Online Marketplace Best Practice: the Buy Box / Buy Button
Date: May 09, 2014
Category: Opinion piece
In the fourth of a series of best practice posts, GS1 UK offers Q&A guidance on some of the fundamental elements to help you trade on online marketplaces successfully.
The focus for this post: the Buy Box / Buy Button.
If you are 'promoted' to the Buy Box position it means that when a customer clicks 'buy' on the product detail page, all purchases will be sent automatically to you. Although customers can still browse other merchants, winning the Buy Button is obviously a big deal for marketplace sellers. Over the years, customers have become accustomed to clicking this button when buying from a retailer directly.
Winning the Buy Button therefore gives the featured merchant a huge advantage relative to anyone else who is selling the item. It is not uncommon to see a five-, ten-fold or even greater increase in sales after being promoted to this position.
This has huge implications for the marketplace, its customers and its merchants. If sellers fall short on inventory levels then thousands of customers can be left disappointed. For this reason, marketplaces do not take the decision to promote a merchant lightly. They must prove that they can handle it by carefully managing their Order Defect Rate (see previous post on Key Performance Metrics) over a sustained period.
Currently the idea of winning the Buy Button is unique to Amazon among the major marketplaces, since Play.com removed the concept recently. Amazon do not publish their criteria for winning the Buy Button as it may change over time or vary by category. However, careful management of your KPIs will always help.
In addition, consider the following factors:
Price – marketplaces do not want their customers to find the same item cheaper elsewhere so (all other things being equal) the lowest priced item will have a higher chance of winning the Buy Button (even in some cases, where the marketplace themselves are selling the item). Under-cutting other sellers by one penny, however, may not be enough to win the Buy Box. If the other seller has an equally strong track record as you, it may take a price difference of a few percent to dislodge them from it.
Availability – clearly to support the increased sales, a merchant must have good on-hand availability of the item, but longer-term availability is also known to help with winning the Buy Button. Merchants who have stable, high inventory volumes which do not go out of stock repeatedly over time stand a better chance than those whose inventory levels drop to zero frequently.
Order Defect Rate – you are unlikely to be promoted to the Buy Button if your order defect rate is above 1%. In the event that your account does go over this, consider some short-term promotional activity to boost sales and get your overall rate down. Order Defect Rate is usually calculated at an account rather than item level.
Selling History – your sales history, including the amount of time you have been selling, and the volume of sales you have successfully fulfilled, plays a large part in influencing your eligibility to win the Buy Box. It can be worth discounting your products to achieve high sales volumes.
[Amazon Only] Fulfilled by Amazon – if you rely on Amazon to warehouse and fulfil your orders for you, they can guarantee that the on-hand quantity is sufficient to meet demand and that there will be no question about dispatch times. It also makes orders eligible for Amazon Prime. However, although it can help a lot, Fulfilment by Amazon is not essential to winning the Amazon Buy Button.
If you would like more information on selling on online marketplaces, GS1 UK recently published a guide to support small traders. You can download a copy here.
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