Losing the Buy Box on their product pages is one of the biggest problems on Amazon for our durable goods brand customers, such as Logitech and Goodbaby. Our studies have shown that revenue leakage from losing the Buy Box to unauthorized 3P sellers can result in a loss of up to 1-2% of total Amazon revenues. Add in the potential reputational damage caused by losing the Buy Box to gray market or even counterfeit or stolen goods, and it is clearly a high priority issue to address. As an example, one of our durable goods customers was able to prevent the loss of $250,000 over just a two month period by automating the detection of lost Buy Boxes and taking the necessary steps to get them back.
There are three steps in automating the detection and recapture of lost Buy Boxes, which we call the “three D’s” – Detect, Determine, Dispatch.
First, you have to detect which of your ASINs have lost the Buy Box. This is not a process that can be done manually at scale. If you have five ASINs, sure. If you have 50? Not so much. If you have 500 or 5,000, don’t even think about it. This is true whether you are manually checking your product pages, or poring over reports. You need an automated solution that detects lost Buy Boxes and automatically alerts you to them, prioritized by their impact on your revenue so you know where to focus your attention first.
Next, you need to determine why you have lost the Buy Box (hint: it’s probably pricing-related). Once again, automation is essential for all but the lowest-volume Amazon sellers, and automation that is capable of root-cause analysis. If the reason is pricing, the degree of difference between your price and that of the current Buy Box winner can contain useful information. Often the difference is very small (in many cases, as little as one penny where an unauthorized 3P seller is re-pricing its same product offering to steal the buy box from your Amazon-sold product), but in those cases where the difference is very large, it is worth asking, “why?” Is the winning seller offering gray market goods or even stolen or counterfeit goods? You may also discover (as some of our customers have), that you are losing the Buy Box to the same sellers over and over, because they are particularly aggressive about undercutting Amazon’s price by a penny or two. In that case, you can drop your COGS slightly, which will cause Amazon’s algorithm to return your listing to pride of place in the Buy Box.
Finally, dispatch the unauthorized sellers that taken over the Buy Boxes on your 1P product pages. For situations where the cause appears to be a narrow price difference, you can open a ticket with Amazon (if you don’t have a solution that will do so automatically upon detecting the lost Buy Box). For those situations with broad price disparities, you may need to do some digging into just how such a thing is possible. Note that customers of ours have encountered situations where they have lost the Buy Box, despite spending significant marketing dollars with Amazon to prevent just this occurrence; in this case, being able to quickly detect a lost Buy Box can help ensure that Amazon is upholding its side of whatever such bargains you have with it. Even algorithms sometimes make mistakes.
Losing the Buy Box is a costly problem, but fortunately it is one that can be minimized through an automated approach to detect that it is happening, determine why it is happening, and dispatch those unauthorized 3P sellers that have taken over this critical Amazon real-estate. If you are interested in learning more about our approach to this important issue, drop us a line at email@example.com.