December 3, 2019
Welcome to the definitive guide on how you can win the biggest prize for any Amazon FBA Merchant, the Amazon Buy Box
Amazon is the world’s largest retailer, with a product catalogue that includes almost every item under the sun. With more than $150 billion in annual sales (and growing), it is clear that they are dominating online retail throughout much of the developed world.
A large proportion of Amazon’s success has come from encouraging third party vendors to sell their products on the platform – creating a steady flow of competition that keeps prices low, product offerings diverse and customer service high.
Whilst there is lots to be said about the income potential that can be enjoyed from building your retail business on Amazon, one thing is clear – most of the sales go to a small proportion of all the sellers.
At the product level, the ones who succeed are those who win the buy box. In fact, around 82% of sales on Amazon go through the buy box. The percentage of buy box purchases through mobile devices is much higher. With this in mind, it is clear that winning the buy box is one of the most lucrative ways to make money on Amazon.
In this comprehensive guide, we uncover everything you need to know about understanding Amazon’s buy box eligibility & algorithm. The following chapters combine our years of industry experience with best practices, guidelines and tips from the leading online publications to help you succeed at winning the buy box.
Table of Contents
- Frequently Asked Questions
- The competitive landscape – selling on Amazon and the buy box
- Why is there a buy box formula?
- How does the buy box work?
- Winning the buy box isn’t all about having the lowest price
- Latest changes to the buy box formula
- Hacking the buy box formula
- Eligibility requirements
- Fulfilment method
- Shipping time
- Customer feedback and service
- Order defect rate
- In-stock consistency
- Prioritize the most important metrics
- Tips for winning the buy box
- Success on Amazon involves getting lots of little things right
Frequently Asked Questions
Before we delve into the details of understanding Amazon’s buy box eligibility & algorithm, let’s take a look at some of the most common questions people ask when it comes to winning the buy box…
What is the Amazon buy box?
When you visit most product pages on Amazon, you will notice a white box with a couple of yellow buttons on the right hand side of your screen – ‘Add to Cart’ and ‘Buy Now’.
This section is known as the buy box. Most people (around 82% of shoppers) that purchase items at Amazon.com do so through the buy box.
When you shop on a mobile phone, this is the main purchasing icon that you see on product pages, which results in a much higher buy box purchase rate.
– This is what the buy box looks like on mobile devices (source).
Why is there no buy box on my listing?
Amazon sometimes removes the buy box from product listing pages to protect consumers. In general, people tend to trust that the buy box offers the best deal for shoppers (in terms of price and service level). If Amazon has reason to believe that offerings for a particular product aren’t the best deal available online, they may suspend the buy box.
Here are the most common reasons why Amazon may decide to remove the buy box from product listings:
- The same product is for sale at lower prices elsewhere, or is listed above the manufacturer’s suggested retail price (MSRP).
- The accounts selling this product have poor performance metrics and can’t be trusted to provide the quality of service that people expect when purchasing from Amazon.
- The listing needs improvement – description lacks detail, poor quality images, bullet points don’t convey the right information etc.
- If there is an increase in customer complaints, Amazon may temporarily suspend the buy box while they investigate further.
- A major price decrease can trigger an automatic removal of the buy box, as this often indicates potential fraud or counterfeit products entering the market.
- A dramatic price increase often signifies that customers are paying too much and can result in the buy box disappearing to prevent loyal shoppers from being ripped off.
In other words, Amazon may decide to remove the buy box if there is a medium to high chance that the customer experience will be subpar.
How does the buy box work on Amazon?
Amazon’s overarching goal is to give shoppers the best experience – to ensure that they come back again in the future. The buy box is Amazon’s way of showing customers which supplier is offering them the best and most reliable deal on any particular item, based on a wide range of variables.
When there are multiple vendors competing to sell the same SKU, Amazon’s buy box algorithm compares each seller’s price, performance metrics (reputation), promised delivery times and other important information to determine who is offering the best deal.
Amazon then presents this deal to people visiting the product page as a way to simplify the shopping experience, encourage sellers to provide great service and keep prices down.
How do I get the buy box as a new seller?
Before you can win the buy box, you first need to be eligible to compete with Amazon’s trusted sellers for a share of the winnings.
