Originally published on December 13, 2016, updated July 14, 2020
As an Amazon merchant, you know that winning the Buy Box can help sellers dramatically increase product sales. In fact, Feedvisor reports that 82% of Amazon’s sales go through the Buy Box. That number is projected to continue to climb as buyers shop from mobile devices. Amazon shared that 70% of users shopped the site using a mobile device in the 2015 holiday season.
We partnered with Feedvisor to present an educational webinar regarding advanced Buy Box strategies. Ohad Hagai, VP Marketing at Feedvisor, and Jay Lagarde, founder and president at eComEngine, teamed up to share their expertise with Amazon sellers.
“If you go back to the whole concept of the Buy Box, which is to guarantee customer satisfaction, Amazon knows that sellers who use FBA are more likely to perform better in terms of the customer experience. Amazon controls the flow of fulfillment and interaction with the customers, and that’s what they’re trying to achieve: a best in class customer experience,” said Ohad.
Learn what it takes to win the Buy Box in this webinar. By watching, you’ll discover:
With several years of experience in both eCommerce and digital marketing, Ohad offers advice regarding Buy Box strategies, pricing and more. Jay provides strategic feedback management insight related to winning the Buy Box as well as smart suggestions for sellers who want to succeed in a competitive marketplace.
You can watch the webinar above or check out the show notes below for the recap and a full transcript.
Amazon sellers dream of winning the Buy Box, which can significantly increase sales. In fact, Feedvisor recently shared that 82% of Amazon’s website sales occur through the Buy Box. This number will likely continue to grow as mobile sales increase.
While the exact Buy Box algorithm has never been revealed, merchants can benefit from learning strategies to increase their odds of winning the coveted spot. We recently partnered with Feedvisor to offer an informative webinar on the subject. In this recap, we’ll share a few of the many highlights from this webinar.
Providing a balance between a positive customer experience and a competitive price is key for merchants who are hoping to capture the Buy Box for a particular item. In fact, having stellar metrics is necessary for success on the Amazon marketplace. The mysterious Amazon algorithm favors sellers who consistently provide good service and maintain positive feedback ratings. Fantastic metrics are especially important for merchants who are up against Amazon as competition for a product.
Sellers who participate in the FBA program or the Seller Fulfilled Prime program are more likely to win the Buy Box than other merchants. “If you go back to the whole concept of the Buy Box, which is to guarantee customer satisfaction, Amazon knows that sellers who use FBA are more likely to perform better in terms of the customer experience,” Hagai said. “[In FBA] Amazon controls the flow of fulfillment and interaction with the customers, and that’s what they’re trying to achieve: a best-in-class customer experience.”
Seller feedback is one of the most important components of the Buy Box algorithm. “Amazon has always recommended that you ask for feedback,” Lagarde said. “The reason for this is twofold: number one, they know it works. But more importantly, they want sellers to be highly focused on the customer experience. It’s a huge part of the Amazon marketplace DNA.”
Positive seller metrics depend upon great seller feedback. In addition to fulfillment method, as noted above, a few areas merchants should pay extra attention to when trying to win the Buy Box include:
“Improving these metrics not only enables you to win a higher Buy Box share, but also positions you to win the Buy Box at higher prices, which is critical for your ongoing business,” Hagai noted.
Feedback is of supreme importance for sellers for three major reasons:
It’s important for merchants to have a strategy ready for responding to neutral or negative feedback. (FeedbackFive has a nifty feature that allows sellers to opt in to receive text or email notifications for neutral or negative feedback in order to respond as quickly as possible.) Don’t let negative feedback slip by without taking reasonable steps to have it removed. Getting negative feedback removed whenever possible helps sellers maintain positive seller metrics.
“Setting up a consistent and methodical process to manage negative feedbacks can pay huge dividends for your Amazon business and for your ability to compete for the Buy Box,” Lagarde said. Having an abundance of positive feedback provides a buffer when the inevitable negative feedback appears. FBA sellers can request feedback removal from Amazon if the issue was related to service or fulfillment. Merchant-fulfilled sellers should work with customers to attempt to resolve any problems as soon as possible. Keep a close eye on feedback trends and make any adjustments as needed. For example, if a particular SKU keeps receiving negative feedback, it may be time to take a closer look at that product.
For brand owners or sellers with exclusive ASINs, there’s no competition for the Buy Box. These merchants benefit from asking buyers for product reviews. After all, products that receive high reviews (4-5 stars) are significantly more likely to be purchased. Buyers trust their fellow shoppers to leave accurate reviews.
Product reviews drive traffic and increase the number of Buy Box impressions for private-label products, kits and other exclusive items. They also drive conversions of those same impressions. Asking for product reviews with targeted messaging can help merchants significantly increase sales. FeedbackFive also offers automated product review solicitation and management for busy merchants.
Gaby: Hi everyone. Thank you for taking the time to join us at such a busy time of the year. I'm Gaby Young, and I'd like to welcome you all to Feedvisor's Ask the Amazon Experts webinar in partnership with FeedbackFive, one of the leading feedback automation solutions for Amazon sellers.
Gaby: As you probably all know, the Buy Box is, by far, the most coveted and lucrative position on Amazon. With so many sellers competing for the Buy Box applying Amazon's best practices and developing a winning strategy is imperative to growing a successful online business.
Gaby: Our experts, Jay Lagarde, founder and president of eComEngine and Ohad Hagai, VP of Marketing at Feedvisor will guide you through this complex process to help you achieve continued success for the rest of the season, and well into 2017.
