fulfillment Method has a Very High Buy Box Impact
The fulfillment method chosen by a seller has a significant impact on their chances of winning the Buy Box on Amazon. Amazon places great importance on whether the item is fulfilled by the merchant or by Amazon’s own fulfillment service, known as Fulfillment by Amazon (FBA).
Amazon views FBA as having perfect scores in crucial variables such as Shipping Time, On-Time Delivery Rate, and Inventory Depth. This means that sellers utilizing FBA are more likely to win the Buy Box due to the reliable and efficient service provided.
While it is possible for a Fulfillment by Merchant (FBM) seller to beat an FBA seller for the Buy Box, the FBM seller must have exceptionally high scores in all relevant areas or offer a significantly lower price to compete effectively.
For sellers looking to improve their chances of winning the Buy Box, choosing Fulfillment by Amazon is the quickest and easiest route. However, this decision should be made strategically, considering its implications and potential impact on the seller’s overall profit margin. It is essential to carefully plan and evaluate whether FBA aligns with the seller’s business goals and requirements.
To determine the fulfillment method for a product, sellers can refer to the Offer Listing Page, where the information regarding fulfillment will be displayed.
Landed Price has a High Buy Box Impact
The landed price refers to the total amount at which a product is sold on Amazon, including the cost of shipping in the US and the additional costs of shipping and VAT in the UK and Europe.
The impact of the landed price on winning the Buy Box is significant, with a high influence on the seller’s Buy Box share. Lowering the landed price can effectively increase the seller’s chances of winning the Buy Box. This variable is relatively easier to manipulate since it is directly under the control of the seller and can be adjusted instantly.
Price plays a crucial role in securing the Buy Box, but it is not the sole determining factor. If a seller’s overall performance metrics are weaker compared to their competition, lowering the price of the product becomes necessary to gain a larger share of the Buy Box. The extent of the price reduction depends on how inferior the seller’s metrics are relative to their competitors. The lower the metrics, the more the seller needs to drop the price to compete effectively for the Buy Box.
Conversely, if a seller’s performance metrics are stronger than their competition for a specific product, they can increase their price and still maintain a healthy share of the Buy Box. This showcases the value of enhancing the customer experience. A higher Seller Rating and a lower Order Defect Rate allow the seller to sell the same item at a higher cost while retaining their Buy Box share.
To view the landed price of a product, sellers can refer to the Amazon product page where the information will be displayed.
Seller Rating has a High Buy Box Impact
Seller Rating plays a crucial role in the Buy Box algorithm and has a high impact on determining which seller wins the Buy Box. It represents the overall score of the customer experience when purchasing products from a particular seller.
Amazon assigns points for each order based on its fulfillment without any issues. A seller receives 100 points for every order that is successfully fulfilled. Additionally, if Amazon deems an order as perfect, an extra 10 points are awarded, allowing a maximum score of 110 points per order. However, if any problems or issues arise, such as delayed shipping, order cancellations by the seller, or negative feedback from the customer, the seller receives zero or even negative scores.
Orders with minor problems, like late shipments, result in zero points, while moderate problems, such as order cancellations, lead to a deduction of 100 points. Major problems, such as negative feedback, result in a deduction of 500 points. It’s important to note that if an order has multiple issues, only the most severe negative score is considered.
The average of all these scores is calculated as a percentage and referred to as the Seller Rating. Only orders placed within the last 365 days contribute to this score, with orders from the last 90 days having a greater impact on the overall rating.
When comparing sellers for the Buy Box, Amazon groups them into various rating brackets. It’s important to distinguish that these brackets differ from the way Amazon groups scores in the Amazon Seller Central dashboard. Understanding the rating brackets is essential for sellers aiming to compete for the Buy Box effectively.
Metrics over Time
Many metrics used in determining Buy Box eligibility are assessed over a specific period, such as days, weeks, or months. Sellers can leverage this aspect to their advantage.
For instance, if a seller has a less-than-stellar 90-day Order Defect Rate (ODR), but has received no negative feedback, claims, or chargebacks in the last 30 days, they can patiently wait for their ODR history to improve. Once their recent performance positively influences the overall ODR, their Buy Box share is likely to increase.
Conversely, if a seller experiences multiple claims in the last 30 days, leading to an increase in their ODR, it becomes crucial for them to take proactive measures to prevent further claims in the coming weeks. Mitigating the negative impact on their Buy Box share becomes a priority.
