Rethinking Placement & Price in the Age of the Amazon Buy Box
August 27, 2019
With over 310 million active customers worldwide[i] and 55% of shoppers starting their purchase journey on Amazon[ii], there’s no denying Amazon’s growing importance for sellers of all sizes. Yet finding success in selling to this massive customer base in a sea of 353 million product offerings,[iii] can be daunting, to say the least.
Selling to Amazon’s Customer Base
As with traditional multi-brand retail partnerships in the physical world (e.g. Target, Walmart), a seller on Amazon is selling to someone else’s customer base in exchange for reach, convenience, fulfillment and ease of purchase. Yet a common frustration with Amazon is that growing your own customer base and increasing your brand recognition is not turnkey. In fact, Amazon’s Seller Requirements stipulate that a Seller cannot directly solicit or advertise to the customers they have gained from an Amazon order. The reality is that while Amazon may be the “store” you sell through, there is still room to build brand recognition within their customer base. Customers usually understand that the brand of the product they are buying is separate from the store environment and build post-purchase recognition on new brand discoveries.
Price and Profits: How Can I Win the Amazon Buy Box?
Another common Amazon seller frustration is balancing product visibility and profitability. Visibility on an Amazon product page comes down to winning the Amazon Buy Box position. The Amazon Buy Box position accounts for over 80% of sales on Amazon[iv], so being the seller who wins this position is crucial.
This position is driven by a complex Amazon Buy Box algorithm that Amazon does not publish, but it’s known to be heavily affected by price, fulfillment rate and seller interactions. As a seller, you face a tough decision whether to lower prices to increase your visibility to ultimately increase sales or protect your margin and maintain your Amazon pricing strategy.
And it’s not just price; it’s price plus the cost of the sale which is the Amazon fee. So, how do you win and protect your margins?
With Amazon Sales Channel in Magento Commerce, a free Magento–developed Amazon extension, you can seamlessly and efficiently sell and distribute your products on Amazon from the ease and familiarity of the Magento Admin. Amazon Sales Channel lets you set up Intelligent Repricing Rules that allow you to automatically reprice your product listings relative to your Amazon competitors. Additionally, you can set a custom floor price which will protect your products from repricing to a point where you are losing money.
Setting Up an Intelligent Repricing Rule
In this example, we will walk through setting up a pricing rule so that your products will reprice to price $0.01 below the Buy Box winner.
First, log in to your Magento Admin and navigate to your Amazon Sales Channel integration found under:
Marketing > Channels > Amazon > [your Amazon store name] > Pricing Rules
Click on Add New Pricing Rule in the top right-hand corner. From here you will fill out your main pricing rule information. Within the Price Rule Actions, you will select the following configurations to reprice your products against the Amazon Buy Box price.
Within the Price Adjustment, you will select the following configurations to price $0.01 below the Buy Box Price.
Finally, you will set the Floor Price value to protect the automation and ensure you don’t price below a particular threshold. In this example, we have a custom price attribute called ‘Cost’, so your floor price will be 20% above cost. For example, if your cost is $10.00, then your floor price will be $12.00.
With this rule set up, you have now automated competitive pricing on Amazon and ensured protection of your margins.
Ready to start growing your revenue on the world’s largest marketplace? Download the Amazon Sales Channel extension today in the Magento Marketplace.
Watch the Amazon Sales Channel Video