Gaby: Today, they will uncover key insights and advanced strategies for winning the Buy Box with a focus on feedback and pricing. We've received hundreds of your questions, so thanks very much for sending those in. Most of the answers will be covered by Jay and Ohad within the next 45 minutes. If you do have any further questions, you can send them to us via your GoToWebinar player, and we'll do our best to fit them in. If we don't have a chance to fit them in, then we'll try and get back to you after the webinar. This session will be recorded, so look out for it in your inbox later this week.
Gaby: So, let's get started by introducing our experts. Hi Jay. Please introduce yourself to everybody.
Jay: Hey Gaby. Thanks a lot. And thanks Ohad as well for having us on today. I am the founder and president of eComEngine, as you mentioned. We started eComEngine back in 2006, really to help Amazon sellers automate their ecommerce processes. It wasn't until 2009, after we'd been working with sellers for some years and automating their feedback processes, that we started FeedbackFive to bring this capability to a larger number of sellers. So, I'm real excited to be here today to talk about feedback and how to manage it properly, and also a little bit about product reviews. Thanks.
Gaby: Thank you very much, Jay, for joining us. And Ohad, let's hear from you too.
Ohad: Hello everyone. Hi Gabby. Hi Jay. And thank you everyone for joining us on today's webinar. So, a few quick words about myself. I've been with Feedvisor for almost a year. It has been a very interesting and exciting year at Feedvisor. We've done some great things there. And some of you have probably already met me face-to-face in some of our conferences in this past year. Before Feedvisor I was a director of ecommerce and digital marketing at Sears and kmart.com where I build online membership acquisition, launching new brands, and some other interesting things.
Ohad: One of the things that we are doing here at Feedvisor not that you won't understand or have the visibility for that, but at Feedvisor we are the Buy Box experts I'll say in the industry. We wrote the Buy Box Bible which is a great piece of content that has over 15,000 downloads until today, and at one point or another we'll add it on the GoToWebinar dashboard that you are seeing so you will be able to download this great piece of content to learn more about Buy Box.
Ohad: One of the interesting thing is that at Feedvisor we have a team of almost 10 data scientists and algorithm experts that just sit and analyze the Buy Box, Amazon's Buy Box algorithm, trying to understand what impacts the decision of who is going to win the Buy Box and at what prices. And according to that we keep optimizing our algorithm of course, and in addition to that, we are trying to educate the market with some of the learnings that we have.
Ohad: So as one example, few of the slides we are going to share today are going to be based on a big research we are doing right now on Amazon price wars, how do they work and how do they behave, and most important, how to manage price wars because it's something that affects each one of you here on the webinar today. That's it for me Gaby.
Gaby: Thank you very much Ohad. So today Jay and Ohad will cover the following topics. They will talk about their Buy Box and the key variables that affect winning the Buy Box and getting the maximum Buy Box share. They will cover common misconceptions about the Buy Box. Then we'll move on to the main points of advanced Buy Box strategies, and that includes optimizing feedback which is very important and also managing price wars which I know a lot of you have been asking questions about. I can still see that many of you are still asking questions about it live right now. Most of your questions will be answered and now I will pass over the mic to Ohad and Jay to continue.
Ohad: Thank you very much Gaby. So before we start, even though this webinar is called advanced strategies for Buy Box strategies, it's important to make sure everyone's on the same page. So the first slide we're seeing here is the importance of the Buy Box.
Ohad: If you didn't know yet, this is an important statistic that you have to memorize. 82% of Amazon website sales today go through the Buy Box. And this number as it says in here is probably higher on mobile devices. For those who don't know exactly what the Buy Box is, that's the box, the white box where it says Add to Cart on the product landing page that the customers are seeing. And what happens essentially is when a customer lands on a product page, Amazon chooses one seller and puts their details on that Buy Box. When the customer clicks Add to Cart, the sales go to that seller. What we call that seller wins the Buy Box.
Ohad: One important thing to know is that on mobile, as I said, the percentage is most likely higher, and as many of you already know, mobile is getting a bigger share of the Amazon business. And in fact, in all of the 2015, Amazon reported that 70% of Amazon customers shopped using a mobile device. There's already some metrics about this holiday season shopping ratio from mobile, but it's not surprising. This number is just going to increase.
Ohad: Many of you want to know how the Buy Box works. And again, this is some kind of the basic stuff, but I'll say on a very, very high level is that the Amazon Buy Box is basically an algorithm that tries to give the customers, Amazon customers the best value for money. What it does it's determining which seller offering promises the best balance of high seller performance and low price basically. That's Amazon care about the customer experience. They want to make sure they have happy customers, and that's what they identify as this balance. This is the point where these two meet together.
Ohad: And to simplify how the algorithm works and I'm going to simplify to the extent possible, it's much more complicated than that, but to simplify I would say that for each product the algorithm determines first which competitors meet all the necessary minimum requirements, because that's a requirement. You need to have the minimum requirements to even be able to be eligible for the Buy Box. Once it identified these competitors, this algorithm then choose from those who are eligible to win the Buy Box. It's looking all of them. It breaks down all the many different variables that are important to winning the Buy Box and evaluate each one of them to see who is the relative seller that's going to get the Buy Box.
