Podcast

Learn from Fast Growing 7-8 Figure Online Retailers and eCommerce Experts

EPISODE 12 41 mins

Winning and Owning the Amazon BUY BOX – Shmuli Goldberg, Feedvisor

Posted on 20th April 2015 ,
by Kunle Campbell


About the guests

Shmuli Goldberg

Kunle Campbell

Shmuli is an experienced marketer, who has worked with several B2B SaaS tech start-ups.
He used to be the Director of Marketing and Senior Technology Evangelist at ClickTale,
He is also a featured speaker at industry conferences all over the world.



Understanding that it is increasingly difficult for Amazon Marketplace sellers to stand out, Shmuli Goldberg, head of marketing at Feedvisor offers retailers a solution to win the coveted Amazon Buy Box without compromising on revenue and profits.

There are 15-20 requirements to win the Buy Box on Amazon, the most important being fulfilment, seller rating and landed price. Feedvisor executes 25 million pricing decisions per day to make sure that their customers’ products are visible and offer good value within the Amazon Marketplace.

Shmuli gives an insight into how small and larger retailers can remain competitive and profitable in an increasingly crowded sales channel.

 

Key Takeaways

0.03.24                  What is the Amazon Buy Box?

0.06.07                  How to win the Buy Box

0.09.43                  Selling on Amazon rather than Ebay

0.11.35                  Amazon Featured Sellers

0.16.17                  Is Amazon solely a price driven platform?

0.21.04                  Selling internationally

0.27.42                  Feedvisor customer results and pricing structure

0.30.27                  Can retailers outprice Amazon?

0.32.22                  Price volatility and maintaining profitability

0.36.04                  Advice to established Amazon retailers

0.38.33                  Advice to new Amazon retailers

Key requirements to win the Buy Box on Amazon:

  1. Fulfilment method

  • Using “Fulfilled by Amazon” is a preferred method
  • Fast dispatch and shipping via own delivery methods
  • International shipping
  1. The landed price

  • The total price of an item to a customer including delivery costs
  1. Seller rating

  • Performance and feedback rating in %.
  • Good customer service, fast dispatch 

Tweetables

If you don’t give your customers a great experience, it can definitely be a detriment to you, because it’s harder and harder to make sales on Amazon.

Our experience has shown that less than 20% of people will always buy the cheapest item. Everyone else is going to go with a reputable seller.

Amazon is far away above Ebay in terms of exposure, customer base and the infrastructure that they have around the products and promotions.

Your goal initially is to prove to Amazon that you actually know what you’re doing and that you can run a retail business.

If you have a higher price, but better metrics, that is more important to Amazon than if you have a lower price buy lousy metrics.


It’s not a lot of effort to sell internationally on Amazon at all. It’s actually a very low barrier to entry.


I would never recommend anyone to start off with 3000 items at once. Start in the tens and move to the hundreds and finally to the thousands.


 

If you’re the 97% mark of rating, maybe make one or two deals that you wouldn’t normally make, just to get yourself to the 98%.


If you start badly on Amazon, and you screw up your first couple of shipments, it’s going to put you in a situation that you will simply not be able to recover from.