“Lots of newbie sellers assume that the buy box is up for grabs for everyone right away, but buy box eligibility is a privilege that must be earned through time and experience selling on Amazon.”
The first step to getting your products in the buy box as a new seller involves becoming buy box eligible…
What does buy box eligible mean?
Before you can win the buy box, Amazon first needs to approve your account. Buy box eligible simply means that you have met Amazon’s criteria for that particular product category, and they are now happy to recommend your offerings as the best purchasing option for shoppers.
While there are overall metrics that you need to maintain (such as having an order defect rate below 1%), being buy box eligible doesn’t necessarily guarantee that all of your products can win the buy box. It is done on an category-by-category basis – so you might have some products that are buy box eligible, and others that aren’t.
How do you get Amazon buy box eligible?
The most important factors for winning the buy box are:
- Subscribing to a professional seller account – this costs $39.99USD per month.
- Great performance metrics (order defect rate below 1%, cancellation rate under 2.5%, late shipment rate less than 4%, valid tracking rate above 95%, on time delivery rate greater than 97% and return dissatisfaction rate under 10%).
- Only selling new items (used items are eligible to compete for the ‘buy used’ box).
- You need to hold physical stock of eligible products. Consider stocking enough inventory to fulfil the larger sales volume if you win the buy box – all else being equal, sellers with more stock will win the buy box more often.
- Meeting these requirements for 2-6 months, or using FBA for your fulfilment (Amazon favours FBA sellers, by making it easier to win the buy box if you use their distribution network).
How do I check my buy box eligibility?
Finding out if you are buy box eligible is simple. Just log into Seller Central and follow these steps:
- Click on the ‘Inventory’ tab and select ‘Manage Inventory’.
- Click on the ‘Preferences’ tab.
- In the ‘Column Display’ section, locate the field for ‘Buy Box Eligible’
- Select ‘Show When Available’ from the drop-down menu.
- Look at the ‘Buy Box Eligible’ column for any particular product. If you are eligible with that SKU, it will say ‘Yes’.
Does Amazon rotate the buy box?
Yes. Amazon regularly rotates the buy box between the top sellers that are eligible and have the best performance metrics.
This way, everyone gets a chance at earning their share of the pie. It also helps Amazon to gather data about the ongoing performance of each seller to ensure that they are always recommending the best purchasing option to customers.
Amazon also considers location when deciding who wins the buy box. For example, if a customer in Los Angeles looks at a particular item, the buy box is more likely to offer the product from a seller with inventory located in California rather than Texas.
In doing so, customers enjoy quicker delivery times and eligible sellers all over the country get a fair chance to compete.
What is buy box percentage on Amazon?
When someone visits a product page and your listing is in the buy box, this is known as winning the buy box. The buy box percentage refers to the proportion of page views where you have won the buy box for any particular product (compared to another seller winning the buy box).
By keeping a close eye on your buy box percentage, you can maintain an accurate measure of seller performance. When this is compared to overall sales volume for all sellers on any particular SKU, you can get a rough prediction of how likely you are to sell that product moving forward.
This is an important thing to keep in mind when forecasting how much inventory you will need to purchase. Follow these instructions to find out your buy box percentages.
Can you compete with Amazon for the buy box?
The short answer is yes, you can compete with Amazon for the buy box.
However, it is best to avoid competing directly with Amazon where possible. They have some of the best performance metrics and deepest pockets, which gives them the ability to operate on razor thin margins and undercut their competition.
Amazon holds huge stock quantities of popular SKUs, but there are other products where they are constantly running out of inventory. Some resellers use apps like Keepa to uncover items that Amazon doesn’t hold large quantities of. This way, they can fill the gaps and win the buy box when Amazon is out of stock – without sacrificing their profit margin.
The competitive landscape – selling on Amazon and the buy box
Amazon takes the best aspects of search engines, online marketplaces and retail shops and combines them together to deliver the shopping experience that we know and love.
“In the same sense that Google organizes the organic search results to give users the best search experiences possible, Amazon allocates buy box privileges to give customers the best purchasing experiences possible.”
Unlike online marketplaces such as eBay, where there can be hundreds or even thousands of separate listings for the same SKU, Amazon presents the products for sale as a catalogue.
Although there might be 200 different sellers offering the iPhone X, every single one of these offerings is found under the same product listing page. By structuring the Amazon catalogue in this manner, it makes the retail shopping experience easier to navigate and feels more like visiting a physical store.
