When we are talking about the Gray Market, we just assume everyone knows what the Buy Box is – and while an everyday term for us, we know the Buy Box isn’t well understood. Even if you do know what it is – owning it is another matter altogether. But to own it, first you have to understand what you’re aiming for.
Simply put the ‘Buy Box’ is what appears at the top of the page of ‘buy from’ options on Amazon or other online marketplaces. The seller who wins the Buy Box gets sales from those customers who click ‘Add to Cart’ of ‘Buy Now’ on the product landing page – without comparing all other seller offers. To decide who wins the Buy Box, the marketplaces run highly sophisticated algorithms across a range of criteria including:
• Price
• Seller reputation
• Inventory count
• Speed of delivery
While all these carry weight, ultimately, it is ‘price’ that is the greatest determining factor. This is driven by online marketplaces wanting high customer satisfaction ratings based on giving consumers the best possible deal.
However, most consumers enter these purchases believing they are buying from Authorized Partners within the Marketplace or from Amazon itself, and not from a random reseller. But while they may not be interested in how the seller came by the goods – or if they are authorized by your brand – you should be.
Ownership changes in seconds
Ownership of the Buy Box can change in seconds. Ordian MI monitors in real time who is winning the Buy Box (and who is not) – it is amazing to see how frequently this can change and the variance in pricing against just one SKU. We also get alerted when pricing enters ‘too cheap’ territory defined by a brand’s Minimum Authorized Price – this also happens more frequently than any of our customers initially believe.
And this is where ownership of the Buy Box becomes critical. Your Authorized Partners can be continuously prevented from owning the Buy Box by Unauthorized Resellers who have fraudulently obtained goods carrying your brand. It can leave your Authorized Partner community with nowhere to go other than to drop prices below MAP to compete – in which case nobody wins. Having an Unauthorized Resellers in the Buy Box also means your paid advertising won’t kick in, reducing overall sales volume vs competing brands. So, what can you do about it?
The obvious first step is to know it is happening. The second step is to be able to attribute the bad behavior to an entity and provide irrefutable proof of what is happening to the Marketplace and get them shut down. Generally, bad actors are immediately turned off (the Marketplace genuinely does want to retain a good reputation) and your Authorized community gets the Buy Box back.
Is the Buy Box worth fighting for?
Think of it this way. Most consumers are shopping online looking for the best deal. If someone is selling goods they have stolen or bought at a bulk discounted rate from a retailer breaching their reseller agreement – the consumer doesn’t really care, they just want the best price.
This cuts into both your revenue and profit – and that of your Authorized Partner channel. It is highly likely to damage your brand and reputation as these resellers don’t care about delivering a quality experience in the long term – it is all about short term gain.
The harder you make it for illegitimate resellers to own the Buy Box – the less likely it is to occur. To most consumer electronics brands owning the Buy Box is worth tens of millions of dollars in sales and several million in extra margin each year. We believe it is worth fighting for.
To learn more about how to own the Buy Box – check out our blog on Attribution.