Transcript

Kunle: If you sell on Amazon, then you know how coveted owning the Buy Box is in the Amazon marketplace. My guest today talks us through the key signals Amazon uses to determine which retailer wins the Buy Box.
He also talks us through FBA, which is fulfilled by Amazon, how to start up on Amazon and scale up and all about dynamic pricing. Stay tuned if you want to find out more.
Welcome to the 2x ecommerce podcast show where we interview founders of fast growing seven and eight figure ecommerce businesses and ecommerce experts. They’ll tell their stories, share how they 2x their businesses and inspire you to take action in your own online retail business today. And now here he is, the man in the mix, Kunle Campbell.
Hi 2Xers, welcome to the 2X ecommerce podcast show. I’m your host, Kunle Campbell and this is the podcast, as usual, where I interview ecommerce entrepreneurs and online marketing experts who help uncover new ecommerce marketing tactics and strategies to help you, my fellow 2xers, double specific ecommerce metrics in your online stores. If you’re looking to double metrics such as conversions, average order value, repeat customers, traffic, and ultimately sales, you are in the right place.
On today’s show, I have Shmuli Goldberg. He’s the director of marketing at Feedvisor, which is an Amazon repricing platform. Shmuli is an experienced marketer, he’s worked for several B2B and SaaS tech startups. He used to be the director of marketing and senior technical evangelist at ClickTale. Most of you might know about ClickTale. And he’s a featured speaker at industry conferences all over the world, globally. Shmuli, welcome to the 2X ecommerce show.
Shmuli: Thank you very much. It’s a pleasure to be here.
Kunle: Thank you. Could you take a minute or two to tell our listeners about yourself?
Shmuli: Sure. As you said, I am an experienced online marketer. Most of my experience has been B2B, which means I’ve had a lot of time and a lot of efforts given towards helping online stores, be it ecommerce on their own website, be it through Amazon. All the start-ups and all the technologies that I’ve been involved with over the last few years have really been aimed at ecommerce sellers. Most of them have been very successful, ClickTale is now used by hundreds of thousands of people all over the world and we already have nearly 1000 people using Feedvisor, so we’re growing very strong. Again, my passion is helping medium and large businesses improve their online metrics.
Kunle: That’s fantastic. The majority of our listener base are mid-tier etailers. How long have you been with Feedvisor for?
Shmuli: I’ve been there for a little over two years, and the company is about three years old.
Kunle: Ok. So Shmuli is going to be talking about the Amazon Buy Box. Some of you are multi-channel retailers, and some of our listeners might be also considering Amazon, and the coveted Buy Box is what we’re going to be talking about. Without saying too much, I would just ask you to explain what the Buy Box is all about.
Shmuli: When you have several people selling the same product on Amazon, as often happens, they are all listed together. They are grouped under one product listing and you can see this yourself if you go on Amazon and you pick a popular product, on the side you can see 8, 10, 20, 30 people that sell the same item. The Buy Box essentially controls which one of those sellers gets the sale. It’s the yellow button you can see in the top right hand corner, where you actually push the “Buy Now” button.
Kunle: So unlike Ebay, where you probably have multiple listings for a particular item. Say I list an Iphone case, I could have 10 other listings somewhat identical, there’s more control on an individual basis. Amazon controls a singular version more or less. Is this a constraint in Amazon or do you see this as an advantage, or a bit of both?
Shmuli: It’s a bit of both. There are many sellers. It’s a constraint if, let’s say there are 20 people trying to sell the same item, if you’re one of those 19 that doesn’t make the Buy Box, it’s definitely a constraint. Because 80-85% of the sales for each item go through that Buy Box, so by not having it, you’re definitely at a disadvantage. However, it actually works as an advantage to many other sellers, because when you win the Buy Box, that’s the term that we use “to win the Buy Box share”, you’re able to sell your item, and sometimes at a higher price than other people. That’s given to you as a reward, so to speak, for having great metrics, for having good ratings, good shipping times, low returns. It almost rewards positive and great sellers for their service to the customer. It encourages strong customer service, which is an absolute win for the end user. It almost pays back those sellers that spend time and money invested in their customer service, so for them, it’s a great opportunity. However, if you don’t keep your metrics up and if you don’t give your customers a great experience, then it can definitely be a detriment to you, because it’s simply harder and harder to make sales on Amazon.
