Automatic Eligibility of Sellers in an Online Marketplace: A Case Study of Amazon Algorithm

Abstract

Purchase processes on Amazon Marketplace begin at the Buy Box, which represents the buy click process through which numerous sellers compete. This study aimed to estimate empirically the relevant seller characteristics that Amazon could consider featuring in the Buy Box. To that end, 22 product categories from Italy’s Amazon web page were studied over a ten-month period, and the sellers were analyzed through their products featured in the Buy Box. Two different experiments were proposed and the results were analyzed using four classification algorithms (a neural network, random forest, support vector machine, and C5.0 decision trees) and a rule-based classification. The first experiment aimed to characterize sellers unspecifically by predicting their change at the Buy Box. The second one aimed to predict which seller would be featured in it. Both experiments revealed that the customer experience and the dynamics of the sellers’ prices were important features of the Buy Box. Additionally, we proposed a set of default features that Amazon could consider when no information about sellers was available. We also proposed the possible existence of a relationship or composition among important features that could be used for sellers to be featured in the Buy Box.

Platform Design When Sellers Use Pricing Algorithms

“…However, past performance also matters. For example, Gómez‐Losada, Asencio‐Cortés, and Duch‐Brown (2022) find that current price in relation to previous periods helps predict changes in the buy box winner, while Chen, Mislove, and Wilson (2016) find that sellers with more (and better) reviews are more likely to occupy the buy box. That higher reviews make a seller more likely to win the buy box is echoed by industry experts (see, e.g., repricerexpress.com/win‐amazon‐buy‐box/).…”