Ohad: In some cases where there's two sellers with same high level metrics, both of them can get 50% of the Buy Box or to that extent the percentage might change. There are some other cases where there can be 10 sellers competing for the Buy Box, two of them have the highest ranking. Amazon Buy Box algorithm will decide to give 40% to each one of them and then the rest will be shared amongst the other. The 20% will be shared amongst the other sellers. So these are some of the basic, really basic stuff about the Amazon Buy Box.
Ohad: Before we continue, let's get rid of some key misconceptions about the Buy Box. And I'm still, I met a lot of Amazon sellers and engaged a lot with the Amazon sellers community in the past years, and I'm still surprised to hear that claim. Many people still think that the lowest price always wins the Buy Box. And this is absolutely not true. I just show you as an example before or explained how Amazon, how the Buy Box works and what Amazon is trying to achieve, and the lowest price doesn't necessarily mean the highest customer satisfaction rate. If one seller has very bad metrics, it can offer a price much lower than you are and still not get the Buy Box, because Amazon will look on the overall experience to the customer and will try to find that sweet spot.
Ohad: And to show you a real-time example, I used our ... what we talked before, the data scientist team and we pulled one of our customers. And what I'm going to show you now is a screenshot of one specific product. It's a screenshot from Feedvisor repricer dashboard that show you an example of our customer getting a higher Buy Box ... getting a higher share of the Buy Box with having higher price than the average. And just to explain what you're seeing on the screen right now. Again, this is a screenshot of the dashboard. One of the things that Feedvisor dashboard lets you do is for each product you can click and drill down and analyze the performance.
Ohad: Most of our customers of course don't do that for their thousands of products. They usually pick the top 10 or the top 20% of the products and analyze them constantly. But on this specific example, what the dashboard is showing you it's matching on the top chart the average price that's running on the Buy Box and in that case the customer price that is offering. And you can see that on that specific timeframe for that specific product, and of course we hided the ASINs and other stuff to keep the customer information hidden, but for that specific product, you can see that the average price of the Buy Box is the purple line and the brown line is the average price of our customers. So you can see that is winning the Buy Box in higher price than the average price of the Buy Box.
Ohad: What you can see on the bottom chart of that screenshot is for a specific timeframe, in that case you can see that the mouse is pointing on November 19, and you can see on that specific example our customer was charging a price of $30.53. The average price for the Buy Box on that specific day was $27.11, and our customer was still able to win a Buy Box share of 41%. So that goes back to the claims of lowest price win the Buy Box. This is absolutely wrong. And in fact, this is a very problematic misconception because in many cases it leads to a price war between Amazon sellers and that affects the overall arena. And we'll touch and show some examples of price wars and what happens.
Ohad: Does Amazon always win the Buy Box? The answer is in many cases yes, but not all the time. According to our research, in 70% of the cases where Amazon is competing on the Buy Box, they will win. This means that you still have 30% chance of winning the Buy Box. Now of course, if you are competing against Amazon, you have to make sure that all your metrics are excellent, everything is green. Most likely you have to be an FBA or seller fulfill Prime seller, but if everything is good, then in some cases, in the 30% of the cases you can still win a percentage of the Buy Box.
Ohad: I think the most important thing to add is to have some kind of alert. Make sure that whatever reporting you are using or repricer you are using, it can give you that notification that Amazon entered the arena. One of the things that algorithmic repricer is doing as part of the revenue intelligence reporting suite, we have alerts for items, specific items that Amazon entered the competition. Why is it important? Because you need to decide what your pricing strategy going to be at that point.
Ohad: The first thing you need to do is to see what Amazon is doing. You need to check what percentage of the Buy Box Amazon is taking. You have to make sure that you have to ask again whatever repricer you are using or reporting solution you are using, ask for this information. At Feedvisor we are giving you as part of the drill down to the product. You can see the percentage of the Amazon Buy Box share. If you see that the percentage is lower than 70% or it's 40%, you can still continue as usual. If you see the percentage is high, 80%, start thinking about what's your next steps. One thing for sure is that you not necessarily want to replenish this product. Wait to see what's happening with Amazon before you go and buy more of that product. This is why it's important to have that visibility.
Ohad: The other important, it's not a misconception but it's a statement that is absolutely true and important. Sellers who use FBA and sellers fulfilled Prime are more likely to win the Buy Box. This is absolutely true. And the reason this is happening if you go back to the whole concept of the Buy Box which is to guarantee customer satisfaction. Amazon knows that sellers who use FBA are more likely to perform better in terms of the customer experience. Amazon control this whole flow of fulfillment and interaction with the customers, and that's what they're trying to achieve, a best-in-class customer experience.
Ohad: By the way, I'm not recommending anyone just to go and move it to FBA. Each case it's by itself. You need to analyze. There's definitely pros and cons for going FBA or sell-fulfill Prime. Each one should analyze the situation for themselves. But you have to understand the impact it has on the Buy Box.
Ohad: On that slide the impact of seller metrics on the Buy Box. There's different metrics that affects if you are going to win the Buy Box and at what specific price. I'm not going to go through all the variables in here. Again, as I said, we want to focus on the advanced strategies on this webinar. So we have a link that we put on the chat box. You can get and download the Buy Box and learn about all these metrics.
Ohad: I think another thing I know that the important metrics according to our research is a) the fulfillment method you are using, if they're not FBA, the landed price you are using, and in fact landed price is the only thing that you can change in real time, the top score you are getting, perfect or percentage which takes into account negative feedback, charge back, cancellation rate, et cetera, shipping time, order defect rate which also takes into account negative feedbacks and some other metrics.
