How can Pricing become a Key Success Factor for your e-commerce?

How did we do it before the internet?

You walk into your favorite store, take a brief look at the displays, touch a few items to feel the texture. Suddenly, you find your crush, grab it, try it on to see if it suits you well. You love the item, the only thing that separates you from it is the price tag. You return it and check how much the item is worth. Ouch! It's expensive. It's not a good deal... So you give up on this purchase and leave the store disappointed. Sounds like a very old story, doesn't it ?

What the internet has changed in our purchasing behaviors

Today, we follow our favorite brands on Instagram, Tik Tok... we spot a product and find out where it is sold in seconds.

For the same product, we have an infinite number of purchasing options : e-merchants, marketplaces that sell identical products at different prices.

Google's consumer barometer below shows how much time is spent researching a product online before a purchase decision is made.

As you can see from this chart, for only 21% of online purchases, consumers started their research right before that purchase. For all other online purchases, the search started hours, days, or even months before the act of purchase!

Price, a key factor in the purchase decision

So how many products and prices do you think a consumer sees before landing on your website and buying something? Hundreds to thousands on average.

Let's look at some statistics:

How can you use Pricing to your advantage?

Don't let these numbers scare you. Instead, see it as anopportunity to gain an advantage and increase your sales !

Pricing  in e-commerce can act as a traffic-generating marketing tool, influence comparison engines and increase your conversion rates.

There are many pricing strategies.

Here we will detail different pricing strategies that may prove to be the deciding factor you were looking for to win the online competition

Cost-Based Pricing Strategies

This method requires the company to know all of its unit costs for each product in its catalog and then set a target profit margin per product.

The formula is as follows:

Unit costs

Here are most of the common costs in e-commerce :

This may seem obvious, but it is really shocking to see how many e-merchants do not know in detail their unit costs

The target profit margin

Now let's take a look at the second part of the equation, the target profit margin.

AND this is where most e-merchants become too greedy

The crucial task is to find the right profit margin that will maximize your profits without causing you to lose customers.

There are 2 pitfalls to avoid:

To determine the right price positioning, two major factors  must be taken into account that play an important role in the price/demand relationship:

For example, when you sell a diamond necklace, you know that price is not the most important criterion for buyers and that they don't have a real point of comparison. However, in a sector like consumer electronics, where competition is fierce and products are identical, players with relatively high prices have very little chance in the market.

Market-Based Pricing Strategies

If you're not the only player in the market, or if you're not selling a unique product, you should definitely keep an eye on your competitors. There are around 860,000 e-commerce companies active in the industry. In this huge jungle, each company is in direct competition with at least 15 to 20 other companies.

That's why online retailers can't ignore the competition in the market. As we mentioned above, consumers care a lot about price and they compare prices all the time.

Pursuing a competitive pricing strategy doesn't mean undercutting your products and lowering your prices and margins to a minimum. Leading a race to the bottom is not beneficial for anyone.

One of the main benefits of market-based pricing with strong competitive pricing intelligence is that it also allows you to detect opportunities for price increases that maintain a competitive advantage.

Let's take a look at this example: 3 retailers sell the exact same casserole. The former, the most competitive, sells it for £171.08. The second and third sell it for £210.00.

In this scenario, the first retailer could detect this opportunity to increase their price through competitor price monitoring software like Price Observatory and increase their price just below their competitors. It would thus increase its margin while remaining the most competitive on the market.

Dynamic Pricing Strategies

Dynamic pricing is a highly cost-effective e-commerce pricing strategy in which marketers set flexible prices by taking into account costs, target profit margins, market demand, and competitor pricing.

Dynamic pricing allows you to set the optimal prices, at the right time, based on demand and the market in real time while taking into account your business objectives.

Having tons of data is great. But, the key is to convert data into actionable insights.

Dynamic pricing and re-pricing software, like Price Obervatory, collects competitors' prices and immediately adjusts your prices based on their changes and your margin goals.

You can define rules such as:

Dynamic pricing bots work all day long, and your prices will be changed in real-time based on market fluctuations and the rules you set. With this tool, you are able to react to every move in the market, and your prices always remain competitive or optimized.

