In Part 2 of the Ultimate Guide to Wholesale Sourcing, we’re going to talk about analyzing buy box competition for Amazon wholesale. (By the way – if you haven’t already checked out part 1 about finding niches, check it out here.)
Because analyzing the competition is what really matters.
You see, just because a listing has a third-party seller in the buy box doesn’t mean it’s a great listing.
In fact, a listing with 10 sellers competing at the buy box could be better than a listing with one seller.
Let’s take a deep dive into the buy box, go over everything that factors in to it, and then analyze some competition!
Buy Box Factors
There are tons of factors that go into the buy box. But only a few of them really matter in terms of wholesale.
Buy Box Price
Price is, by far, the most important factor to winning the buy box.
Chances are if there’s a third party FBA seller priced lower than you, they’re going to win the buy box (as long as they’re in stock and meet a few more criteria we’ll talk about below).
You’ve got to stay competitive. A repricing solution will help automate this, but if your prices are significantly higher, you’re not going to win the bulk of the sales.
Now, there are a few unique scenarios where you can win at a price higher than the lowest. This brings us into the next factor, seller type.
The type of seller that’s the lowest price really matters here. Are they merchant-fulfilled?
If so, you may be able to gain a decent premium on them in terms of price. We’ve found that this threshold can be from 5% to more than 10% – it really depends on listing price.
In the above screenshot, you can see that only one offer has a “Fulfilled by Amazon” badge. The rest are merchant-fulfilled.
If Amazon was not on this listing, that offer would likely get the buy box, as long as they were within a decent percentage of the lowest offer.
This is where having a handy repricer will help – good repricers will price you up during the period you have the buy box, allowing you to sort of auto-test this threshold and maximize your profits.
Feedback rating is another aspect to buy box winning.
Recently, it’s seemed to have less of a weight than it did before, but ideally, you want to shoot for 95%, or at least 90% positive feedback rating.
Any factor that makes you less good in Amazon’s eyes to other sellers will reduce your chances of getting a good rotation, which we’ll describe below.
Number of Sellers
Number of Sellers at the buy box price, of course, is another crucial factor. This brings us into the concept of rotation.
In the buy box, if there’s say, 5 sellers that meet the criteria at that price, all of them will rotate.
This means that if an item usually gets 20 sales per day, in theory, each seller will get 4 sales – if everyone stays at the same price.
Now, this is completely theoretical, because some sellers will have repricers that will go down in price as soon as they lose the box.
This allows for significantly more sales at the cost of potentially crashing listing prices very quickly – if other sellers also have repricers enabled.
The status of the units per-seller is also a buy box factor.
If someone’s backordered, they’re probably not going to win the box against an FBA seller that isn’t backordered.
Now, if they’re against a merchant-fulfilled seller, or there’s no other sellers, they may have a chance.
Ideally, you want to stay in stock as much as you can. This will keep you from losing the buy box.
But on those few initial days that you are waiting for your inventory to come in? Probably won’t win the box too much.
Buy Box Threshold
The buy box threshold is also a factor to winning the box. Have you ever seen a listing that says “Available from These Sellers”?
In this case, Amazon is stating that they can’t find an offer competitively-priced enough to win the buy box.
Likely, the historical price of the ASIN is way lower – or another retailer (in this case, probably Chewy) has the item for a lower price.
This is also referred to as a suppressed buy box.
To win in this case, you’re going to need to test lowering your price until you’re within the threshold.
You’ll have to experiment and see whether or not it’s advantageous to have the box at a lower price, because, obviously, this will lower the amount that you take home on the ASIN.
Amazon on Listing
Having Amazon on the listing is absolutely crucial to the buy box. If Amazon is priced competitively, and in stock, you’re probably not going to win the buy box.
This is why many Amazon wholesalers specifically avoid listings with an Amazon history or an active Amazon offer.
You can do this in Sellonaut by filtering by the “Amazon on Listing” filter.
