How Being FBA Helps You Win the Buy Box
by Joanna Lupo, on April 29, 2015
As we mentioned in our previous article about winning Amazon’s Buy Box, the two biggest factors are your fulfillment status and price. And, assuming you aren’t wildly pricing your items, your fulfillment status is the biggest factor. Let’s look at why.
FBM vs. FBA
When you are FBM (fulfillment-by-merchant), you are responsible for the entire process of selling: inventory management, delivery, customer service, returns, etc. You run your own eCommerce operation, and use Amazon as a way to feed traffic to your products. FBM sellers usually pay lower fees to Amazon, but have to cover their own shipping costs. They also have control over nearly the entire customer experience.
On the other hand, FBA (fulfillment-by-Amazon) sellers have given over many of these eCommerce functions to Amazon in exchange for additional fees.
FBM is right for you if you are trying to build a brand as a complete eCommerce store. Perhaps you have a brick-and-mortar site and you hope you outgrow your space on Amazon and pull loyal customers to your site.
The decision to go FBA is a decision to become a professional product sourcer. FBA merchants scout for products at a good price, spend their own capital to buy them, and are rewarded when the item sells. Everything else is handled by Amazon.
Understanding this distinction between the two is crucial to your success on Amazon.
Why Amazon Loves FBA
Amazon would love it if every successful seller made the move to become a professional product sourcer (or went FBA). Their goal is to give an amazing customer experience across the largest online store, and their main advantage is their fulfillment system. The more they can standardize the customer experience over an increasingly gigantic number of products, the better. Therefore, they are eager to recruit as many great product sourcers as possible.
How Being FBA Gets You the Buy Box
Amazon loves FBA sellers so much that they are willing to give them an advantage when it comes to the all-important Buy Box.
FBA sellers don’t necessarily need to have the lowest price to win the Buy Box. The price might be higher than FBM sellers, and you can still win a large share of the Buy Box. Some of this is because the shipping cost is included in the FBA price, but Amazon also opens up the "sweet spot" of pricing a little more for FBA sellers.
Other seller metrics like feedback score and order defect rate can be less critical if you are FBA. They are still important, but similar to price, Amazon gives more grace to FBA sellers than to FBM sellers because Amazon controls more of the customer experience with FBA sellers.
FBA sellers are also more likely to be featured and chosen by Amazon Prime customers who love the free two day shipping they likely don’t get from FBM sellers. Prime customers are much more active and spend over twice as much per year as nonmembers.
Do You Have to be FBA to Get the Buy Box?
You can still win the Buy Box if you decide not to be FBA, but the other factors such as price and seller metrics become much more important. If you are selling unique products or bundles, you still have a great chance of winning the Buy Box as an FBM merchant since you are less likely to have FBA competitors.
Not every seller needs to be FBA to be successful. In fact, in some cases, if you sell fragile, low margin, low price, oversized, heavy, hazardous, or slow-moving products, the costs for FBA could outweigh the advantages.
Know Your Place
FBA status is the top factor in winning the Buy Box because it is the greatest sign that a seller wants to align itself with Amazon’s goals. If you are comfortable owning your role as a professional product sourcer for Amazon, then FBA holds a lot of promise for you. If you are looking to build a reputation and following as an independent store and maintain control over the entire experience, then you will need to think through how the FBA program can play a role in your success.
Use Professional Tools
Just like you wouldn’t expect a professional chef to use a set of knives from the local dollar store, a professional product sourcer needs to have tools at hand that help do the work. Keeping a constant supply of product is one of the biggest challenges, and you need to consider using an intelligent software like RestockPro to keep your business running smoothly. Try it free for 14 days and you will realize that it is the right tool for a professional product sourcer.