Dynamic multi-channel pricing

For sellers who sell on marketplaces, there are also features that allow you to generate different prices per marketplace.

Thus, you can define rules for each marketplace based on the prices of competitors present on these marketplaces in order to send an allotted or optimized price for each marketplace. This strategy is very powerful because it allows you not to lower your price unnecessarily on marketplaces on which consumers make their price comparisons while staying on the marketplace.

pricing dynamique

Consumer Pricing Strategies

In all aspects of e-commerce, focusing on your customers is essential. When pricing your products, you need to be able to answer two questions:

Based on the responses you get, then segment your audience to target each group with the right products and prices. Use real-time data and purchase history to accurately identify customer segments.

After you've finished segmenting, set each group's willingness to pay (WTP) for your products. You can conduct WTP research yourself or seek professional help.

Price discrimination

Price discrimination is a tailor-made approach to consumer-based pricing in e-commerce. This strategy allows the same item to be sold at different prices to different buyers. It works on three levels:

  1. First degree: Consumers are charged the maximum of what they are willing to pay for a given product. For example, auction or auction sites. A customer can pay a lot more for a similar item depending on what they are willing to pay.
  2. Second degree : Consumers can choose their price discrimination. For example, they may be offered a lower price if they buy a product in larger quantities.
  3. Third degree : Products are priced differently depending on the customer segments.

This involves taking past and real-time customer data

Bundle Pricing Strategies

Bundling products is simple. It involves selling a range of products together at a discounted price compared to buying each item  individually

For example, many products require accessories. Some are required (like a lens cover on a camera that usually comes with the camera), but some are optional, like a tripod for a camera.

Grouping these products together is a great way to increase average order value, as customers are likely looking for similar items. Someone who buys a DSLR camera is likely to be interested in another lens or tripod.

Market Penetration Pricing Strategies

Penetration pricing is a marketing strategy used to enter a market by slashing prices to attract competitors' customers to their homes. Example: Free on the Box market.

Companies also use this strategy when they want to highlight a new product or service.

Pricing Strategies with Loss Leaders

The pricing strategy with loss leader products involves pricing a few products at a lower level than the market in order to attract customers to your website or store.

Once customers are on your website and convinced that your prices are in the right place, they will be more likely to buy your other items (at regular prices) as well.

This technique is widely used in mass distribution because consumers cannot buy each product on different sites and compare the prices of each product, but it also works in other sectors, such as cosmetics, DIY, etc., on which the consumer has several potential purchases to make.

For example, an electric toothbrush is a great appeal product. This electric toothbrush costs £99.

While we don't know the manufacturing costs, we can assume that they make most of their profits on replaceable brush heads.

When you think of an electric toothbrush, you don't tend to buy them often. And so brands can afford to sell them at a loss. Because they know that they will easily recoup their lost profit costs thanks to accessories that need to be changed much more regularly for oral hygiene.

So, if you want to implement a loss leader strategy but are worried, think about complementary products that you can highlight and that people will need to come back to your store for an additional purchase.

Price Skimming Pricing Strategies

E-commerce price skimming involves setting high prices during the launch phases. This means that companies can take advantage of the "novelty" effect of their product and maximize their profits from the start.

The takeaway from price skimming is that there are consumers who want to be the first to get a product. They love the feeling of exclusivity.

If you want to implement price skimming, use phrases like "exclusive offer" or "limited availability", "be the first to get your hands on", "pre-order", "preview"... in your marketing text to emphasize the urgency of the call.

Apple is the best example of a price skimming strategy. During the run-up to the release of a new iPhone, there are rumors and buzz even before the release announcement .

Once the time for the announcement comes, there has already been enough excitement generated to increase customers' appetite for purchase.Future iPhone owners camped out in front of the store to be among the first to get their hands on the new model. Others would pay weeks before

In conclusion, build your own Pricing Strategy

Pricing, when taken seriously and treated in a smart and creative way, turns into a secret and highly effective marketing tool.