Of course, when there are many sellers offering the same product on the same page, competition can get quite heated. Prices tend to be driven down, with all sellers striving to secure their slice of the pie.
Why is there a buy box formula?
“It’s in Amazon’s best interest to deliver to its customers high-quality sellers who offer affordable prices. If Amazon were to give the buy box to sellers with subpar products and below-average reviews, they would have a lot of complaints and returns on their hands.”
Alongside streamlining the purchasing experience for customers and making it easier to select the best offering, the buy box formula also serves the following purposes:
- Provides strong incentives that reward good behaviour and punish bad behaviour.
- Keeps suppliers honest by only putting their products in the buy box when certain conditions have been met.
- Encourages those who win the buy box to hold larger quantities of stock and pay Amazon for advertising.
- Gives sellers another reason to hand the fulfilment functions of their business over to FBA (providing Amazon with another income stream and level of control over the shopping experience).
- Ensures that there are always high levels of competition to keep prices down.
How does the buy box work?
Whenever someone visits a product page on Amazon, the buy box algorithm compares a range of data points from all of the sellers on that listing who are buy box eligible.
Using this information, Amazon then ranks each vendor based on their performance metrics, customer service, price, location and a handful of other factors to determine who is the best candidate for the buy box.
The winner will then have their offering displayed in the buy box. Throughout the day, the seller who wins the buy box is rotated between the top candidates. This way, Amazon is able to gather real time performance data, and the highest quality sellers all get a chance to take home their share of the winnings.
Winning the buy box isn’t all about having the lowest price
Price is definitely an important factor for winning the buy box. However, there is more to it than simply discounting to grow your sales. If you have much better performance metrics than the other sellers on a listing, you can charge higher prices than others and still win the buy box.
In the next section of this guide (Hacking the buy box formula), we take a closer look at the metrics that matter when competing for the buy box, and how you can dominate your listings without needing to resort to continuous discounting.
Latest changes to the buy box formula
Here’s a brief run-down on the latest updates and changes to the buy box formula (current as of December 2019):
- Otherwise known as the ‘suppressed buy box’, Amazon has removed one click buying from some listings where the performance metrics, on-page content or pricing doesn’t meet their criteria.
- “Amazon introduced a Buy Box for new books, allowing booksellers to compete with Amazon for the first time.” – Source
- New research indicates that the buy box algorithm now favours algorithmic repricing (compared to using rule-based pricing apps or manually changing your prices on a regular basis).
- There has been an increase in price wars.
- Fast shipping times are more important now than they were in the past.
- The buy box is prioritized on mobile (it’s the main option for shoppers).
Amazon is always tweaking and improving the buy box formula to give customers the best shopping experience. As a result, it’s important to stay on top of changes to make sure that you don’t miss out on future opportunities to improve your seller performance.
Although the buy box algorithm is in a constant state of flux, the core principles of online retail aren’t likely to change any time soon. More specifically, that involves providing great customer service, fast delivery times and sharp prices.
Hacking the buy box formula
While the exact details behind what influences buy box algorithm are a closely guarded secret, there is plenty of information available online to help you win the buy box.
Through looking at what works (and what doesn’t), we have broken it down into an easy-to-understand guide. This section takes a closer look at the known factors that influence the buy box, and what you need to do in order to succeed.
“Buy Box eligible sellers are Professional sellers who have met performance-based requirements. There is no additional fee for being Buy Box eligible, and sellers must maintain their performance levels in order to retain the status of Buy Box eligible.”
Before you can win the buy box, you first need to earn the right to compete at that level by becoming eligible. To be considered for eligibility, you need to:
- Be registered as a professional seller.
- Have strong performance metrics.
- Only sell new products (at least for the SKUs where you are looking to win the buy box).
- Hold your products in stock (no dropshipping).
The main performance metric that Amazon considers is the order defect rate (ODR). It is expected that you should maintain an ODR of less than 1% to retain buy box eligibility.
Fast track approval with FBA
Amazon makes it easier for sellers to become buy box eligible when they use FBA. Not only does this deliver another income stream to Amazon, but it also makes it easier for them to provide a high level of service to customers.
