If you’ve ever wondered if you should resort to using repricing software on Amazon, the answer appears to be a resounding yes according to a research paper published by Northeastern University in the US.
82% of all sales on Amazon are from the seller who wins the buy box according to the paper. And that’s regardless of whether they are offering the best price, often you can get a lower price by clicking to see offers from other sellers. Winning the Buy Box is a self fulfilling mechanism – You win the Buy Box, you sell more, you have higher volumes and more feedback so you’re more likely to win the Buy Box and get more sales in the future.
Of course a cheaper price might mean that the offer doesn’t qualify for Amazon Prime or has slower shipping, it might be from a seller with lower feedback or more likely it’s from a seller who isn’t using a repricing tool.
Sales volume, response time to customer inquiries, rate of returns and refunds, and shipping times (especially use of Fulfilment by Amazon) all affect which seller will win the Buy Box on Amazon. The exact formula is unknown but price is definitely a key factor.
It’s not just winning the sale however, it’s profitability as well. If you know that you’ll win the buy box a good proportion of the time then you can edge your prices higher. The paper reports that “although the algorithmic seller is willing to sell the product for as low as $12, the majority of the time they sell at prices up to 40% higher“. A 40% uplift in your sales price above the lowest price you’re willing to accept is a healthy profit margin to take.
The research paper is well worth reading in full and concludes that “sellers identified as using algorithmic pricing receive more feedback and win the Buy Box more frequently, likely suggesting higher sales volumes and thus more revenue than non-algorithmic sellers“. In other words, if you want to be successful on Amazon then you should be using repricing software.
(You’ll find a selection of repricing solutions to choose from in our Tools & Services Guide)
One Response
Gave up after reading the 1st few lines of this artical…
Getting the buy box is the quickest way to the bottom and make 50p profit per item sold…
I would rather not get the buy box, charge a few quick more and sell 50% as much but make more per item.
I also find people who do only make 50p per item and have the buy box get crap feedback as they cut corners to be able to offer the items at such a low profit.
At the end of the day we are in this to make a living, not to make 50p.