The approaches we have shared here are not exclusive. You don't have to pick one and forget about the others. On the contrary, like most marketing and growth strategies, they work best when integrated into a blended strategy.

These strategies are also not exhaustive. You can find others, or even invent them. Be creative!

Define your business goals, needs, and interests. Then, decide which of the above strategies would work well with your goals. Combine them into a single pricing strategy that will fit your needs.

Finally, pricing is not a static task and requires a continuous effort to optimize and refine it as your eCommerce business grows. Just like any other ecommerce operation you need to manage, there will always be room for improvement and it won't be an easy task. But, fortunately, there are tools like Price Observatory that offer advanced solutions for e-tailers and brands  that allow you to define optimized pricing strategies adapted to your business.

For personalized advice on the pricing of your products, do not hesitate to contact our team of experts on our Price Observatory website.

Contact us for a demo, a real-world test or information

Omnibus EU Directive impact on Pricing Strategies

The Omnibus Directive : a term that resonates more and more in e-commerce circles, but despite its importance, many retailers and manufacturers do not know it precisely or have doubts about how to take it into account in their pricing strategy.

In this article, we'll dive into the world of the Omnibus Directive, explaining its background, purpose, and providing practical tips for staying compliant.

What is the Omnibus Directive?

The Omnibus Directive (EU) 2019/2161 is a European regulation aimed at modernising and harmonising consumer protection rules in the European Union in the digital and e-commerce age. However, it applies to both physical warehouse and online businesses.

 The new rules of the Omnibus Directive came into force on 28 May 2022, as specified in Article 10 of Ordinance No. 2021-1734.

Its objective is to ensure greater fairness and transparency regarding the commercial and pricing practices of merchants, retailers and marketplaces.

The main points of the Omnibus Directive concerning Pricing

1. 1. Price Transparency and Total Price Display

One of the main components of the Omnibus Directive concerns price transparency and the obligation to display the Total Price of a product or service.
The Total Price must be displayed at the beginning of the purchase process and must include all taxes, surcharges and shipping charges.

2. Transparency Regarding Promotions, Strikethrough Prices and Price Changes

In addition, in the context of a price reduction, a promotion, or sales, the Omnibus Directive makes it mandatory, alongside the updated price, to display the Reference Price, i.e. the lowest price offered in the last 30 days. The purpose of this regulation is to  allow customers to clearly assess the discount made and to strengthen confidence in the accuracy of the information provided.

Professionals have the freedom to choose how to display the discount (absolute value, percentage, strikethrough price, etc.).

NB: There are two exceptions to this rule: perishable goods and progressive Early Booking for travel, for example.

3. Transparency Regarding Personalized Prices

The personalized prices applied by certain sites based on consumers' purchasing behavior should be clearly displayed. For example, offers based on recent purchase history, such as Amazon's  with its recommended product carousel, should clearly state the original price, as well as the percentage and amount of the discount.

Risks of sanctions

Violators of these rules face  up to two years in prison and a fine of €300,000 for misleading commercial practices. The DGCCRF will be responsible for ensuring compliance with these rules during its inspections, in particular during large-scale price reduction operations such as sales or "Black Friday".

Best Practices for Brands and Retailers

Now that we have a better understanding of what the Omnibus Directive means in terms of pricing, let's take a look at some best practices that brands and e-tailers can adopt to comply with this regulation while offering an optimal customer experience.

1. Price Transparency from the Start

Make sure that all pricing information  is clearly displayed at the beginning of the purchase process, including taxes and shipping costs. Avoid hidden fees that might surprise customers at checkout

2. Clear Return & Refund Policy

Set up a  transparent  and easily accessible return and refund policy. Consumers need to know exactly what they can expect in terms of returns and refunds if something goes wrong with their purchase.

3. Verified Reviews

Be sure to only submit customer ratings and reviews that are verified by a reliable system to ensure that the reviews posted are from consumers who have used or purchased the products. Control and verification procedures must also be displayed and easily accessible by the consumer.

