The Amazon Buy Box is kind of a big deal. That’s not a pun about the awesome discount you just got. It’s a statement of fact about the box’s importance to Amazon and all the third-party sellers on its marketplace. 83% of all sales on Amazon go through the Buy Box. For sellers, conversations about winning on Amazon invariably become strategy sessions for winning the Buy Box. It’s such a top-of-mind concept, we’re still calling it the “Buy Box” even though the name changed to “Amazon Featured Offer” at least four years ago.
The Buy Box, and the methods Amazon uses to determine who wins it, is just one of the issues at the heart of an antitrust lawsuit filed by the Federal Trade Commission in September. Meanwhile, in the UK, their version of the FTC—the Competition and Markets Authority—recently announced that it had secured an agreement with Amazon to improve the fairness of its marketplace for third-party sellers. Their voluntary cooperation with the British government avoids a prolonged antitrust investigation into, among other things, the way the Buy Box works. This comes less than a year after Amazon reached a similar agreement with the EU.
Before getting into the details of what Amazon’s agreed to—and how that will affect UK sellers going forward—we should first cover the basics of what the Buy Box is, how it’s supposed to work, and what the specifics are around the CMA’s accusations.
The name “Buy Box” is a leftover term from before Amazon’s third-party marketplace was in full swing. You know it when you see it: every Amazon listing has it, either to the right of the product image on desktop, or below it on mobile. The Buy Box gives a summary of price, shipping costs, and a few other facts, and then the buttons that make every purchase possible: Add to Cart and Buy Now. What most shoppers don’t realize, and what most sellers know all too well, is that the winner of the sale changes with every visit to the product listing.
When a customer lands on a product listing page, Amazon’s algorithm determines the seller based on a number of variables. It’s not just a matter of having the lowest price, or even the lowest landed price (that’s the total of purchase + shipping + tax). The algorithm takes into account the specifics of your listing, but also your history as a seller, and the location of the buyer. At any time, a customer can manually choose to click through to a specific seller's listing. But if she just clicks Add to Cart or Buy Now, she’s purchasing the Featured Listing—the one that Amazon’s algorithm determines offers the “best value to customers,” a vague requirement for which they provide no real quantifiable guidelines.
Additionally, to even become eligible for the Buy Box, sellers have to achieve certain baseline performance metrics in the course of doing business. Amazon does provide hard numbers here, but often there is no context for them. For example, all the metrics indicate an experienced seller, but they don’t disclose the minimum amount of time and experience you need. The requirements are:
There are more factors than these that go into eligibility, all weighted differently according to importance, which importance is also determined by Amazon. It all seems like a deliberately confusing mix of explicit requirements layered with vague suggestions. It’s no wonder that on forums like Reddit and Quora—and Amazon’s Seller Central—there’s post after post from the sellers themselves wondering just what they should do differently. This mix of confusion and helplessness led to the investigations that Amazon has dealt with.
The facts of each of these cases against Amazon differ, but they all center on what they allege is monopolistic behavior—abusing its already dominant position in order to stifle competition and innovation. Within the scope of the CMA’s investigation, there were a few issues at hand.
The CMA alleged that one of the variables involved in determining the Buy Box winner was whether or not the seller was Amazon itself. This can be a confusing notion if you’re not a seller. From a customer’s perspective, they’re just buying from Amazon. What they don’t realize is there’s a whole competition for their business going on behind the scenes of that Add to Cart button, and Amazon is competing with all the other sellers. And this is the part that confuses most people: The Amazon Marketplace is a different business line from Amazon.com, which is the retail arm of the company. The algorithm determines which seller is offering the best value to the customer and that seller becomes the Featured Listing. This could be Amazon, or it could be a third party seller who pays to be in the Marketplace.
According to the CMA, Amazon prioritized its own listings over the sellers'. That is, the algorithm was more likely than not to determine that Amazon was offering the “best value” to the customer. On the occasions when Amazon didn’t win the Buy Box, the CMA says, it then prioritized sellers who use the Fulfilled by Amazon (FBA) service. Sellers who do their own order fulfillment—called Fulfilled by Merchant (FBM) sellers—were the least likely to win a sale. The CMA was also looking into the eligibility requirements Amazon sets for FBA merchants to sell under the Prime label.
Perhaps more troublesome than these, the CMA went on to say that Amazon collects data from its third-party sellers, and then uses that information to give themselves even further competitive advantage. This is particularly sneaky. Remember, Amazon takes a monthly fee from sellers to access the Marketplace and potentially win the Buy Box. And while those sellers are winning some deals and losing others, they’re collecting commercially sensitive data about their customers, data which Amazon has access to and then collects for itself. It’s then able to use that data from sellers as business intelligence, enhancing their already considerable edge.