Kunle: Ok, we’re going to talk about the metrics. Because I was of the idea that, from the consumer side, I get the best price rather than the best quality seller. So we’ll delve into what makes a quality seller that wins the Buy Box. Could we go into the core metrics? What does Amazon look into towards awarding the winner, or a retailer, or a merchant, that Buy Box per listing?
Shmuli: There are many. There are actually 15-20 requirements, but there are four that stand out above all. The first and most important is your fulfilment method. That defines whether or not you’re fulfilling through Amazon or you’re sending the items straight to the customers themselves. If you’re selling through Amazon, if you’re using FBA, which is a fulfilment method which can be expensive but is very good, then you have a much better chance of winning the Buy Box straight away, just because Amazon trust their own shipping services more than yours.
After that, they look at three other big metrics. Your landed price, which is your total price to the customer. Your seller rating, which is your percentage score. And your shipping time, which is how long it takes you to get your items to the customer. Generally, each one of these can be bracketed. Your seller rating can be between 98-100 and it’s about the same, or 95-97 it’s about the same. Shipping time is the same. You can be 0-2 days and it’s about the same, and you can be 3-5 days and it’s about the same. So as long as you’re in a high enough bracket with e competitive price, you stand a very high chance of Buy Box share. It’s not necessarily that you’ll win it all the time, but you’ll win it maybe 50% to the day, or 70% to the day. And if your metrics aren’t as good, but you’re still competitive, then you might win it 10-20% of the day. And if you’re not able to compete with the other people in the market, you simply won’t win it at all, which essentially means you almost can’t sell this product.
Kunle: Does that mean that if I browse through the alternative sellers, I could potentially find a cheaper price than what’s in the Buy Box? But, obviously compromising on maybe shipping times or the quality of the seller?
Shmuli: Definitely. I would imagine 4 times out of 5 you might be able to find the item cheaper. But I would not normally recommend going with the cheapest guy because the quality of the product in question, and also the quality and the reputation of the seller themselves, they may be getting cheap knock offs and selling them at a low price or they might be selling that item, but as they don’t worry about returns, they’re able to sell it at a lower price because they haven’t got additional costs. So it’s not always recommended to go with the cheapest and our experience has shown that less than 20% of people will always buy the cheapest. Everyone else is going to go with a reputable seller.
Kunle: That’s quite interesting. So Amazon preselects, automatically selects the best seller. Does it really work or are there glitches in the Buy Box system?
Shmuli: From my experience, it works. I wouldn’t say it’s flawless, but it does work. Sometimes there are anomalies, things that you wouldn’t expect, but most of the time when you investigate, you can actually work it out.
Kunle: Interesting. A few shows ago, I interviewed a retailer, they sell car parts online and they said they started out on Ebay initially, and Ebay was the holy grail of anything externally from their website and the tide has sort of changed. Now Amazon brings as much business as Ebay to their business and they’re about $8-10 Million in revenue. My question has got to do with Amazon’s placement in the marketplace for multi-channel retail. Where does Amazon sit in the pyramid? Is it top or is it side by side with Ebay, as they alluded to?
Shmuli: In my experience, Amazon is far away above Ebay. Just looking at the number of sales, in terms of exposure, in terms of customer base, in terms of the infrastructure that they have around the products and around the promotions. Not only does Amazon count for 1/3 of every dollar spent in ecommerce in the US, throughout Europe, in Germany, UK and France it’s significantly a higher and more experienced player than Ebay. Ebay was big, but as Ebay’s shrinking as it has been over the last few years, Amazon’s taken the place. Amazon is also a better location for professional sellers. People like the ones you mentioned, making half a million dollars month on Amazon find it an incredibly powerful platform. It almost acts as a retail outlet. It’s a channel in itself. Whereas Ebay may be kind of a supplementary income, eventually most marketplace sellers sell on Amazon and they might also sell on Ebay.
Kunle: I wanted to ask you about the featured sellers. I’ve come across it in a few articles that I’ve read. Could you expand upon what it entails and means to be an Amazon featured seller?