Ohad: I think one of the important things that is important to understand and that's also the reason why we have Jay today with us here on this webinar is that affecting all these things, the top score or the defect rate, and if you noticed through what the images mentioned, feedback is a key component in each one of these areas. Improving these metrics is not only enabling you to win either Buy Box share, but also position you to win the Buy Box in higher prices which is critical for your ongoing business.
Ohad: I'm going to let Jay continue from here. Go ahead Jay.
Jay: Okay, well thanks very much. So what I'm going to talk about right now are some of the reasons why feedback is so important for getting the Buy Box and for driving additional sales on Amazon. I'm just going to mention three reasons right now.
Jay: The first reason is, and you could switch to the next slide Ohad if you'd like. So the first reason is the one that Ohad just mentioned. And that is that feedback is a really important component. It's not the most important. It's not as important as price for example, but it's an important component in Amazon's Buy Box algorithm.
Jay: So if you want to go into battle on Amazon, if you want to compete in the price wars on Amazon, one of the best weapons that you can have in addition to a good repricing tool is to have a good feedback, because having good feedback will allow you to compete with a slightly higher price. You would prefer not to compete with price if you can avoid doing so. You don't want to have to reduce your price too much. So coming in with high feedback is an important weapon in that battle.
Jay: The second reason is that strong feedback helps sellers qualify for certain gated programs that can help you get a higher share of the Buy Box. For example, to participate in the recently announced Subscribe and Save program that Amazon sellers can participate in, Amazon requires sellers to have a feedback rating of 4.7 or higher. You can imagine that in other contexts, in other types of programs as well that Amazon is looking at your feedback rate in order to determine whether you're the type of seller that would qualify for a program like that.
Jay: And then the third reason is a very interesting statistic which I'm going to share with you on the next slide. Earlier this year Feedvisor did a survey of Amazon consumers, and they found that nearly, you can switch, they found that nearly 60% of Amazon of the respondents on this survey always check third party ratings before buying, and then another 29%, that's almost 90% total, but another 29% said they sometimes check. So that means that 90% roughly of customers on Amazon are checking feedback ratings. So feedback ratings are influencing buying decisions on Amazon whether the buyers are buying through the Buy Box or in some cases when they're not.
Ohad: Jay, one thing I would like to add here.
Ohad: I think what you just mentioned, I love these metrics. They were all surprising to me. As a service to anyone on the webinar, we're putting the link right now to one of our pages to download these survey results. I think it has very interesting metrics, a survey that we launched in July this year. It includes over 1,500 Amazon consumers focusing specifically on things that matters to them when buying from third-party sellers. So I'm sure you're going to find this information valuable. It's on the chat box on the GoToWebinar dashboard that you're using.
Jay: Great. So what I'd like to do now is provide some tips about how to really drive and improve your feedback. And I'm just going to focus on four simple areas. They may be obvious but they're worth mentioning because not everybody pays attention to all of these areas, and really all of them are important.
Jay: The first is really simple. It's just to ask. I'm not going to go into that right now, soliciting a feedback. I'm going to talk a little bit about that in a minute, but it's the first step, is to ask for feedback.
Jay: And secondly, it can be really useful if you get alerted in the times when you get neutral or negative feedback. And the reason for that is, is that there are many Amazon customers that are frustrated for whatever reason, rightly or wrongly, and rather than send an email, they send feedback. So feedback for them is kind of like a loud email saying, "I want somebody to fix my problem right now."
Jay: So if you are getting alerts, when neutral or negative feedback happens, this gives you the opportunity to respond to it in a very timely manner. And if you do that, you will be able to reverse a lot of those negative customer experiences, have that feedback removed and significantly improve your feedback scores. We'll talk a little bit more about in a moment as well why removal is so important.
Jay: The third thing is what I would call strategic monitoring. Really that's to take a little bit of a bigger picture look, whether that's weekly or monthly to look at trends and to make adjustments. So for example, you want to see as just one example are there certain SKUs that might be leading to feedback issues? Could it be an issue with product quality or shipping, or maybe an issue that has arisen with a product description? And all of these cases being strategically attentive and making adjustments can have a good, long-term impact on your feedback scores, as well as other aspects of your Amazon business.
Jay: And then last manage. And by manage I'm principally focusing here on the need to manage your negative feedback and to seek removal of negative feedback. Negative feedback and removal of negative feedback is more important than it might first appear. The benefits of feedback removal are huge. Just to give you a simple, a really simple example, just to drive home the point. If your goal is to have a 98% positive feedback let's say, and you get one negative feedback, it's going to take 49 positive feedbacks to counteract that one negative. And if your goal is to have a 99% positive feedback, and you get one negative or neutral, it's going to take 99 positive feedbacks to counteract that one negative.
Jay: So really it's in your best interest to be very diligent in getting negative feedback removed whenever possible, in addition of course to having a lot of positive feedback to bury the inevitable negatives that you can't get removed, hopefully not too often, but it is going to happen to all sellers. So for FBA obviously, if it's an FBA order, you're usually in luck. If the issue had to do with fulfillment or if it's service related, you can ask for it to be removed. If it's a merchant fulfilled order, then as Amazon has recommended for many, many years, try to resolve the customer's concerns and then ask them to remove the feedback.
Jay: So setting up a consistent and methodical process to manage negative feedbacks can pay huge dividends for your Amazon business and for your ability to compete effectively for the Buy Box. Don't let negatives slip by without taking reasonable steps to have them removed.