4. Protection of Personal Data

Make sure your website complies with GDPR data protection regulations. Obtain explicit consent from users to collect and process their personal data, and ensure that robust  security measures are in place to protect that data from breaches.

5. Transparent Communication with Customers

Be transparent in your communications with customers. Provide clear information about the products and services you offer, and respond quickly and effectively to any questions or concerns raised by customers

What are the impacts on Pricing strategies and Dynamic Pricing tools?

1. Use Price Intelligence Tools

Price monitoring tools are used to monitor the prices charged by competitors and/or resellers and to monitor their compliance with the rules as well as market fluctuations. By using these tools strategically, businesses can adjust their own prices based on market trends while remaining competitive.

2. Implement a compliant Repricing Strategy

 Repricing, or dynamic price adjustment, is a common practice to stay competitive in a fast-paced business environment. However, it is important to ensure that price adjustments comply with the regulations for advertising price reductions. By using intelligent algorithms and taking into account price intelligence data, companies can automate the repricing process while ensuring compliance with the Omnibus Directive.

Brands, on the other hand, can ensure that their resellers comply with its rules.

3. Ensuring Transparency and Integrity

In all pricing and repricing actions, transparency and integrity must be prioritized. Consumers must be able to trust the prices displayed and be assured that they are not victims of misleading marketing practices. By complying with regulations and taking an ethical approach to pricing, companies can build consumer trust and ensure their reputation in the marketplace.

The benefits of a more transparent pricing strategy

An Omnibus Pricing Strategy has a multitude of benefits for e-commerce, including :

  1. Improved price transparency and reliability : By accurately displaying discounts and complying with regulations, companies increase transparency in their pricing practices.
  2. Increased customer trust and satisfaction : Clear and honest pricing fosters customer trust, which can lead to better customer satisfaction and retention.
  3. Retention and acquisition of new customers : Ethical and transparent pricing can attract new customers while retaining existing ones, due to the increased trust it generates.
  4. Avoidance of deceptive pricing practices : By complying with the Omnibus Directive, online retailers avoid misleading practices that could damage their reputation.
  5. Promotion of fair competition : Fair pricing practices promote healthy and fair competition in the marketplace.
  6. Highlighting quality and value : By presenting prices based on real data, companies emphasize the quality and value of their products or services.
  7. Encouraging ethical practices : Pricing in line with the Omnibus Directive encourages companies to adopt ethical and transparent pricing practices.
  8. Contributions to sustainable growth : By building trusting relationships with customers and promoting fair competition, companies can foster sustainable business growth.

At Price Observatory, we offer advanced solutions for e-tailers and brands that allow you to adapt to the Omnibus Directive, ensuring  your company's compliance while applying an optimized pricing strategy.

E-merchants, stay competitive while complying with price regulations in an efficient way, thanks to our Dynamic Pricing module from Price Observatory

Brands and Manufacturers, monitor your resellers' promotional practices with our powerful, reliable and easily accessible price monitoring tools

For personalized advice on the pricing of your products and the Omnibus Regulations, do not hesitate to contact our team of experts on our Price Observatory website. Contact us for a demo, a real-life test or information

5 Tips for Choosing Your Price Monitoring Software

In the fast-paced world of e-commerce, staying ahead of your competitors' trends and movements is key to staying competitive. Competitive intelligence, as a strategic practice, requires appropriate tools to collect, analyze, and interpret relevant data. However, choosing the right tool can prove to be a challenge in itself. Here are five key tips to guide you in choosing your competitive intelligence and price intelligence  tool for e-commerce.

1. Define your specific needs

Before you start your search, it's important to clearly define your specific competitive intelligence needs. This step will help you narrow down your search and choose a tool that precisely meets your needs.