Shmuli: Featured sellers used to be public information, it’s now not. It’s now called “Buy Box eligible seller” and it’s hidden from the customers, but shown in the backend of each customer access to the seller central. Essentially what I means is a seller that’s proven their ability to deliver an Amazon-worthy experience. They have enough sales under their belt with enough positive feedback and enough orders sent successfully, that Amazon now trusts them so to speak. In order to win the Buy Box, you have to be a featured seller. You can’t be in the Buy Box unless you’re a featured seller, but recently we’ve seen it become easier and easier to become a featured seller. Normally after a couple of months, and sometimes even after a couple of weeks, as long as you’re doing ok on Amazon, you’ll automatically become a featured seller. If not, you can ask and they’ll do some magic behind the scenes and push the button for you.
Kunle: For etailers listening to this show thinking of moving to Amazon, say they’ve been running their store for a year or two, probably even three years, and they haven’t thought about or approached Amazon, have they missed the boat, or is there still traction? Is there still room for them to build out an Amazon store, an Amazon presence?
Shmuli: They haven’t missed the boat at all. You could start on Amazon today, tomorrow and still build up a presence in a matter of weeks. We have sellers of ours making in the tens, if not in the hundreds of thousands of dollars a month on Amazon are a little less than 3 months old. It’s easy to start you just have to perform, and that’s absolutely key.
Kunle: Would you suggest they start out with FBA initially, right from the start to improve their seller rating?
Shmuli: Definitely, and that’s what I was going to recommend. I’d start off with a couple of items, ideally cheaper items, even items that you can sell almost at a loss, on FBA initially and make sure that you pick items that you know sell well, in volume and get good feedback. Your goal initially is just to build that momentum so that you prove to Amazon that you actually know what you’re doing and that you can run a retail business. Pick an item that you can sell well, pick an item that you cans ell at a good enough price and sell on mass without hurting yourself too much, sell at FBA if you can to set yourself up for those first two weeks to make ideally hundreds of sales, and then you’ll get featured merchant status, you’ll get yourself up and up in the Buy Box share, and then you really can control your own destiny. So if you want to go FBA, FBM, you have the ability to choose.
Kunle: Sounds good. Is the featured seller accreditation, is it a product level metric or a category level metric or a seller level metric?
Shmuli: It’s primarily seller level. Normally you get featured seller status across a whole bunch of products and attributes at the same time. There are exceptions. Sometimes, specific categories you might not get featured in straight away, or maybe one or two categories you’ll get featured in earlier, others may be later, it has been known to have within the same category, one product that you’re featured and one where you’re not. There’s not always enough clarity and visibility into why Amazon do this. They’re not a transparent company, almost by reputation. Generally, it’s a seller level metric.
Kunle: Speaking about transparency, I had a friend at the office, because I work in a workspace, he runs a retail business and he decided to set up an Amazon store for the first time. He logged in once and he logged in again, the second time he logged in he was banned, totally banned. He sent loads of emails to the customer service and there was absolutely no answer. And then, as a last resort, he got the Amazon UK’s CEO email address, he somehow found it and emailed him and within an hour, his account was released.
Shmuli: Unfortunately, I can believe such stories. They’re an incredible marketplace. They’re an opportunity that can potentially be worth tens if not hundreds of millions to a seller, but I cannot for one second begin to favour everything that they do, especially when it comes to seller rights and opening, closing and banning accounts.
Kunle: One question I’ve always had behind my mind, is Amazon solely a price driven platform? Because there’s this feeling that I feel it’s commoditised in a way. I don’t know what were your thoughts there. What do you think? Does a brand lose some equity going on Amazon or having an Amazon presence?
Shmuli: I don’t believe a brand loses any brand value equity at all. Some of the largest brands in the world sell on Amazon no question. If you pick in fact, any major brand, you can find products made by them and often sold by them on Amazon. I think that it is commoditised in regards to the fact that anyone can sell anything. If you have a slightly more generic brand or a brand that is sold by many retailers, then it’s commoditised in the fact that you could have tens or hundreds of people selling the same bunch of items, but it’s definitely not price driven. It’s experience driven. It’s customer success driven. If you have a higher price, but better metrics, and significantly better metrics, then that is more important to Amazon than if you have a lower price buy lousy metrics.