Jay: I'm going to move on to the next slide. Mention one additional thing about asking for feedback. As we see that Amazon has always recommended that you ask for feedback. The reason for this is twofold. Number one, they know it works. But more importantly, they want sellers to be highly focused on the customer experience. It's a huge part of the Amazon DNA, marketplace DNA. Amazon knows that their marketplace works better when buyers really care about feedback. So if there's any doubts about whether you should be asking for feedback or not, I think it's important to remember that Amazon has been encouraging this and continues to encourage it today.
Jay: There are two rules. Really, asking for feedback really boils down to two rules, and the next slide kind of summarizes those two rules. If we can move to the next slide. Thanks. So really, ask correctly. Be polite. Have the right subject line. Check on your customer satisfaction first. Then ask for feedback. It makes a big difference about how the ask is made and how it's targeted. Are you targeting the right customers as to the success of your feedback campaign? A little bit attention there can make a huge dividend in the success of any feedback increasing and asking campaign.
Jay: The second thing is to honor opt-outs. There are a very small number of customers that would prefer not to get additional communications from an Amazon seller, and they will typically click on a link to ask to opt-out from follow-up messages. We suggest that when that happens, that you honor that process and that you set up a process where you do not solicit that person again and ask them for additional feedback or product reviews, because that's one of the few number of people that would prefer not to be asked.
Jay: Our tools have been doing this for some time and we've found that it can be useful to not only honor requests that have come to you as a seller, but to look at previous orders, and if possible, even if you can use a tool that will also opt you out from requests that have come to buyers other than yourself.
Jay: The next thing I will talk-
Jay: Go ahead.
Ohad: I want to say one quick thing, which I actually like about this slide. For some people it might seem obvious to ask correctly or to honor opt-outs. But from what I have seen in the past year and even before that, the basic has to work in order to be successful. And that's true by the way for any business. Whether you're managing a coffee shop or you own a small store or you own an ecommerce business, all the basic stuff has to work. That's the thing that people pay attention to. That's the things that people notice. Once the basics are there, then you can start working and optimizing your business.
Ohad: Applying automation is a very smart move because in order to keep the basic that may be time-consuming, once you have the automation, it can help you to streamline your business and focus on other things such as optimization.
Jay: It's a very good point.
Jay: Next I just want to talk really briefly about product reviews. This is not the main focus of what we're talking about today on feedback. But you're talking about feedback. It's always a good idea to talk about product reviews. And that's because product reviews are really a main driver of organic SEO on Amazon. So if you own a brand or you have exclusive ownership over an ASIN on Amazon, you kind of already own the Buy Box. But what you really want to do is you want to drive more visits to that Buy Box. So how do you do that? How do you increase the number of product reviews?
Jay: Well when you're managing feedback, you learn about targeting and messaging. And you can use some of those same strategies to reach out to your customers to ask for product reviews. You can customize your message for a particular SKU or a group of SKUs. And you can target a message for repeat buyers as examples.
Jay: Another really great strategy is that you can target product reviews to those who have already left you positive feedback, because you know that those people are already positively disposed towards your product. In addition, by monitoring product reviews, you have the opportunity to follow up on their concerns and to increase the overall product review quality that's displayed on your listing.
Jay: And then last I just want to mention one other ... on the next slide I just want to mention one other benefit of product reviews, and here I'm going to quote from another place on that same Feedvisor survey that we mentioned earlier. And that is that over 90% of consumers would not consider purchasing a product that received less than three stars. That's a big statistic and it's also supported by statistics done by other parties as well, that product reviews are a major component and most ecommerce sales are happening with products, a huge percent with products with very high product reviews, four and five stars.
Jay: So what that means is that quality product reviews bring you a double benefit. They not only drive traffic and increase the number of Buy Box impressions that you get, but they also drive conversions of those impressions. So that's another benefit to remember that the time you invest in product reviews can pay huge dividends for those sellers that own brands or otherwise manage brands on Amazon.
Ohad: Thank you very much Jay. This has been very educational. And as I said before, it's critical to have these basic things to work in order to optimize your position for winning the Buy Box, not only for higher share but also in higher prices.
Ohad: Before we move on to the second part, we're going to put a poll right now on the screen. So if you're interested in learning more about how FeedbackFive can help you with optimizing your business, click or choose one of the options on the screen. I'm going to keep it there for a few more seconds to let everyone a chance to read and decide if they want to learn more about this service.
Ohad: Basically what we are going to cover in the next few slides is a) the difference between rule-based repricers, manual repricing, and algorithmic repricers, and what should be working for your business. And then we're going to dive in into price wars and how to better manage them on Amazon to optimize and improve your business. And then we'll move to some Q&A. We're receiving a ton of questions which is great. It means that you guys are listening and getting value from this.
Ohad: Okay. So moving to the next slide, rule-based repricers, manual repricing, or algorithmic repricing. I'll say that on a very, very high level, the big difference between rule-based repricers and algorithmic repricing is the difference between being reactive, reactive to what your competitors are doing which is to some extent what rule-based repricers are doing, and being proactive which means leading the market and reacting to market changes and then the competitors follow you.
Ohad: On a very high level, manual repricing it's a good option if you are selling a very small number of SKUs. If you are selling only 10 products, it's very easy to go inside, take a look on your performance, start playing with the pricing until you are finding the sweet spot. If you're selling more than these 10 products. Now let's say for example you are making $20,000 a month. That I'll say is also ... I'm not sure you need an algorithmic repricer solution. I think a rule-based repricer can also help your business, and I said before, the big difference is that's going to be reacting to what your competitors are doing.