It’s important to remember that Amazon’s agreement isn’t an admission of any wrongdoing. And the CMA’s investigation was never formally completed, so there are no formal findings of wrongdoing, no document to point to outlining any misdeeds. Still, Amazon made some commitments in order to avoid the investigation and any possible legal actions that could have arisen from it. Among them:
Essentially, Amazon isn’t saying they did anything wrong in the past, but they are saying they promise to be fair in the future. Which sure sounds like…something. The good news here is that they’re also being required to appoint an independent trustee—someone not on the Amazon payroll whose job will be to make sure they actually comply with all these commitments.
Whether these pledges have any material change on how often—or not—a seller lands the Featured Listing remains to be seen. Maybe Amazon isn’t doing anything wrong, and these agreements are just a way to show they’re on the up and up. Is it that crazy to think a large company with its own worldwide delivery fleet and more cash on hand than the US Government can offer more value to customers? But on the flipside, is it so hard to believe a huge company with the resources and dominance to stifle competition and line its pockets would do exactly that?
For sellers, the answer is almost irrelevant. They still have a question, the one they’ve been asking all along: What do I have to do now to win the Buy Box?
All eyes are on Amazon’s pledge to the CMA about maintaining fairness in their marketplace. UK sellers are wondering if anything’s changed, and US sellers are watching with keen interest. These issues are just starting to bubble up with the recent stateside lawsuit. And right now, in November of 2023, the honest answer is: nothing much changes. And that’s because Amazon has only committed to a single change, letting merchants negotiate their own rates with independent delivery service providers. For now, though, there’s no infrastructure in place to make that happen.
But until any changes to being a seller or winning the Buy Box are announced, sellers don’t need to brace for any changes. If you get a Featured Listing regularly, keep doing what you’re doing. There’s a chance things might improve for you as Amazon executes on its pledge of fairness. If you’ve been struggling to make the cut, there are two major tips to keep in mind:
We mention in this article, and it’s everywhere else as well, that price isn’t the only thing, and it’s true. You’re not going to win every deal just by undercutting the competition. But everyone says some variation of this so much, it’s easy to forget how important price is. It’s very important.
There’s another thing to understand about price: Amazon wins the Buy Box a lot because it’s constantly fiddling with the cost of its items—every 10 minutes, in fact. Now, with millions of products located all around the world, and the price changing frequently based on the preferences of the individual buyer, there’s no way that there are people making these decisions. No, Amazon’s built algorithms that dynamically reprice their items based on—you guessed it—a bunch of variables for any given moment.
As an Amazon Professional Seller, you have access to their Automated Repricing Tool, but it updates pricing every 15 minutes. Third-party repricing tools offer a competitive edge with more frequent updates. SmartRepricer reprices every five, for example. You can also use a tool like Keepa, which has a Chrome extension that allows you to see all the Buy Box eligible sellers and what they’ve been pricing at. It helps to know what’s winning, as it can inform the parameters you feed to your own repricer.
This seems like trite advice, and maybe it is—out in the physical world. But on Amazon’s Marketplace it can actually be the difference between winning customers and not. Because, for better or worse, beyond typing “amazon” in their browser, those customers by and large aren’t choosing who they’re buying from. They click Add to Cart and the item shows up in an Amazon box. Now think about this in terms of dollars for a moment:
Amazon’s net revenue in 2022 was $513.98 billion and, as we established earlier, 83% of that revenue goes through the Buy Box. That’s $426.60 billion that people are spending and have no idea who they’re buying from, really—whoever the algorithm chose at that moment. So if the algorithm is really determining which listing gets featured, and that choice is based in part on your past performance, then it makes sense to be the best Amazon seller possible.
Stay on top of all your metrics in your Seller Central dashboard. We covered the big ones up above, like Order Defect Rate and the various delivery-related metrics. Check in with them daily and you can ensure you never even approach the threshold where you get penalized. And when you’re diligent about running a solid ecommerce business, the algorithm will start to reward you with a bigger share of the Buy Box.
Don’t just rely on your own performance, though. Cash in on any goodwill you generate with happy customers by asking them to write a product review and/or leave some feedback for you. There are ways to do this without being pushy or alienating anyone. Using the right software can help you automate the process of soliciting feedback from the customers who are most likely to give it. Positive customer reviews are the social proof behind all your metrics. It doesn’t just reassure the algorithm of your bona fides, but reviews and feedback reassure future customers. Build up enough buzz around your Amazon shop and you can start directing customers right there. In this way, the Buy Box becomes like a customer acquisition tool, and you can directly market to customers for retention.
Ultimately, we all have to remember that—for whatever great services Amazon offers to consumers and merchants alike—it’s still a business that exists to make a profit. When it created Amazon Marketplace, it figured out a way to monetize its competition. Ultimately, it’s probably fantasy to think you’ll ever outcompete Amazon on its own platform, but with enough diligence and the right tools you can join the 1.75 million active Amazon sellers winning the Buy Box and turning profits on the Marketplace.