A. What objectives do you want to meet with this tool ?

B. What types of products do you want to track ?

C. What types of data do you want to collect ?

D. What types of sites do you want to monitor ?

E. Who will use the tool and how?

F. How will the tool interface with your existing systems ?

G. What features are a  must-have for your business?

To help you define your needs and think of all the useful features:
Discover the benefits of Price Observatory for Retailers
Check out the Features for Retailers brochure

2. Assess the reliability and accuracy of the Data

Make sure that the tool you are considering offers comprehensive coverage of data relevant to your industry. Check the frequency of data updates (daily), the reliability of the data, and the accuracy of the information provided

A. Reliability of the data

Above all, a competitive intelligence tool must provide reliable, easily verifiable and verified data. For this, the accuracy of the algorithms is essential. Various control phases must also be carried out to ensure the validity of the data collected. Human control is also essential for all collated data that is not matched by EAN code or unique reference.

B. Frequency of surveys

The tool must also be able to collect daily or even real-time data. Make sure that the tool provides daily price readings and that you can refresh the data at any time in 1 click.

C. Accuracy of the data

Make sure the data is accurate. In particular, check that:

D. Test the tool in real-world conditions

The best way to ensure the reliability and quality of the data and free test

The Price Observatory software offers free 1-day tests in real-world conditions. Contact us for more information

3. Investigate how to access data

Make sure the tool offers a variety of convenient ways to read and use data :

4. Consider Scalability and Integration

Your business may evolve over time, and your competitive intelligence needs may also change.

Choose a tool that is scalable and able to scale as your business grows.

Is the software publisher open to specific development and to adapt to the needs of its customers or is it more in a mass logic?

Additionally, make sure the tool can easily integrate with other tools and platforms you already use, such as your inventory management system or e-commerce platform.

5. Evaluate customer support and value for money

Finally, don't underestimate the importance of customer support and value for money.

Opt for a provider that offers responsive and knowledgeable customer support to help you with any issues or questions.

Additionally, carefully evaluate the cost of the tool in relation to its features and the value it brings to your business. A competitive intelligence tool can be a valuable investment, but it needs to offer value for money to be profitable in the long run.

In conclusion

In conclusion, choosing the right e-commerce competitive intelligence tool is essential to stay competitive in the market. By following these five key tips, you'll be able to select a tool that perfectly meets your needs and helps you make informed strategic decisions for your business.

For personalized advice on the pricing of your products, do not hesitate to contact our team of experts on our Price Observatory website. Contact us for a demo, a real-life test or information

Like Apple, test the pricing strategy of the decoy effect

In the complex arena of e-commerce and web marketing, there is a subtle but incredibly effective strategy: the lure effect or the lure of price. This pricing technique is based on the deliberate addition of a significantly less attractive option among the alternatives offered, with the aim of making the other options more attractive by comparison. It is a game of mirrors where consumers' choices are distorted by the presence of a clearly less advantageous option.

In this article, we explain how it works and how to use it well through concrete examples.

Some brands, such as Apple, Spotify, Pathé... know how to use this effective technique in a subtle way to maximize their profits while respecting their consumers.

1/ Manipulate consumers by adding a decoy price option

The decoy effect cleverly exploits certain flaws in our cognitive psychology. When we are faced with several options, our brains naturally look for points of comparison to assess their respective value.

Adding a significantly more expensive option creates a benchmark that influences our perception of what is reasonable and affordable. It's as if this extravagant option acts as a yardstick, implicitly determining what is acceptable in terms of price for a given product.

This is because consumers tend to change their shopping preferences when they are offered a third option. This means that if the customer clearly prefers option A, which is cheaper than option C, he can change his mind if he is offered another option B in the meantime, between A and C in terms of price but significantly less advantageous than C. This effect has been studied in neuromarketing as one of the most effective cognitive biases to apply in e-commerce.

2/ Professor Dan Ariely's experience about the decoy price effect

In his book "Previsibly Irrational," behavioral economist and professor Dan Ariely demonstrates how a major magazine used this technique to increase its subscription sales.

Consumers were offered three types of magazine subscriptions:

  1. An exclusively online subscription for €59
  2. A paper subscription only for €125
  3. A subscription combining online access and paper format, also priced at €125

At first glance, Option 2 seems like an aberration. Why opt for a paper-only subscription at the same price as an offer that includes both paper and online access?

Faced with these 3 options, 16% of consumers chose option 1 at €59 and 84% chose option 3 at €125; Not surprisingly, none chose option 2.