Kunle: It reminds me of the quality score in Google AdWords. It seems like rather than looking at advertising metrics in terms of the performance of your adverts, Amazon is actually looking at the performance of your retail business.
Shmuli: That’s a very good way of looking at it. It’s a nice comparison. But both are closed algorithms, we don’t necessarily understand how either of them work directly, but we’ve learnt how to influence both of them and can manipulate them if needed.
Kunle: Interesting. Let’s go back to new sellers. I understand there’s a top 100 best sellers list on Amazon per major category?
Shmuli: Yes, those are the top selling products in each category.
Kunle: As a strategy, should new sellers aim at products in the top 100 list, or is it too competitive for new players to play in?
Shmuli: I wouldn’t recommend targeting that list straight away because there’s going to be a lot of competition and for new sellers that haven’t got their metrics yet, and more importantly can’t go as low price-wise as other people, they simply haven’t got enough buying power. I would recommend to stay away from that. I’d find whatever your best selling items are on your own website, whatever you can get because of good customer service, good vendor relations or that you have in your warehouse and that you’re able to sell. I’d start with those items. I’s start playing to your strengths as opposed to playing marketplace competitors.
Kunle: One of the benefits of Google AdWords especially, is that you can reverse engineer your strategy with keyword research essentially. In Amazon, is there anything similar where we know what people are searching for and we get that sort of intelligence from past trends to kind of tweak or decide to go into what to sell?
Shmuli: It’s not really the Buy Box algorithm that can be manipulated in that way or reverse engineered as such, because the truth is that it changes so drastically from product to product that you couldn’t tell me specifically one product and say “yeah, that’s a good product for you to sell”. More importantly, the market changes so quickly and it’s not that the algorithms necessarily change so often, but the sellers coming in and out of the marketplace so often that what the environment looks like one day is kind of like a micro economic environment, would be very different on the next day. And when you have Google AdWords, the pages themselves are fundamentally static. They change over time, but the number of pages is similar and the keywords are similar. With Amazon that’s not the case. Big sellers come in and out. Small sellers come in and out on an almost daily basis.
Kunle: So they don’t provide any data on search or keywords within Amazon?
Shmuli: They provide some data, but the sales rank of an item is used to kind of guesstimate how many are being sold. It can tell you that one’s being sold more than another or the demand is higher for one item than another, but it’s not always a key indicator of what to by next. You’re not relying on the changes in the algorithm you’re relying on the changes in the marketplace. Certain items can become popular overnight and lose popularity just as fast.
Kunle: Excatly, like toys over November and December. What advice do you have for selling internationally through Amazon?
Shmuli: Internationally is a very good question. If you’re selling in the states, try and do as much as you can from the States. Have an American account, have an FBA in the States. If you’re selling to Europe, try doing as much as you can from England. By having a .co.uk and listing them in England, especially through FBA, you have the ability to sell them to any other European country such as France, Germany, Italy, Spain directly from your Amazon.co.uk account. It’s much easier than you think. Once you have everything listed and selling in England, you literally push a button that says “sell this item internationally” and you’re there, it’s not a lot of effort to sell internationally on Amazon at all. It’s actually a very low barrier to entry.
Kunle: Would you suggest FBA with international sales on Amazon?
Shmuli: That’s always a tough question, FBA vs FBM. I think it’s a good place to start. It makes a lot of sense for a lot of businesses and you have to look at your own cost structure and what you’re selling and other regulations and metrics, but generally, FBA does try to be competitive. There are a lot of hidden costs that can hit you if you don’t know what they are, so obviously, if you know your business, you’re in a clear advantage, but they’re not fundamental in order to actually do what you need to do. As long as you’re confident with your ability as a business, FBA is a great starting point.
Kunle: Ok. What’s your advice to a retailer that’s looking to list over 3000 SKUs on Amazon for the first time? Is there a structured process or flow to follow?