Ohad: If you're selling what we call high volume sellers, if you are making half a million a year or north to that, then algorithmic repricer can certainly impact your business positively. The reason I'm saying that rule-based repricers are reactive as opposed to being proactive is that algorithmic repricer not only look on what your competitors are doing but it also analyze everything that's happening in the market. It looks on the seller metrics of yourself, of your competitors, and according to that it set up the best pricing for your position.
Ohad: I spoke before about our data scientist team. Our algorithm is not only based of that. It's also self-learning algorithm so it knows to adjust itself to what's happening in the market. The four key differences between rule-based and algorithmic repricer that will help you to decide what's right for your business, the first thing to know is that there's too many variables in the market that needs to be taken into account. This is something that algorithmic repricing is doing.
Ohad: Dynamic market changes. We're in online environment. The pricing and the market itself constantly changing, and identifying emerging trends is part of that. The example which I liked the most is the Chewbacca mask who shot that ... a video of a lady somewhere in the United State can go viral. And I don't know if you saw that video. If no, please go and search for that. But that video went viral in a matter of few days, and the pricing of that product basically climbed to the roof. It's almost doubled itself and you need to have a repricing that knows to capitalize on these opportunities. It's not only cutting the price down. It's also to know when to increase the price.
Ohad: And then the last thing I'll say is that manual pricing and rule-based repricing are based on human bias. No one guarantee that what you think is the right thing is actually the right thing to do for your business or for that pricing matters. Now, we're only talking about one, two products. Imagine what happens if you have 1,000 products, 5,000, 10,000, 50,000 products you are selling on Amazon. Then manual repricing rule-based at that point is more challenging.
Ohad: Moving forward to the next slide and talking a little bit about Amazon price wars. As I said before, this is part of the research that our data scientists team have been doing in the past few months, analyzing thousands of hundreds, hundreds of thousands transactions on the Amazon Marketplace, and we are trying to understand what caused this price wars and trying to understand how to better manage that.
Ohad: I'll say that for those who don't know, price war is basically when two or more competitors are engaging into some kind of let's call it a dialogue, of course, not with talking to each other, where one competitor cuts the price, the other competitors want to beat him. They take the price down and go on and go on. And that leads to a race to the bottom.
Ohad: Price wars has been also in traditional retail. In the past there's many cases of price wars. The difference between offline and online environment is the time length of price wars. In an offline environment, one brand can cut the price. The other brand see that. They will cut the price two weeks or one month later because changing prices in store is not so easy. It takes time. The other competitor is doing that. So you have a cadence of a price war that can have a length of almost a year. When the two competitors realize eventually that the market overall pricing went down by 10% or 15%, which is not good to anyone because it's affected both competitor profit margin.
Ohad: On Amazon itself the cadence of price wars can be very short or can be long, long meaning 24 hours. And let's start with taking a look on some examples. These are by doing real examples. We won't have the product ASINs in here, but it's real examples from the data scientist team. So in this example you can see a short price war with a very minimal impact. So that price war occurred for 17 minutes and the price difference was only 0.02% decrease, very minimum price difference. But it's interesting. You can see how one competitor is taking an action and the other one is following him.
Ohad: So the gray competitor is taking some kind of an action. The red competitor is following. I'll bet that in this case these are two rule-based repricers, just because I don't think people sit and reprice manually in that very short timeframe on that 17 minutes. It might be the case that the gray repricer set up a rule to be below a certain percentage of the red repricer. He cut the price down. The red is doing exactly the same thing, cut the price or match the price. The gray take the price down again. The red matched the price again and go on and go on until it reached to a certain pricing.
Ohad: The second example we have here is a long price war that has very high impact. So this price war occurred for 24 hours and the price difference eventually was very significant. 24 price decrease, it's a significant cut to these sellers profit margin. What's interesting in that example is that both of them had some kind of a cadence at the first 18 hours approximately, and then toward the end the price difference start going aggressively down. And what happened in that specific example is that one of these competitors was cutting the price in a minimal small percentage. That one was following him, and then at one point that I think in that case it's the gray competitor start cutting the price on a much higher rate. The red one following him. And you see where they're ending later on. 24 hours later they both wake up and realize that they are selling the product at almost $80 instead of $120. The difference it's additional $40 that can go to the profit margin. They can double the number of the unit they are selling with the math and understand the impact that this has on their business.
Ohad: This example I like because it shows multiple competitors with multiple methods. The gray and the blue one has their own method that they're just basically following each other. The red one it's either using manual repricing or doing repricing different set of rules. So you can see that the blue and the gray follow each other to the bottom. The red one is doing the same, just in different cadence. You can see that he always likes to keep a specific ... I'll bet actually that this is also a rule-based repricer because you can see that at each point that they cut the price, it's almost the same price difference in terms of percentages. So you can see in each points, I can actually point with my mouse, that at this point the price difference got to that range. They drop it down to be at that level. Then goes on. The price difference came to that range, they cut it again to be on the same level as before and go on and go on.
Ohad: The question is how do you better manage price wars? What can you do when that happens on Amazon? And there's three methods that we'll identify. I have to tell you now, if you have five, 10 products, you can do that. It will require time. If you have more than that, you either need a tool to do that automatically for you like other repricers in the market or you need a team of analysts to sit down and analyze each transaction for itself.