Here are a few metrics related to logistics, which sellers who look after their own fulfilment are assessed on:
- Valid tracking rate (VTR) measures the proportion of parcels shipped with valid tracking numbers. To be buy box eligible, you should maintain a VTR of at least 95%.
- On time delivery rate (OTDR) “shows the percentage of seller-fulfilled packages that buyers received by the estimated delivery date. This number is based on confirmed tracking information.” Aim to maintain an OTDR of at least 97%.
- Late shipment rate (LSR) represents confirmed orders that are shipped after the expected ship date, as a percentage of total orders. It is measured over both a 10 day and a 30 day period. Sellers need to keep their LSR below 4%.
- Cancellation rate (CR) measures the percentage of total orders that a seller has cancelled over a 7 day period. “This metric includes all order and item cancellations initiated by the seller, with the exception of those that are requested by the customer using the order-cancellation options in their Amazon account. Pending orders or items that are cancelled by the customer directly on Amazon are not included”. It’s important to keep your CR below 2.5% if you are fulfilling your own orders.
However, Amazon gives perfect scores for these metrics to sellers that use FBA. By holding your stock in FBA and making the most of their immense distribution network, you can become buy box eligible faster – without needing to pay attention to these details.
For vendors that fulfil their own orders, it generally takes between 2-6 months to become buy box eligible. You can reduce this approval time simply by using Fulfilment By Amazon.
Other things to keep in mind when it comes to buy box eligibility
Securing buy box eligibility doesn’t necessarily mean that you will win the buy box. Rather, it is the first stage in getting to the top of Amazon’s product listings. Once you are buy box eligible, it is possible to win the buy box.
Getting into the buy box, and keeping your share of the business is an ongoing process that involves continual improvement, diligent service and a focus towards customer satisfaction – this is what the following chapters will cover.
Earning buy box eligibility has more benefits than just competing for the top spot. When you become buy box eligible, you also have the opportunity to be listed in the ‘more buying choices’ section of product pages, which increases your likelihood of winning the sale.
It’s important to keep striving for success – even if you don’t win straight away. Amazon favours sellers that have a longer trading history. All else being equal, the longer you have been selling for, the more likely you are to win the buy box.
Being the world’s leading retail store, price is a major factor in determining who wins the buy box. Whilst it is not 100% based on price, the amount that shoppers pay is arguably the most important single metric to be considered.
However, don’t let surface impressions fool you. There is a common misconception in the seller community, which is that your price is only judged based on the cost of the item. Rather, it is the overall landed cost including delivery charges and other fees that actually matters (the total amount that customers pay).
In saying this, the landed price is only one data point in a series of considerations that Amazon’s buy box algorithm takes into account. If you offer the cheapest price, but have an average seller reputation, it is unlikely that you will enjoy any meaningful share of the buy box.
On the flipside, if you have a great reputation, it is often possible to charge a significantly higher price and still win the buy box.
So how can I know what price to sell my products for?
Although pricing strategies are a topic for another day, here are a few different ways that successful merchants manage their pricing strategy:
- List products at the recommended retail price – set and forget. This method is uncompetitive and generally leads to being undercut by the competition.
- Manually adjust prices on a regular basis to stay in line with market rates. Whilst this is manageable with a small number of products, it soon becomes impractical if you have a large product catalogue or compete in popular categories.
- Use rule-based repricing apps such as Repricer Express to automatically adjust your pricing based on a range of variables. This is a useful way to keep your pricing sharp, without needing to constantly watch what’s happening on your listings.
- Employ an algorithmic pricing tool to maximize your chances of winning the buy box. Plugins like Feedvisor, Seller Snap and Aura take rule-based repricing one step further by employing the use of artificial intelligence and machine learning to construct complex buy box algorithms that get smarter as time progresses.
As we previously mentioned, the latest research out of Northeastern University indicates that algorithmic pricing delivers the best results for Amazon sellers. If you’re looking for an innovative way to stay ahead of the competition, perhaps it might be worth giving machine learning a go?
Amazon favours sellers that use their in-house logistics empire. When you send inventory to FBA, not only does it increase your chances of winning the buy box, but it also simplifies the operations of your business.
This is because Amazon looks after logistics-related customer service queries, and takes responsibility for ensuring that your products are delivered on time. They also move your inventory around the country to reduce delivery times (note: this can have an adverse effect on sales tax obligations).
