Amazon the Kingmaker
I recently moved to a new state, and with more floor space comes more floor space to cover. I needed to get a rug pad for a new rug, so knowing nothing about such products turned to Amazon.
The number of results for “rug pad”? 728. Uh oh.
Amazon currently sells over half a billion products in the U.S., and more than three billion worldwide. The number of results for some product categories can land easily in the thousands. What is a customer supposed to do with that kind of information?
Reviews help, but still dozens of products can have essentially the same review score. How is a customer supposed to make a good purchase decision?
Recently, you may have noticed certain items marked “Amazon’s Choice” at the top of search results. They’re not paid placement, but what exactly are they and how does a product get such a badge?
Well, Amazon is cagey about how Amazon’s Choice is determined. The extent that the site will tell you is available by mousing over the option when it appears on product pages: “Amazon’s Choice recommends highly rated, well-priced products available to ship immediately.”
Let’s break that down.
CNET has documented that the badge can appear on pre-order items with few reviews, so it is not clear what “highly rated” means in this context. Perhaps Amazon is aggregating reviews from other sites, averaging reviews from a brand’s other products, or making its own determination about the ratings the product will receive in the future.
Presumably, Amazon is cross-referencing a given product’s price across its category to make such a determination. How well its systems can tell the difference between different product models, sizes, levels, and bundling could have a big effect on proper price comparisons.
Available to Ship Immediately
Perhaps the most clear of the three, “available to ship immediately” may also include a measurement of the speed of shipment. Amazon’s more expedient Amazon Prime shipping is surely a factor, despite that being more an indication of speed than availability. After all, a pre-order product logically cannot be available to ship immediately.
The same article shares that recipients of the Amazon’s Choice badge don’t know how they won the designation and that, thankfully, it isn’t for sale. It also shares that, due to the presumably overwhelmingly algorithmic nature of the badging, counterfeit items can win out.
Helping Customers Choose
Amazon’s Choice began as a solution for its Echo home device, which, when prompted by a user to buy an item not previously purchased, needed to know what to get. But its increasing presence in Amazon search results illustrates a problem with those results: there are simply too many.
In this manner, Amazon is facing the need for more hand-holding in the buying process. Hundreds or thousands of search results are great for algorithms, but not for humans.
For my rug pad search result, Amazon not only chose one overall result as Amazon’s Choice ($15.89 by Gorilla Grip), but also one per four price points:
This demonstrates that Amazon acknowledges that the two customers looking for rug pads, say, one for under $50 and the other for above $100, really aren’t looking for the same product. They aren’t in the same customer segment. They represent different willingnesses to pay and presumably some correlation with benefits delivered.
Simply presenting the $32.99 option as Amazon’s Choice would inaccurately combine multiple segments into one recommendation, resulting in suboptimal search results—and less money for Amazon and its merchants. Without a doubt, Amazon is well aware of the decoy effect, whereby customers tend to choose middle price points when provided with more than two options.
If Amazon can convince more customers to purchase through the Echo or other somewhat-automated mechanisms, it will have to get even better at determining what the optimal product is for each customer. It will have to know to whom to serve the $32.99 versus the $189.99 rug pad.
The benefits to the merchant of being Amazon’s Choice are readily evident. Not only are they at or toward the top of the search result, but they get the association with Amazon’s brand, which ranks very highly on trust and customer loyalty. The revenue and profit windfall from such a badge must be enormous.
Customers must hope that Amazon stays cagey with its badging so that merchants can’t game it, but also constantly monitors and improves its recommendations. Customers simply cannot navigate enormous search results on their own, and even choosing between a handful of top scoring results can eat up an hour or two.
As for me? Time is money. I went with Amazon’s Choice.