However, the real revelation of this experiment appears when the decoy price is removed from the equation. When the latter option is removed, consumer preferences often change significantly. What was once considered a value proposition suddenly becomes less appealing, while initially overlooked options suddenly take on prominence.

Faced with only 2 options, 68% of consumers chose option 1 at €59 and 32% chose option 2 at €125.

It is therefore clear that the intermediate option was not superfluous; it made option 3 more attractive to consumers.

3/ Decoy Price examples from everyday life

An obvious example of the decoy effect is the packet of popcorn or candy at the movies.

When there are only two options, small or large package, the customer will conclude that the large package is more expensive and they don't want to eat as much popcorn. He will therefore buy according to his needs.

Small package → 3€ Large package → 7€

However, by offering a third prize, the decision changes. What for?

Small package → 3€ Medium package → 6,50€ Large package → 7€

The new price, the lure, will trick consumers into choosing the most expensive product, when they don't need it, because they feel like they 're getting a good deal and making a better purchase. This strategy is part of psychological pricing, because it is based on the interpretation of prices that buyers make, rather than on the real value of the products

4/ Which products does the Decoy Price Effect work with?

The decoy effect is effective with:

5/ What are the techniques to make the Decoy Price effect work?

6/ The risk with the misuse of the Decoy Price pricing technique

The main risk with this pricing technique is that buyers become aware of the scheme. This can damage brand image and cause the consumer to abandon their purchase. This technique should therefore be used with caution and fairness while respecting the consumer. For example, by offering an intermediate option that is clearly less advantageous, but not completely absurd either

In conclusion

The decoy effect is much more than just a marketing trick. It is a powerful tool that shapes our perceptions and influences our purchasing behaviors in ways that are often unsuspected. Understanding how price lure influences our decisions can allow e-tailers  to design more effective pricing strategies and maximize sales, while respecting consumers and avoiding overly underhanded and manipulative marketing tactics.

For personalized advice on the pricing of your products, do not hesitate to contact our team of experts on our Price Observatory website. Contact us for a demo, a real-life test or information

E-commerce: how to get the Buy Box on Amazon

 Amazon's Buy Box is a central feature of the platform, often misunderstood, but essential for online sellers. In this article, we will explore in detail what the Buy Box is, how it works, how sellers can get it , and how monitoring and price intelligence tools can be powerful assets in the quest for the Buy Box. Knowing that 85% of sales are made via the Buy Box, all sellers want to win this coveted Buy Box.

1/ What is the Amazon Buy Box?

The Buy Box is the order block located on Amazon's product page, allowing customers to add an item directly to their cart. It is usually placed at the top right of the page. Only one seller holds control of that box for a given product at any given time. This means that when customers click "Add to Cart" or "Buy Now," they are purchasing the product from the seller who currently holds the Buy Box.

 Competition on Amazon is fierce, and all sellers are engaged in a price battle. Since there is no limit to the number of sellers on Amazon, multiple sellers offer the exact same item. They will then all be present on the same product page. And that's where the Buy Box comes in. The seller who owns the Buy Box is almost the only one who is visible on Amazon.

In fact, on a desktop (and not mobile) purchase, the other sellers are presented below the Buy Box. But only the following 3 sellers are visible on the product page. Although they are not as visible as the Buy Box, they still have a small chance of conversion. For other sellers, it is necessary to click on the number of offers available to access the full list of sellers. These sellers are therefore at a disadvantage in terms of visibility.

The notion of a Buy Box is all the more important in the age of mobile shopping. We know that almost half of all purchases are made on mobile among young people under 35 years old and winning the Buy Box offers maximum visibility on mobile, since it is presented directly under the product. Unlike a computer, all other sellers are hidden in the offers underneath. This makes the conversion even more complicated without the Buy Box on mobile

2/ How Does the Amazon Buy Box Work?

The algorithm that determines which seller gets the Buy Box is complex and takes into account several factors. While Amazon isn't revealing the precise details of this algorithm, here are some of the key factors that influence the decision :

A. Professional Seller Account

The first step is to benefit from a professional seller account. 90 days of seniority as a seller are also required to be eligible for the Buy Box.