The Buy Box groups sellers based on their Seller Rating within certain rating brackets, which are as follows:
- 100-98%
- 97-95%
- 94-90%
- 89-80%
- 79-70%
- Less than 70%
While any improvement in Seller Rating has a positive effect, jumping from one bracket to another yields a more significant impact on the Buy Box share compared to moving within the same bracket. For instance, improving Seller Rating from 94% to 95% would result in a greater comparative increase in Buy Box share compared to moving from 95% to 96%.
If a seller’s Seller Rating falls below 70%, their chances of winning the Buy Box become extremely slim, even when competing with other low-rated sellers for the same product.
It’s important to note that maintaining a perfect 100% Seller Rating is not necessary. In fact, slipping to 98% does not significantly affect the likelihood of making sales. While it’s essential to prioritize customer satisfaction, sellers should not obsess over achieving a 100% rating. Investing excessive time and effort in maintaining a perfect rating may not have a substantial impact on their seller account, as long as they stay within the 98%-100% range.
Shipping Time has a Medium Buy Box Impact
Shipping Time holds significant importance in the Buy Box algorithm, with a high impact on a seller’s chances of winning the Buy Box.
This metric revolves around the duration promised by the seller for shipping the item to the customer. For certain time-sensitive products and categories like birthday cards and perishable goods, the influence of this metric on the Buy Box becomes even more pronounced, as customers often prioritize swift shipping for such items.
Shipping Time is categorized into several brackets, each representing a specific timeframe
- 0-2 days
- 3-7 days
- 8-13 days
- 14 or more days
It’s important to note that the timeframe mentioned here refers to business days and excludes Saturdays and Sundays.
The significance of jumping between these brackets surpasses that of moving within them. For instance, if a seller enhances their Shipping Time from 6 days to 3 days, they might witness a modest increase in their Buy Box share. However, improving it further from 3 days to 2 days will have a much more substantial effect on their Buy Box performance.
Order Defect Rate (ODR) has a Medium Buy Box Impact
The Order Defect Rate (ODR) encompasses three key metrics: Negative Feedback Rate, A-to-Z Guarantee Claim Rate, and Service Chargeback Rate. Amazon combines these metrics to calculate the percentage of defective orders.
These orders are categorized into two groups:
- Short Term: Orders placed between 17 and 77 days ago.
- Long Term: Orders placed between 32 and 122 days ago. Orders placed within the last 17 days are disregarded to allow sufficient time for customer complaints to accumulate.
While the impact of ODR on the Buy Box algorithm is considered medium, sellers with an ODR exceeding 1% in either the Long Term or Short Term categories face significant penalties. To have a serious chance of winning the Buy Box, it is crucial to maintain an ODR below 1%.
Feedback Score
The Feedback Score is an aggregate of all feedback received by a seller from customers, grouped by the last 30 days, 90 days, and 365 days. The most recent feedback holds the greatest influence on the Buy Box.
Boosting Feedback Score and Feedback Count can be challenging for sellers as these metrics rely solely on buyer actions. However, they play a critical role in a seller’s ability to compete for the Buy Box.
To encourage positive feedback and mitigate negative feedback, sellers can employ various strategies:
- Including a pleasant and engaging feedback request message on the packaging slip.
- Directly contacting buyers through the Contact Buyer link in the Manage Orders section of Seller Central.
- Utilizing feedback solicitation tools to automatically request feedback from customers after completed purchases.
Newer sellers can enhance their Feedback Count by selling popular and affordable items, increasing their chances of generating more sales and, subsequently, receiving feedback from buyers.
It is important for sellers to proactively address negative feedback and work with buyers to resolve any issues. This may involve issuing refunds, sending replacement items, or offering complimentary gift certificates. Once the problem is resolved, sellers can request the removal of negative feedback. However, sellers should avoid explicitly offering incentives for the removal of negative feedback or the posting of positive feedback, as this can lead to account-related complications.
Improving feedback not only impacts Feedback Score and Feedback Count but also has a positive effect on Seller Rating and Order Defect Rate metrics.
Delivery Time & Rate has a Medium Buy Box Impact
The Buy Box algorithm considers three distinct elements related to delivery, with each element grouped according to the last 7 days, 30 days, and 90 days:
- On-time delivery: This metric represents the percentage of orders that buyers receive by the estimated delivery date. The calculation is based on confirmed tracking information. A score below 97% will strongly impact the Buy Box in a negative way.
