News & Insights
The Role of Amazon Prime in the Buy Box Algorithm
There are several ways that companies can take advantage of Amazon Prime to succeed in the Amazon marketplace. Among the most significant is the influence that eligibility for Amazon’s signature product status can have on a brand’s pursuit of the Buy Box.
When multiple sellers offer the same product, the Buy Box algorithm uses a complex set of criteria to decide which seller should be featured in the Buy Box. Since Prime-eligible are given a higher preference due to the various benefits associated with the program, the most successful Amazon sellers leverage this relationship in their favor. Of course, it’s not as simple as requesting to join the Prime program and then sitting back to watch your sales grow.
The path to Amazon Prime starts with FBA
Currently, more than 100 million American households are Amazon Prime members. The main advantage of membership, Prime shipping, gives them access to two-day shipping for their Amazon purchases regardless of where they reside throughout the United States. Customers greatly value this perk and often prioritize Prime products when on Amazon. At Amify, we often see a 50-100 percent increase in sales when a brand moves to Prime eligibility.
Amazon FBA (Fulfillment by Amazon) is a service that allows sellers to store their products in Amazon’s fulfillment centers. Then, Amazon handles those products’ shipping, handling, and customer service. Notably, FBA sellers are automatically eligible for Amazon Prime, meaning their products are available with free two-day or one-day shipping, depending on the product and the customer’s location.
While Amazon offers a Seller-Fulfilled Prime (SFP) option, less than one percent of orders are shipped using SFP. The reality is that, despite being positioned as a way for brands to capitalize on Prime eligibility and use their existing warehouses, it’s not a viable route for most sellers.
First, to qualify, the brand must ship most products via one-day shipping, which is exceedingly expensive. This can cost $20 or more per item in shipping alone for many products meaning the method only works well for products with high margins and priced at $100 or more. Secondly, it is challenging for a warehouse to maintain the high criteria for eligibility. Products need to be shipped out and delivered quickly. Even FedEx’s delivery standards are not high enough for SFP, leading to many account suspensions.
By opting for FBA instead, sellers can take advantage of Amazon’s vast network of fulfillment centers and have more affordable access to the fastest shipping options that make their products more attractive to shoppers. This FBA impact on Buy Box is substantial because it is one of the best ways to increase the visibility and sales of products on Amazon.
Prime eligibility strengthens critical Buy Box metrics
The impact of Amazon Prime eligibility Buy Box aspirations is also significant. That’s because Prime members are more likely to buy from Prime-eligible sellers due to the access to free and fast shipping and other benefits. These brands can also benefit from higher seller ratings because of the trust and convenience conveyed by Amazon Prime status. Since product reviews and seller feedback are important factors in winning the Buy Box, it’s a helpful advantage.
Unsurprisingly, winning the Buy Box with FBA and Prime eligibility is more straightforward when compared to Sellers that rely on other types of fulfillment. Partially, it’s because these sellers are automatically eligible to win the Buy Box since they have handed fulfillment duties over to Amazon. But also, self-fulfilled sellers have a much more challenging road to the Buy Box simply because they must keep their fulfillment-related metrics high enough to compete with FBA. For them, keeping an account healthy and competing for the Buy Box means paying close attention to several benchmarks, including:
- Cancelation Rate – Amazon requires sellers to avoid initiating cancellations and complete at least 97.5% of their orders when they are seller-fulfilled products.
- Late Shipment Rate – Brands that manage shipping on their own must meet their expected shipping date at least 96% of the time.
- Valid Tracking Rate – 95% of your customers must receive an accurate order tracking number.
- On-Time Delivery Rate – Your orders should arrive when promised more than 97% of the time to be eligible to offer the fastest delivery options on your listings.
Make the most of Prime eligibility
To ensure that they clearly understand how FBA and Prime eligibility impacts their ability to win the Buy Box, sellers should read Amazon’s policies and guidelines and track their relevant performance metrics. In addition, new sellers may need to experiment with different pricing, shipping, and fulfillment strategies to determine what works best for their business and helps them win the Buy Box.
In most cases, the fight for the buy box starts with pricing. Amazon offers a few ways to ensure that you’re pricing items competitively. Within Seller Central, the Manage Pricing page will indicate which seller currently has the featured offer and their price. The Pricing Dashboard provides real-time data about your product prices relative to other sellers. Finally, Amazon’s Selling Coach Pricing report will make pricing recommendations for your product.
Still, Amazon won’t let you win the Buy Box if you’re out of stock, so you must keep your inventory updated and plan for seasonal or promotional surges. One of the tools that Amazon provides to help manage inventory is the aforementioned Amazon Selling Coach. It also provides real-time status reports showing low and out-of-stock inventory alerts, letting you know when to stock up.
FBA and Prime won’t guarantee Buy Box success
While using FBA and having prime eligibility typically increases a seller’s chances of winning the Buy Box, it is not a guarantee. Amazon considers various factors when determining which seller wins the Buy Box, including price, availability, and performance metrics. Sellers can also win the Buy Box through merchant-fulfilled shipping if they meet Amazon’s performance standards and offer competitive pricing and shipping options.
And although FBA will be the most effective fulfillment method, there are exceptions. Certain large products can sometimes be shipped more efficiently by other means since FBA largely calculates shipping costs based on weight and size. In addition, some products are ineligible for FBA due to temperature requirements or safety issues. These items can must rely on alternative fulfillment methods.
Finally, since FBA puts Amazon in charge of returns, sellers who need more control over their return policy or have a high rate of fraudulent damage claims may be better served by self-fulfilling their customers’ orders. It’s best for sellers to compare the costs and benefits of FBA and merchant-fulfilled shipping to determine which option is best for their bottom line.
Regardless of the products being sold, it’s essential to understand the facts about FBA and Prime eligibility. That way, sellers can take a data-driven approach to performance optimization and efficiently pursue the Buy Box.
What out for these Prime pitfalls
However, knowing what areas to target for improvement isn’t quite enough. Amazon brands should also realize the limitation of FBA and Prime eligibility and not rely too heavily on these programs to lead them to long-term profits.
Sellers shouldn’t expect Prime eligibility to be a shortcut to success. Unfortunately, many brands expect huge sales and profitability from the start. Instead, it often takes many years to perfect a product and craft an Amazon selling strategy that leads to sustainable growth.
Brands need to take a long-term approach to Amazon. The market is enormous and highly competitive. So time and patience are necessary as new brands build their reputation against entrenched competitors. The good news is that perseverance does pay off.
Remember, Amazon does not care about your brand but wants to make money off it. Therefore, companies should approach the marketplace knowing that Amazon will not prioritize a seller’s internal profitability levels or provide unique advantages to any brand over its competition.
Furthermore, as more sellers adopt FBA and Prime eligibility, competition for the Buy Box will intensify, making it more challenging to win consistently. In some cases, it may make sense to expand product sales to other marketplaces to reach a broader customer base and reduce your dependence on Amazon. Otherwise, relying too heavily on FBA and Prime eligibility can make your brand extremely dependent on Amazon, which can be risky if Amazon changes its policies or fees.
Win more with a premium partner
Is your brand ready to win on the Amazon marketplace? Partner with Amify and discover how our experience can be the key to beating the competition and accomplishing your sales goals.
Our team has a deep understanding of FBA requirements and the power of Amazon Prime. And we’re ready to help your brand achieve more growth in less time. Schedule a consultation today.
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