Ohad: The first recommendation we have is be patient. You saw that some examples the price went down in 17 minutes and eventually it will go up again. So not necessarily every time your competitor is doing something, you have to engage in a price war and go down after him. Sometimes they might be testing you. Sometimes they might have a different goal. Maybe your competitor is going out of business. He wants to liquidate these hundred units. There is no reason for you to go after him. Let him sell his hundred units, and then go back to your pricing, original pricing. So the recommendation is to be patient and wait to see what's happened before you make any action.
Ohad: The second point is know your competitors. Try to understand what repricing method they are using, try to understand what's the lowest price. And I'll show you some very nice examples how this can be done if you're drawing a chart.
Ohad: And then the last thing, try to be a market leader. One of the things we found interesting in our research is that there is also a reverse price war. What we call a reverse price war is that when one of these sellers starts to increase the price and the others are following him. You want to be that seller that leads the market and not follow other people, because again, the goal of a few is that you sell in higher price the same as your other competitors. That's the goal because if your Buy Box potential is 30%, you want to make sure you're selling this 30% unit in the highest price possible. And the only way to do that if the whole price of the market also climbs with you.
Ohad: So just to show you some examples. In this example when we say know your competitor, trying to understand the repricing method, you can see that there's three competitors in here, the red and the blue that are selling that specific product on that specific time. We even have a date for you if you want to look on the history. And you can see that the red and the blue ones have a specific pricing method where each one is following each other. But the gray one stay constant. If you have a competitor that doesn't follow your pricing, then you know that there are either very positive about their potential or they are not even repricing at all. That's a benefit for you to know how to react and what to do if you want to beat that competitor. Or if you take the price up, or willing to take the price up or down.
Ohad: The second example which I really, really like when we say about know your competitors, I'm sure each one of you will pay a lot of money to know what's the lowest price your competitor is going to go. And on that specific example you can see that for that faucet, on September 1st between that timeframe, you can see the price differences between two competitors, and you can see that the blue competitor is taking the price down to a certain level while the red competitor in all three cases always stopped on that level, which means that's the lowest price, $270.60, that's the lowest price that your competitor is willing to go. This information is worth gold for you, to know something like that. Again, as I said before, you can either do that by yourself or use a smart repricer that do this job for you.
Ohad: And then the last thing when we say be a market leader and we use a phrase in here, what goes down must come up, and you can see on that specific example the price went down significantly from $38.8 to $37.2, and then eventually it climbs up. And the reason it climbs up is that one of the competitors was a market leader. One of them decided to increase the price.
Ohad: To give you an example, one of the interesting ways that we are using to help our customers to increase the price in the market as well is that on low peak, specific low peak times, we actually increase the price. That's a way to signal the competition to increase the price. If they're using rule-based repricer, their pricing will follow up. If they want to be 10% lower one of the competitors and we are increasing the price on off peak times, we'll reach the peak times when the pricing overall on that Buy Box is higher, which is benefit for us.
Ohad: Another thing we are doing. If we know that a customer Buy Box potential is 30% for a specific day, if we know that they already achieved 30, a range of 30%, we start increasing the price. And we are doing that because we're knowing that this day you reach your maximum potential. Now let the competition increase the prices as well. I'm fine. We are fine. You're fine with your competitors. Also, winning the Buy Box for higher share because that means that when you're going to compete for the Buy Box, it's going to be at the price of $30 instead of competing on a range of $25.
Ohad: So that's it from a very, very high level. Before we're going to move on to the Q&A session and we have some very interesting questions arriving from people here, we're going to put a poll right now on the screen. If you want to learn more about what Feedvisor can do for your business, if you want to learn more on a repricer, please pick one of these options, and we will contact you either today or in the next following days with some more information.
Ohad: There's one thing that I did not mention in too much details. We apply our algorithmic learnings and all the machine learning and all of these smart technology to develop a very smart revenue intelligence. One of our product offering is a very smart revenue intelligence and dashboard that gives you what we call actionable reports. That actionable reports means that it saves you time and it helps you to better manage your business.
Ohad: Just some examples for actionable reports. We have reports that shows you specific products that Amazon entered the competition and the customer success team here at Feedvisor walk you through what you should do in these cases. We have the replenishment reports that signal which products you should buy and how much you should buy for. We have reports that show you products that you reached the maximum. You're already winning a very high Buy Box share, meaning you can increase the Buy Box ceiling price that you give us. Each customer price giving us a minimum price and a maximum price. And if we are seeing that we reached the maximum price and you are winning 100% of the Buy Box, we tell you, here are the products that you can increase the maximum price you gave us and still win the Buy Box. And that's, our customers I know love this report because any change in that report goes directly to their profit margin and you see the impact immediately.
Ohad: So with that said, I'm going to leave the poll open for another minute or two, but we can move on to the Q&A session on this webinar. We have some great questions. And luckily, we have I think enough time to take a few of them. So let's start Gaby.
Gaby: Thank You Jay and thank you Ohad. That was definitely very interesting. And I can see that you've all been asking many, many, many questions. Some of them have been answered and some of them will be answered now. The ones that we didn't get round to, we will ... somebody will give you a call or you're welcome to email me gabyy G-A-B-Y-Y @feedvisor.com with any follow-up questions and I'll do my best to get back to you as quickly as possible. So without further ado, Jay, this one is for you. All else being equal, does a seller with 30,000 feedbacks have an advantage over a seller with 500 feedbacks?