Whilst using FBA is a great way to increase your chances of winning the buy box, it’s not suitable for every product. Some categories are prohibited from being distributed through FBA, or are too bulky to be financially feasible.
In these instances, Seller Fulfilled Prime (SFP) is a great way to stay competitive with FBA sellers without needing to pay a premium for Amazon’s service. SFP is a service that offers consumers all the benefits of Amazon Prime, while being fulfilled from third party warehouses.
If you’re not using FBA or SFP, then the final option is FBM (in other words, you look after fulfillment either yourself or with a third party service that isn’t associated with Amazon). You can definitely win the buy box with FBM. However, it is more difficult than if you offer Prime or use FBA.
In today’s modern economy, shoppers have come to expect speedy deliveries. Waiting weeks for a parcel is no longer considered acceptable to most people, and Amazon recognizes this. As a result, the promised shipping time is an important factor that the buy box algorithm takes into account when deciding which seller to recommend.
To put it simply, if you promise a speedy delivery, you are more likely to win the buy box.
However, this only matters if you can follow through on your promises. Amazon’s buy box algorithm focuses on two different metrics to determine whether the stipulated delivery times are reliable – Late Shipment Rate (LSR) and On Time Delivery Rate (OTDR). In essence:
- Late Shipment Rate measures the percentage of orders that are dispatched later than promised.
- On Time Delivery Rate measures the percentage of orders that are delivered on time.
This way, sellers are rewarded for quick service, but held accountable if they fail to fulfil their promises. Shipping times only matter if you don’t use Fulfilment by Amazon. FBA is considered to have perfect metrics as far as order processing and delivery is concerned.
The importance of shipping time depends on what you sell:
The degree to which delivery times are important largely depends upon what you are selling. For time-critical items such as birthday cards, this is one of the main factors in determining who gets the buy box.
However, for less urgent products, the importance of promising fast delivery is reduced.
Customer feedback and service
Regardless of which platform you sell on, social proof is always one of the most important parts of the online shopping experience. When we don’t have the opportunity to physically interact with products, the opinions and reviews of others plays a much more important role in our purchasing decisions.
Here are some basic guidelines when it comes to feedback on Amazon:
- Feedback is judged based on the count of positive, neutral and negative feedback over the last 30, 90 and 365 days.
- The most recent feedback has the largest impact on your seller reputation. Therefore, it is possible to recover from a handful of poor reviews without having a long term impact on your success.
- The number of reviews that you have is an important data point. Older accounts that have made more sales are expected to have more reviews than newer accounts.
- For best results, aim to maintain a 90%+ positive feedback score.
But what if I don’t have any feedback yet?
For new sellers, getting feedback can often seem like a ‘chicken and egg’ scenario – you need reviews to build trust (to make sales), but you need sales to get reviews.
New merchants will often use apps like Viral Launch to provide large discounts (on private label products) that encourage shoppers to buy their offerings – with the shared understanding that feedback is expected or encouraged.
It is against Amazon’s terms of service to ask for positive feedback, but there are ways that you can gain some initial momentum to get the ball rolling without breaking the rules.
Amazon Vine is another service that helps sellers to gain traction on their new products. This offering, provided by Amazon, is an invite-only programme, where selected vendors send products to Amazon’s most trusted reviewers to get their honest and trusted feedback.
Have a read through our guide on how to become an FBA seller to find out more ways to get started.
Encourage reviews at every opportunity
Positive feedback is a self-reinforcing cycle that attracts new customers to your offerings. It is therefore paramount that you encourage people to share their thoughts after buying your products.
If they are happy with their purchase, you will get a valuable testimonial for future reference. If your customers aren’t happy, encouraging feedback is a great way to find out what’s wrong and fix the issue before it escalates into something worse.
Review apps such as Sales Backer make it easier to gather positive feedback from happy customers by automating the follow up process.
Quick responses are important
Amazon’s buy box algorithm also tracks how long it takes for sellers to respond to customer queries.
“Amazon checks responses for the last seven, 30 and 90 days and compares them for all competing sellers. It is considered, that replying to customers within 12 hours increases your chances of winning the Buy Box.”
If more than 10% of your messages took 24 hours or longer to reply to, this can have a negative effect on your ability to win the buy box. However, sellers can avoid the penalties by simply marking listings with ‘no response needed’ when the conversation is over.