B. FBA Delivery Method

One of the variables that has the most influence on the allocation of the Buy Box is the shipping method chosen by the seller: sellers who use the FBA (Fulfilment by Amazon)  delivery method are favored by Amazon and are more likely to get the Buy Box than an FBM seller who will ship their products themselves. Using the delivery service managed by Amazon will strengthen the seller's positioning. If a seller is positioned on a product by being FBA, they can get the Buy Box with a higher price than FBM competitors on that product. If all sellers use FBA delivery, the allocation of the Buy Box will be based on other criteria.

C. Competitive Pricing

Amazon, of course, favors sellers who offer competitive prices for a given product. However, it's not just the lowest price that matters, but also the overall value the customer perceives. In addition, the price to be taken into account is the total price including shipping costs called on Amazon " landed price". You have to make sure that the total price is always competitive.

D. Stock and delivery times

Amazon obviously favors sellers who have the product in stock and can ship it quickly. Stock availability is a crucial factor as Amazon wants to provide a seamless shopping experience for its customers. Delivery times will also play an important role in the allocation of the Amazon Buy Box. The shorter the delivery time, the better the chances of winning the Buy Box. Some products and categories are very time-sensitive, such as birthday cards and perishables. The impact of this criterion on the buy box will be higher because customers often demand prompt delivery of these items. The Prime delivery method  is also taken into account since delivery is done in two days maximum and sellers eligible for the Prime program must have good sales indicators.

E. Seller's Performance

Seller reliability, shipping speed, customer ratings, and other seller performance metrics are also taken into account. Sellers with a good reputation and a satisfactory customer service history are more likely to win the Buy Box.

Amazon combines several criteria to evaluate the performance of sellers:

  1. Customer reviews: The number of positive customer reviews and reviews  improves the seller's performance, and the most recent reviews have the most impact. The positive review rate should not fall below 90%. The closer the rate is to 100%, the better the chances of appearing in the Buybox. The number of comments is also very important for obtaining the Buy box.
  2. The rate of defective orders : This rate corresponds to orders that have had one or more defects (negative evaluation, return, complaint, dispute of direct debit, customer service dissatisfaction, etc.) in relation to the total number of orders over 60 days. This rate must be less than 1% to win the Buybox and any seller above this threshold will be penalized.
  3. The perfect order rate: This corresponds to the percentage of orders completed without incidents. Amazon calculates the percentage by dividing the number of perfect orders by the total orders in the last 90 days. This perfection rate drops at the slightest negative customer review, cancellation, refund or A-Z guarantee request or late delivery.
  4. Customer response time: To maintain the edge, customers must be responded to within 24 hours of the request. A late response or no response will have a very negative impact on your chances of getting the Buybox. So try to answer 90% of messages within 24 hours to stay in Amazon's good graces.
  5. Valid tracking rate : This rate includes all shipments with a valid tracking number as a percentage of total shipments. Amazon customers rely on the tracking number to know where their orders are and when they are going to receive them. Sellers must have a valid tracking rate above 95% to keep their performance.
  6. The Late Shipment Rate : This corresponds to the shipment of orders confirmed after the estimated shipping date. Orders must be confirmed to be shipped by the estimated shipping date so that customers can view the status of their order online. Sellers must have a late shipment rate of less than 4% to qualify for the Buy Box.
  7. The on-time delivery rate : This is the percentage of orders received by buyers by the expected delivery date. Sellers should aim for 97% or higher.
  8. Inventory:  When a product is out of stock, it automatically loses the Buybox of course but also the lower the stock of the inventory, the more chances of winning the Buy Box are too. Amazon often checks the frequency of stock shortages, so it is necessary to maintain a stock rate at 100% in the majority of cases. Especially for the best-selling products so that you can meet any potential increase in demand.

