Which sellers win 82% of sales on Amazon?
If you’ve ever wondered if you should resort to using repricing software on Amazon, the answer appears to be a resounding yes according to a research paper published by Northeastern University in the US.
82% of all sales on Amazon are from the seller who wins the buy box according to the paper. And that’s regardless of whether they are offering the best price, often you can get a lower price by clicking to see offers from other sellers. Winning the Buy Box is a self fulfilling mechanism – You win the Buy Box, you sell more, you have higher volumes and more feedback so you’re more likely to win the Buy Box and get more sales in the future.
Of course a cheaper price might mean that the offer doesn’t qualify for Amazon Prime or has slower shipping, it might be from a seller with lower feedback or more likely it’s from a seller who isn’t using a repricing tool.
Sales volume, response time to customer inquiries, rate of returns and refunds, and shipping times (especially use of Fulfilment by Amazon) all affect which seller will win the Buy Box on Amazon. The exact formula is unknown but price is definitely a key factor.
It’s not just winning the sale however, it’s profitability as well. If you know that you’ll win the buy box a good proportion of the time then you can edge your prices higher. The paper reports that “although the algorithmic seller is willing to sell the product for as low as $12, the majority of the time they sell at prices up to 40% higher“. A 40% uplift in your sales price above the lowest price you’re willing to accept is a healthy profit margin to take.
The research paper is well worth reading in full and concludes that “sellers identified as using algorithmic pricing receive more feedback and win the Buy Box more frequently, likely suggesting higher sales volumes and thus more revenue than non-algorithmic sellers“. In other words, if you want to be successful on Amazon then you should be using repricing software.
(You’ll find a selection of repricing solutions to choose from in our Tools & Services Guide)