Shmuli: As long as those SKUs already exist on Amazon, it’s relatively simple because if the SKUs already exist, then you’ll work with listings that are there already, you’re just adding your name to the list of people selling it.
Kunle: Are there any tools to upload them in mass or would you have to go over a tough slug and upload them on a case by case basis?
Shmuli: Seller Central allows you to upload in bulk, it is possible with their backend to do that. There are one or two tools, nothing great comes to mind, but anyway, I would never recommend anyone to start off with 3000 items at once. Start in the tens and move to the hundreds and finally to the thousands.
Kunle: Right, let’s talk about Feedvisor. Your value proposition really is a dynamic price strategy. Could you explain the concept of Amazon’s dynamic pricing strategy and how Feedvisor fits in and solves this pain?
Shmuli: As we said before, the Buy Box itself is not only controlled by price. Price is a key component of it and your landing price is critical to get that right, but it’s a mistake to believe that the cheapest price always brings you the Buy Box as we’ve discussed several times. What you need is a system that understands all the other metrics that go into the Buy Box, such as your fulfilment method, your seller rating, shipping time, and then is able to work out in real time the highest possible price you can set your items and still win the amount of Buy Box share you want. So instead of winning 100% of Buy Box share, which is overkill, because you’re winning it every single time and being the cheapest, maybe you’ll win 80% Buy Box share at doubling or tripling your profits. So your volume and sales goes down by 20%, but your profits go up by 200%. This balance between maximum sales and profits, as well as understanding your best price in each scenario based on the Buy Box competitors, demand etc. is exactly what Feedvisor does. We work out for you in real time the highest price you can go to and still maintain your targeted level of Buy Box share.
Kunle: That’s really clever, that makes sense. So it will look at price based on the other quality metrics, seller rating, shipping. Does it look into inventory?
Shmuli: Buy Box itself doesn’t look into inventory, so it’s not something we take into account when we set prices. But the Feedvisor system does help you manage and optimise your inventory. We’ll tell you when you’re running out of stock on your key items, we’ll tell you when you’re holding too much stock and perhaps should liquidate some items in order to free up shelves. We do actively help you manage your inventory. We have replenishment reports and scouting reports, but the price itself is not controlled by the inventory level, so it’s not something that we take into account.
Kunle: Ok. Let’s give this a user case. If I have an account with Feedvisor, does that mean it would be like my dashboard to Amazon, or would I still need to login to Amazon to do a few things and login to Feedvisor to optimise my Amazon listings and get the best price and get the most profit off my listings?
Shmuli: The truth is that once you set up Feedvisor, you don’t really have to login to do that, we do that all for you automatically. We’re always trying to get the most profit for each listing and certain things such as replying to customer questions, you’ll still have to do in Seller Central. But Feedvisor’s revenue intelligence gives you all your core information, all your intelligence you need in the Feedvisor login. We’ll show you your sales numbers, your profit numbers, your trends, your metrics, we’ll show you what your top selling items are, your worst items, the way you’re making money, where you’re losing money, where you’re at risk. All that we show you in Feedvisor, the full revenue intelligence platform gives you a deep understanding into your own ecommerce business than Amazon are trying to do, because Amazon is just an order management platform. You’ll still have to login occasionally, but all the information you need, you’ll get from Feedvisor, but the optimisation and finding that best profit point, that we do for you automatically.
Kunle: So it’s almost plug-and-play besides the reports?
Shmuli: The actual repricing itself is complete plug-and-play. And then if you’re using the intelligence aspect, all that’s in Feedvisor whenever you need it.
Kunle: On average what kind of results does Feedvisor typically deliver using some base metrics?
Shmuli: Internet Retailer did an interview of some of our customers and they came out with the following numbers: they saw 40% increase in profit margins, some items had a 500% increase in sales, so 5X sales. Typically, they worked out that Feedvisor saves up to 90% of the time you’d normally spend repricing. And from my own numbers, I know that our sellers grow year over year around 2.5X. So the average seller that comes to us today making 100,000, is making 250,000 a year from now.
Kunle: Very interesting. That’s a lot to take in. How often would you typically change prices? Or would that be on a case by case basis, or depending on competition, the kind of item, seasonality? Do you change it very often? What’s the frequency of change in repricing at Feedvisor?