3/ Strategies to Get the Buy Box

While there is no guarantee of getting the Buy Box, there are strategies sellers can implement to increase their chances:

  1. Maintain Competitive Pricing: Keep a close eye on your competitors' prices and adjust yours accordingly. This doesn't necessarily mean having the lowest price, but rather offering high perceived value relative to price. It is necessary to determine the price adjustments to be put in place while ensuring the best possible margin. It's not about getting the buy box to sell at a loss. Having access to in-depth analytics or dynamically changing prices can help. For  example, automatic repricing software like Price Observatory will allow you to change your prices instantly based on the competition.
  2. Optimize Seller Performance: Make sure you maintain fast delivery rates, provide excellent customer service, and get positive reviews. Amazon takes these factors into account when assessing customer trust and satisfaction.
  3. Manage Inventory Efficiently: Keep your products in stock and ready to ship quickly. Effective inventory management is essential to meet customer demand and to achieve Amazon's preference in the allocation of the Buy Box.

4/ Holding Contracts

Amazon uses holding contracts to determine which seller gets the Buy Box for a given product at any given time. These contracts can be short-term or long-term, and they are usually based on the seller 's performance and other key factors.

Amazon's Buybox can be shared between multiple sellers with a rotation system. When multiple sellers on the same listing have a similar profile, Amazon will share the Buy Box. Amazon can rotate the buy box every hour, for example.

Amazon may also decide to remove the Buy Box from certain products. For example, if no seller meets the requirements of the Buy Box or the prices are unreasonable.

  1. Short-Term Holding Contracts: Amazon may temporarily grant the Buy Box to a seller based on their recent performance. For example, if a seller offers a competitive price and fast delivery for a certain period of time, Amazon may award them the Buy Box as a reward for their performance.
  2. Long-Term Holding Contracts: Some sellers may benefit from long-term holding contracts, which means they have more stable access to the Buy Box for a specific product. These contracts are usually reserved for sellers who have exceptional performance and a trusting relationship with Amazon.

5/ Maximization Strategies for holding Contracts

While Buy Box holding contracts are not directly negotiable, there are strategies sellers can implement to maximize their chances of securing these long-term contracts:

  1. Maintain Exceptional Performance: The key to obtaining and maintaining long-term holding contracts is to maintain exceptional performance in terms of price, delivery, and customer service. Sellers who provide a great shopping experience are more likely to be rewarded by Amazon.
  2. Invest in Quality: Invest in the quality of your products and customer service. Sellers who offer high-quality products and resolve customer issues quickly are more likely to gain Amazon's trust and secure long-term holding contracts.

Collaborate with Amazon: Work closely with Amazon to understand the expectations and requirements of the platform. Sellers who meet the needs of the platform are more likely to be considered for long-term holding contracts

6/ The Importance of Tariff Monitoring Tools

Price monitoring tools play a crucial role in the management of the Buy Box. Here's how they can be used to optimize your ranking:

  1. Competitive Price Monitoring: These tools allow you to track your competitors' prices in real-time. By monitoring price fluctuations, you can adjust your own prices to stay competitive and maximize
    your chances of getting the Buy Box with Automatic Repricing or Dynamic Pricing  features
  2. Price Change Alerts: Receive instant notifications when your competitors' prices change. This allows you to react quickly and adjust your pricing strategy accordingly to stay competitive in the market.
  3. Market Trend Analysis: Analyze market trends and competitor behaviors to make informed decisions. Understand pricing schemes, demand seasons, and other factors that could affect your positioning in the Buy Box.
  4. Information to find out which seller has the Buy Box: follow in real time which seller has the Buy Box
  5. Buy Box Gain or Loss Alert: Get alerted if you lose the Buy Box or get it back

All of these features are available in the Price Observatory  app to maximize your chances of getting a permanent Buy Box holding contract.
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In conclusion, Amazon's Buy Box is a crucial component for online sellers, and mastering it can make a huge difference in sales success. By combining effective strategies with the judicious use of price intelligence monitoring tools, sellers can improve their performance and maximize their sales opportunities on the Amazon platform.

For personalized advice on the pricing of your products, do not hesitate to contact our team of experts on our Price Observatory website. Contact us for a demo, a real-life test or information