There are a few unique cases where having Amazon on a listing is OK and may prove to be a decent offer still, and those are the following:
Amazon at a Higher Price than Buy Box
This one is a weird one that occurs sometimes – and a lot of wholesalers still avoid these listings, because the graphs look to have Amazon at the buy box.
But maybe Amazon is 10 cents higher than the buy box. And maybe they have been for the past year.
In this case, it may be worth it testing out with small quantities.
You may have found a winning ASIN that no one’s willing to take on.
Amazon Has a History of Stockout
Another type of listing where this rule can be ignored is if Amazon has a history of stockouts on that particular ASIN.
If they’re going in and out of stock frequently, and only are in stock for small periods of time, it may be worth purchasing the ASIN.
Do keep in mind, however, that these ASINs are still risky, as Amazon could place a big purchase order at any time and knock you out of the box for quite some time.
Quantity available is another buy box factor. Amazon is likely to give priority to sellers who have a higher quantity available, as they’re able to fulfill way more customer demand.
Rotating the box between sellers that have 1-3 units isn’t feasible on a listing moving thousands of units a month – especially when there’s a seller at the same price with 10,000 units in stock.
Does this mean you need 10,000 units in stock? No. Just keep enough stock for what you feel comfortable with.
Just know that sending 3 units of something isn’t likely to give you a huge buy box win rate.
Now that we’ve got the basic criteria down, let’s hop on a listing and check out my tips and tricks to analyzing competition.
Here, we’ve got your average wholesale listing. A third-party seller has the buy box.
Let’s scroll down to take a look at the BSR.
Estimating Sales Based on the Amazon Best Sellers Rank
Quick side note here – if you’re brand new, you’re probably totally confused about what’s a “good” or “bad” BSR. This is kind of a feeling you can learn over time as a wholesaler.
There’s a lot of sales estimate tools out there for a quick glance. JungleScout has a decent one.
Plugging it into JungleScout here, I’ve got 540 units a month, so 18 a day. Now, that’s only if I had the buy box all to myself.
Let’s check out the competition to get an accurate estimate.
First, let’s take a look at offers.
Quick Tip: If you want a clearer view, you can go to https://amazon.com/gp/offer-listing/ASINHERE instead of having that dynamically-rendered side view.
Here, we’ve got 1 FBA seller in the buy box (Pet Universe, 2nd offer from the top), but one also really close (within a cent – Pet Town), so it’s probably rotating two ways, with one seller lowering the price by 1 cent.
Therefore, we can feasibly expect that three of these sellers are ultra-competitive, with the potential of having a fourth or fifth jump in (as you can see with those nearby offers of $11.30 [Pet City] and $12.04 [Pet Planet]).
We can probably also throw in that first offer at the top – though this is a Merchant-Fulfilled offer (Pet Universe), it is Seller Fulfilled Prime, and thus is treated very similar to an FBA offer.
Estimating Units Sold Based on the Buy Box
So, worst case scenario, you’re looking at 4 competing sellers for the buy box.
Best case, two people besides you.
Throw yourself in the mix and you’re looking at a rotation of three people in the buy box.
Split those units from earlier over three, we’re talking 6 units a day.
Not too bad for a quick review! Especially considering that once you secure a brand like this, we’re talking thousands of listings.
All which you can update in a tool like Sellonaut and make automatic purchases with. Diversify that purchase over a ton of listings selling 6 units a day, and now we’re talking!
Now that we’ve got a good listing picked out, we’ve got to figure out if this is within our criteria.
Is 6 units a day enough for you? It may yield higher profits than a listing that’s moving way quicker.
But then again, it may not.
Having access to a large enough catalog is where you’re allowed to make decisions like this. But if you’re just starting out, criteria like this would make a great intro listing.
If this isn’t good enough, keep hunting and finding niches. Eventually you’ll stumble upon something great.
Now that we’ve figured out how to analyze buy box competition, you’re ready to get started with Step 3: Contacting Brands. Now it’s time to get researching!
And of course, if you’re ready to automate your product analysis, try out Sellonaut for 14 days free today. We take the hassle out of purchase orders so you can spend time on what’s more important – sourcing suppliers and finding niches.