Shmuli: We make 25 million pricing decisions every single day, so we’re always watching every single price you have for every single item. We’ll make price changes whenever they’re needed. Sometimes that can be every 15 minutes if it’s a very volatile market, sometimes that can be a lot less frequent If it’s an item that doesn’t need to be repriced. But we make pricing decisions for every single one of your items every 15 minutes.
Kunle: Ok. I was just going to connect back to your last comment. For the revenue generated through Feedvisor, what are the cost implications to retailers using Feedvisor? Do they pay per listing or per sell? What’s the pricing structure like?
Shmuli: It’s a pay-as-you-go system, customers are welcome to turn it on as works for them. There’s no long term commitment in that regard. We also allow for customers to choose what they wish to reprice with us and what they don’t and they only pay for items that they reprice. Generally, it’s a fixed low base fee with a small percentage on items sold mainly. 0.5 % or 1% depending on what plan they go for. So it’s a small fixed base fee plus a percentage of only those items which actually sell through the Feedvisor system.
Kunle: So I guess they’re invoiced once everything’s calculated at the end of every month?
Shmuli: Exactly.
Kunle: Ok, that makes sense. Two questions. Can retailers outprice Amazon? Because I’ve been noticing Amazon creeping into products, into various categories and owning it, and actually owning its own inventory, obviously that’s what they started out with n marketplaces, Amazon would get all this intelligence and see how profitable a particular product is and then starts to sell it. When Amazon has stock, is it hopeless to compete against Amazon? Can retailers outwin Amazon to the Buy Box?
Shmuli: That’s actually one of the advantages. We’re probably the only system in the world that lets our customers beat Amazon to the Buy Box, again and again. We see Amazon as top seller. Essentially the seller with the same metrics as God, and for all intent and purposes, they are. They’ve sold more than you, they’ve got better ratings than you, they’ve got more success than you, but that doesn’t necessarily mean that you can’t make any sales. Again, the Buy Box is a percentage, so if Amazon is there at a certain price, we can work out either if your metrics are good enough or your cost price is low enough, ways of cutting very deeply into Amazon’s Buy Box share. Sometimes we can take 10-20% of the Buy Box share so you’re still making sales and you’re still making profit. Other times, if you really have an advantage, you can be taking the Buy Box outright. If you’re buying much cheaper than they are, your metrics are strong and you’ve got a lot of good recommendations. Amazon themselves, as the retailer, don’t actually get a special preference in the Amazon marketplace, they’ve just got better metrics than you. If you can beat their metrics or you can get the item for cheaper or a combination of both, you can beat them. And our sellers beat Amazon to the Buy Box every single day.
Kunle: What impact does this have on price volatility on Amazon and for the end user? Is it to the advantage of the end user and more to the disadvantage of the seller? I know you do maintain profitability, but how does repricing and the every changing dynamic in pricing on Amazon actually affect price volatility?
Shmuli: To answer your question, it’s definitely better for the end user. That is simply because we’re getting the best price based on each seller’s metrics. If a seller has lower metrics, we will lower his price point to at least give value to the customer. If the seller has very high metrics, then we’ll raise his price to the point where we’re still delivering the best possible value to the customer. No one has to go overprice. The whole landscape dictates that there are other people at different prices. If you choose to go for a less reputable seller, or you want to even go more expensive for the high reputable seller. So there’s no price fixing, so to speak, but there’s a lot of volatility between sellers and this is something we can take advantage of because we’re watching the market the whole time, we take demand, price elasticity and supply into account and therefore we’re able to really make sure that the sellers themselves are maximising the profits in each and every sell and the customers are always getting the best possible value for money every time they win the Buy Box.
Kunle: Does Feedvisor also take in my cost? The cost of listing the product, all costs associated with getting that listing on Amazon in its calculation for repricing?