- Late shipment rate: This metric measures the number of orders shipped three or more days later than promised, divided by the total number of orders within the specified time frame (last 7, 30, or 90 days). A score exceeding 4% will significantly affect the Buy Box in a negative manner.
Note: Although shipping an order one or two days later than promised does not directly impact a seller’s late shipment rate, it does influence their Seller Rating. Hence, it is ideal and recommended to fulfill orders by the promised date.
- Tracked delivery rate: This metric represents the percentage of deliveries sent with comprehensive tracking information. A score below 98% will have a negative effect on the Buy Box.
Optimizing these delivery time and rate metrics is essential for securing a competitive position in the Buy Box. Timely and accurate delivery is crucial for customer satisfaction and impacts the overall buying experience.
Sellers should strive to meet delivery expectations, ensure prompt shipment, and provide comprehensive tracking information. These efforts will contribute to maintaining favorable scores and positively influence their Buy Box performance.
Customer Response Time has a Medium High Buy Box Impact
Amazon evaluates customer response time using two approaches
Average response time comparison: The platform checks the average response time for the last 7, 30, and 90 days and compares these durations with those of competing sellers.
Brackets for message replies: Amazon categorizes messages based on their reply times within specific time periods, as outlined below
- Messages replied to within 12 hours
- Messages replied to within 24 hours
- Messages replied to after 24 hours
- Messages never replied to
Maintaining a swift and consistent response time is vital for Buy Box performance. If more than 10% of messages receive replies after 24 hours or are left unanswered, the likelihood of winning the Buy Box significantly decreases.
It’s crucial to note that responses to all customer messages, including customer replies, are considered in these statistics. Therefore, it’s essential to respond to each message promptly.
Auto replies are not counted as responses. However, selecting the “Mark as no response needed” option within 24 hours will exclude the message from the overall metric, without impacting it positively or negatively.
Please be aware that while the 12-hour bracket is not displayed, it still contributes to the calculation of response time metrics.
Efficient and timely customer communication demonstrates dedication to excellent service, enhances customer satisfaction, and positively influences Buy Box performance.
Feedback Count has a Medium Buy Box Impact
Feedback Count refers to the total number of buyers who have provided feedback for a seller. This metric is now recognized as a significant factor on its own, and sellers with a higher feedback count are more likely to win the Buy Box when all other metrics are equal. Sales Volume also plays a role in this regard.
Inventory has a Low Buy Box Impact
Amazon does not award the Buy Box to sellers who frequently experience stockouts of their products. The platform prefers to grant the Buy Box to sellers who have sufficient inventory to meet the increased demand that the Buy Box can generate. Therefore, sellers with a larger current inventory, consistent sales, and a robust stock history may receive a greater share of the Buy Box.
The strength of a seller’s stock history is determined by the duration of stockouts within the last 30 and 90 days. However, historical stock levels do not appear to be taken into account.
Even if a seller maintains a low stock level, they will be preferred over a competing seller with significant fluctuations in stock quantity and frequent stockouts.
These metrics have not been definitively proven to have a substantial impact on the Buy Box compared to other more influential metrics. They may be used to differentiate between sellers with similar performance ratings or who are bidding on highly popular products, although strong evidence supporting this claim is lacking.
Please note that this metric is hidden and cannot be viewed in the Amazon Seller Central.
It is important to highlight that this variable is distinct from the Buy Box requirement of “availability.” To win the Buy Box, an item must be currently in stock and not related to the seller’s inventory count.
Order Cancellation Rate has a Low Buy Box Impact
The Order Cancellation Rate refers to the number of orders that are canceled by the seller before fulfillment, as well as the number of orders that are refunded to the customer after fulfillment. While a positive score in this metric does not significantly affect the Buy Box share, a pre-fulfillment Cancellation Rate exceeding 2.5% will have a notable negative impact on the Buy Box.
Maintaining a low Order Cancellation Rate is important to ensure a positive selling reputation and customer satisfaction. By minimizing cancellations and refunds, sellers can enhance their chances of winning the Buy Box and improving their overall performance on Amazon. It is advisable for sellers to establish efficient inventory management systems and clear communication channels with buyers to minimize cancellations and fulfill orders promptly.
While the impact of the Order Cancellation Rate on the Buy Box is relatively low compared to other metrics, it is still essential for sellers to strive for a low cancellation rate to maintain a competitive edge and foster a positive buying experience for customers.
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