Jay: Well, the answer is absolutely, and I can answer part of that question just from a feedback centric perspective. From a feedback centric perspective, the more feedback you have, the better you're able to accommodate the occasional negative feedback that you get. So if you're just starting out and you have very low feedback and you get a negative feedback, it's going to drive your rating down very visibly. And if you get too many negative feedbacks too quickly, you could put your account in jeopardy. But if you've got a lot of feedback, you're going to be able to buffer those occasional negative feedbacks.
Jay: The second part of that question is quality versus quantity. We know that quality is very important as part of the Buy Box algorithm, and we know that quantity is important for protecting the quality. But we also have reason to believe that a certain quantity of feedback is also a factor as well in the Buy Box. It's not quite as important as quality, but it is an important factor for going into the Buy Box battles that we talked about a few minutes ago.
Gaby: Thanks very much Jay. Ohad, this one is for you, and I think we've kind of covered some of this. But if I have Feedvisor as a repricer and my competitors are using a different repricer, how will this affect Feedvisor's performance for me?
Ohad: That's a good question. The answer it depends on each case for itself. It's not only the repricer they are using. It's also their seller metrics and many other different variables. What I can tell you is that our algorithm takes into account all these variables and try to optimize each scenario by itself. So it doesn't matter if your competitors are using a manual repricing. It doesn't matter if they're using another rule-based repricing. And it doesn't even matter if your competitor is also using Feedvisor, because our algorithm, we look on your performance, we look on the maximum Buy Box you can get, and we try to optimize your potential, which means we'll try to get you the highest Buy Box share that you can get at the highest possible price. And I showed you some examples.
Ohad: If the average price on a certain day is let's say $25.00, that's of course the logic of an average. Some prices are above that. Some prices are below that. We'll try to make sure that you're going to get the sales that are getting the higher, above the average pricing for that specific product. That's the answer for itself. I mean it's very simple. And the nice thing, you don't have to do anything. The algorithm does it for you.
Gaby: Thank you Ohad. Jay, another one for you. Can customers change feedback or can they only remove it? So can they change it to from a negative one to positive one, or just remove it and write a new one?
Jay: That's a good question. With feedback all you can do is ask a customer to remove it. So they can't change it and also for that same order they can't write new feedback. So if you've got neutral or negative feedback, and we define that as a feedback of 1, 2, or 3, even though it's neutral, you still don't want it, really the best thing to do is have it removed. And it's not going to be replaced by something else. It's just going to get removed. So that's the way the rules work on Amazon and have been from day one.
Gaby: Thank you very much Jay. One more for Ohad. If we have the Buy Box, will Feedvisor still try to raise the price?
Ohad: The answer is absolutely yes, taking into account that there is potential to do so. And I gave a very simple example before that of one of our reports which called unrealized profit which tells you basically that you reach 100% Buy Box share for some specific products, and our algorithm was able to do that for you, at the maximum price you've told us to reprice for. And if that's the case, we recommend you to go and increase the maximum price you gave us, so our algorithm can try to increase the pricing for these specific products.
Gaby: Thank you very much Ohad. Jay, one more for you. What are the strategies for product reviews, for product launches to help win the Buy Box?
Jay: Yeah, that's a really good question. So as you probably know or have heard that Amazon has really become more strict about black hat product review strategies. So you can't incentivize reviews like you have been in the past, unless you're using the Vine Program. So soliciting for product reviews as we mentioned earlier is a very, very good strategy. If you're the seller, then you should really take opportunity that advantage to solicit for product reviews, to use good targeting techniques, and to use very good techniques for customizing your message for the audience to try to boost product reviews, and even possibly to target people who leave you positive feedback for those product reviews.
Jay: And then the other thing I would mention that if you do have some sort of a platform, whether through a blog or social media or mailing list, you should of course use that platform to your advantage, not to incentivize reviews but to certainly encourage them. And that can play a big factor in a product launch operation.
Jay: And then the last thing I will mention, and this probably should go without saying, but sometimes it's important to the basics, is that it can often make sense to use sponsored ads, sponsored product ads in order to boost early traffic on your listing to get. And that also can be a way to boost early product reviews, provided that you're soliciting intelligently for product reviews for those purchases.
Gaby: Thank you very much Jay. Unfortunately time is running out so we can't take any more questions at the moment. But I just want to give a quick overview of Feedvisor and of FeedbackFive. So as Ohad mentioned earlier, Feedvisor can optimize your pricing to ensure that you're winning the Buy Box while still maintaining your profit margins. If you'd like to see a personalized demo of Feedvisor or you just want some more information and to see how it can help avoid those dreaded price wars and really accelerate your Amazon business, please click on the relevant option on your screen now. Or you can drop us an email to email@example.com.
Gaby: If you're interested in learning more about how our partner FeedbackFive can help with seller feedback and product reviews or if you would like to receive a coupon code for an extended free trial of FeedbackFive, please click the relevant option on your screen now. You can also contact them if you'd like some more information.
Gaby: Unfortunately that's all we have time for today. Please do click one of the options on your screen just so you can get follow-up information, and look out for an email which will contain the webinar recording so that you can review any material that you may have missed, or listen again or share with some other sellers that you know. Without further ado, we wish you a very happy holiday season and every success with your Amazon business and we hope to see you at our next webinar. Goodbye.
Originally published on December 13, 2016, updated July 14, 2020
This post is accurate as of the date of publication. Some features and information may have changed due to product updates or Amazon policy changes.