What happens when you have a product that is performing well on Amazon, that’s winning the Buy Box but need to raise the price? Well sometimes due to their Competitive Pricing policy, Amazon penalise you by removing the Buy Box privilege and making it less likely that consumers will purchase your product.
In recent times, price rises have become inevitable, cost of materials have skyrocketed and the cost of shipping, especially by container ships routed around Africa to avoid pirates in the Red Sea, have more than doubled. When your total cost of goods goes up at some point the cost has to be passed to the consumer and prices also have to rise.
We are hearing that, even if you are the only retailer on Amazon selling a particular product, that a modest price increase is resulting in Amazon removing the buy box making it more difficult for a shopper to add to basket.
Amazon Competitive Pricing
Amazon say that they feature offers with an Add to Basket button when an offer meets their high quality standards for:
- Price,
- Delivery option, and
- Customer service
“No featured offers available” means no offers currently meet all of these expectations.
We can rule out listing quality, delivery options and customer service for those products which previously enjoyed the Buy Box if the only thing that’s changed is the price. It looks very much like Amazon are comparing the price to other retailers offers and if the cost is higher on Amazon then the Buy Box goes.
We do not display the “Buy Now” button when we learn that another competitor’s store offers that product for less, but it remains available for purchase in case customers still want to buy it in our store.
– Amazon
The big issue here is that it takes time for pricing to filter through the entire industry. Take a manufacturer who has sold wholesale to a retailer at a certain price – these goods may well be in a retailers warehouse or stocked on shelves in their stores, already bought and paid for at the lower price. It could be weeks, or even several months before they raise their prices to reflect the increased cost of buying the product today.
This makes it tricky to raise the price on Amazon ahead of other suppliers also reflecting the increased manufacturing cost and until they do you may lose the Buy Box.
We’d be interested to hear from you if you are facing this challenge, especially if you are a manufacturer or sole importer of a product set. It’s likely that if you supply wholesale retail channels as well as D2C selling on Amazon that sooner or later you’ll face Amazon’s Competitive Pricing algorithm and have to make a choice of selling at an realistic price but lose the Buy Box or accept squeezed margins to keep the Buy Box until all retailers sell out of lower priced inventory.
4 Responses
We are a private label seller and have lost the buy box over a few pennies. For example a product has been £9.99 on Amazon and £9.95 on our website / eBay for several years but we recently lost the featured offer until we reduced it to £9.95. There can also be issues with free delivery on Amazon and price plus P&P on other sites with Amazon not including the P&P when setting competitive pricing. We are going to try increasing our prices on other sites a week before Amazon to see if that works.
Amazon compares the price on their platform including P&P with the price outside of Amazon excluding P&P. This is a massive issue that means we simply ignore whether we have the buy box or not. At the end of the day, if customers think a product cannot be bought on Amazon, the only loser is Amazon as customers are savvy enough to buy it on another platform.
Amazon have been doing this for years, its nothing new.
In a free-market economy, it should not be Amazon dictating what price sellers should offer goods for.
At the end of the day, it is Amazon who charge sellers a 15% commission, which is why sellers can offer better prices on their own websites or on other marketplaces.
There are a lot of buyers who will only use Amazon though, and they’ll pay whatever the price is, despite it being cheaper elsewhere.
Stu, I couldn’t agree more. At the moment Amazon is suppressing the buy box on some of my listings citing that the price is not competitive and to add further insult they are advertising their own branded product as a competitive alternative even though it is not a comparative product. There is a video on the YouTubes of another seller in the U.S. that has been involved in a case relating to this after testing and proving that changes to the product price on his website will impact his listings on Amazon within a very short period of time.