Order defect rate
The order defect rate (ODR) is a combination of three different metrics:
- Negative feedback rate – the percentage of customers who left negative feedback.
- A-to-Z guarantee claim rate – the percentage of unhappy customers who claimed a refund on products under Amazon’s A-to-Z Guarantee.
- Credit card chargeback rate – the percentage of customers that asked their credit card company for a refund on purchases made through Amazon (that you sold to them).
By tracking these 3 metrics, the ODR is designed to provide an accurate measure of dissatisfaction. Amazon’s biggest asset is their reputation, and it is therefore important that they take all measures to safeguard it from being damaged by low quality third-party sellers.
Amazon measures order defect rate based on what’s happened over the last 60 days. To win and retain the buy box, it is important to maintain an ODR of less than 1%.
Damaged/faulty goods and late delivery are the most common reasons why sellers get a bad ODR ranking. Whilst the issue of late delivery can be resolved by sending your products to FBA, problems with product quality are best fixed further up the supply chain.
As your Amazon FBA business grows, so does the importance of having rigorous quality control measures in place. If you are concerned about the potential of faulty goods being sent to FBA, it might be a good idea to enlist the help of factory inspection services or prep warehouses to serve as an intermediary before forwarding your inventory to Amazon’s facilities.
To be eligible for the buy box, you need to have physical stock of the items listed for sale. However, there is a large difference between holding 1 unit of an item, and owning 10,000.
Otherwise known as ‘inventory depth’, the buy box algorithm favours sellers that have a larger amount of stock to move. By holding larger quantities of your top selling products, you are more likely to win the buy box for a greater proportion of the time.
Due to the fact that over 80% of purchases on Amazon go through the buy box, it is very common for sales of an item to skyrocket when that seller wins the coveted position.
If you are striving to win the buy box, make sure to ask the question ‘how much stock will I need to hold in order to stay in the buy box when I win?’ and forecast accordingly. Apps like Forecastly can be helpful for this purpose.
It’s only FBA inventory when it arrives
If you use Fulfilment by Amazon as part of your logistics strategy, it’s important to understand what is considered as being ‘in stock’. For the purpose of winning the buy box, it is only considered as being FBA inventory when the items have been received and recorded in an FBA warehouse.
This means that if your stock is in transit or being stored is another third party logistics facility, Amazon won’t count your stock in the buy box algorithm until it arrives.
Prioritize the most important metrics
Here is a chart from the Big Commerce blog that ranks the various buy box, based on how much impact they have on your success:
By focusing on the most important metrics first, and getting one thing right before moving on to the next, you can increase your chances of success and ensure that your productive time is spent more effectively.
Tips for winning the buy box
Here are a few pointers to help you win the buy box…
Personalize interactions with shoppers
Exceptional retail skills are all about customer service. By looking after your customers and giving them the personal treatment, you can create higher levels of trust and earn positive feedback that brings people back time and time again.
Know your metrics and focus on the important ones
Set goals and always look for ways to improve your account health. Prioritizing the metrics that matter most and taking proactive measures to improve your seller performance is one of the best ways to show Amazon that you mean business!
Ensure that your landed price is affordable
After all, customers are the ones that pay you money, and if they can’t afford your products, the other factors don’t matter all that much. In other words, look beyond just the product price and focus on what it costs the customer to shop with you.
Confront unauthorized resellers
If you have secured access to exclusively distribute a product (or own the brand), don’t let others piggyback off your success. Amazon offers a range of support services (such as the brand registry) to help brands and their appointed representatives protect intellectual property and reap the fruits of building business on Amazon.
Automate product pricing
Let technology do the heavy lifting by employing repricer algorithms to help you win the buy box more often!
Decide which products to focus on
It’s better to do very well with one thing rather than struggle with many. By selecting your best-performing products and optimizing your inventory management to hold larger stocks of these items, you can carve out a more profitable niche and reduce the risk of holding stock that doesn’t move.
Success on Amazon involves getting lots of little things right
There is no silver bullet or magic ‘do this one little trick and you’ll become a millionaire’ when it comes to making money on Amazon. The most successful sellers have achieved great things by focusing on the details, and getting lots of little components right. By constantly learning and improving one step at a time, you can work towards achieving your goals.
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