Shmuli: Of course we do. We’re looking to maximise your profit, so we take into account both your costs and your sales volume and your inventory to make sure that you’re always doing the best you can based on your situation. If you have a special relationship with a vendor and you can get an item cheap, then we’ll use that to your advantage. If you have the opposite, if you’re just starting out and therefore you’re not buying in bulk, you’re buying in smaller amounts and your costs are higher, we’ll make sure that you’re still maximising the profits, even though they may be smaller than other sellers. It’s the ability to work with your business and to tune itself with whatever your goals are.
Kunle: Ok, reassuring. This question I’ve been itching to ask. What happens if two retailers sell the same item on Amazon and then use Feedvisor?
Shmuli: It’s not a problem at all. In fact, if you’re using one of our competitors, if you’re using a standard rule based system, then they’re just going to drop each other by a dollar or a penny until they’re both pretty much floored out and no one’s making any money and the SKU is destroyed. With us, if we have two seller selling, we’ll understand that no two sellers are identical. One may be at 98% seller rating and 2 day delivery, the other one may be at 85% seller rating and 7 day delivery. If that’s the case, they will both get a Buy Box share that they deserve based on their metrics and their price structure. So maybe the guy who’s 98% will get 60% of the Buy Box, the guy who’s at 85% might get 20% of the Buy Box, and that last 20% is fought out between everyone else that doesn’t use Feedvisor. But we’ll still make sure that you get the right amount of Buy Box at the best possible price based on your seller metrics.
Kunle: Sounds good. It makes sense. It sounds quite logical too. On a final note, it’d like you to offer parting advice to 1, existing Amazon retailers trying to maximise profits and 2, to newbies, established retailers but looking to start out on Amazon.
Shmuli: To existing Amazon sellers, to the old school the old guard, my best possible advice I can give is know your metrics. Understand how high your seller rating is, your shipping time. Understand what your landing price means to the Amazon Buy box. Use a tool like us, obviously, which will take advantage of this, but by understanding the brackets that the Buy Box looks at, you are able to have a massive impact in your sales and profitability with minimum effort. So if you know that you’re the 97% mark of rating, maybe make one or two deals that you wouldn’t normally make, just to get yourself to the 98% part because when you go from 97 to 98, you’re in the upper bracket in terms of the Buy Box and therefore all your prices can go up. And if you’re using a good repricing system like ours, it will make sure that one by one, each one of your items goes up by a couple of pennies. But if you’re selling tens of thousands of items, that means a massive difference in terms of profitability in a very short amount of time. So that’s my advice I can hive to high volume sellers. Know your metrics.
Kunle: On that note, I just want to throw in a small question. I’ve noticed retailers that reduce their price drastically, so they could undercut the market by 40, 30 maybe 50%, however they bump up their price again when it comes to shipping. Is that good or is that a no-go area?
Shmuli: From my experience, it makes little difference. Amazon themselves look at landed price. So it’s price of the item + full shipping costs. It’s the cost that it gets to get this item to the door of the customer. So in terms of the Buy Box algorithm, in terms of winning that coveted spot, it makes no difference whatsoever, if your price, so to speak, your cost of the item itself or the shipping side, it’s just a question of perception and in my understanding, this is less and less important nowadays.
Kunle: Landed price, ok. And then your parting piece of advice to retailers looking to go into Amazon?
Shmuli: I would say, number one, start small, start FBA and test the water. You want to start with your best foot forward. If you start badly on Amazon, and you screw up your first couple of shipments, it’s going to put you in a situation that you will simply not be able to recover from. So start with your bestsellers, get ready to fulfil on time, get ready to ask for feedback and do it politely. Start with your best foot forward and you can saw very quickly and grow in to tens of thousands or hundreds of thousands or more a month very quickly. If you start off shaky and you hit your first 10-15 sales and your seller rating’s in the 80% mark because you lost 2 out of 10 orders that you started off with, it can take months to recover from that.
Kunle: Good. Thank you so much Shmuli for coming on the show, it’s been an absolute pleasure. I learned loads about winning the Amazon Buy Box and thank you.
Shmuli: My pleasure, thank you for having me.

About the host:

Kunle Campbell

An ecommerce advisor to ambitious, agile online retailers and funded ecommerce startups seeking exponentially sales growth through scalable customer acquisition, retention, conversion optimisation, product/market fit optimisation and customer referrals.

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