Brand Protection Against Unauthorized Resellers

In Uncategorized by World Class Deals

As a brand owner, protecting your brand is likely your number one priority. This is especially true when it comes to selling your products online, where your exposure increases significantly, but so does your risk. This could not be more apparent than when selling on Amazon.

Amazon has opened many opportunities for smaller brands due to its 49% global e-commerce market share as of 2018. This market share equivalates to nearly $233B in sales in 2018 and growing at a rate of 30% year over year for the past 5 years. Its customer focused approach has made it the number one online retailer and it’s not even close. In comparison, eBay has the second highest market share at a staggering 6.6%. To-date, Amazon has over 100 million Prime members, with over 200 million people visiting Amazon every month.

With numbers like these, not only are brands taking advantage, but so are third-party (3P) sellers. In fact, according to a report from Marketplace Pulse, over 3,300 new sellers per day joined the Amazon marketplace in the U.S. alone. This low barrier to entry leaves you vulnerable to unauthorized retailers, price erosion, and brand misrepresentation.

Below are the top three complaints we consistently hear from brands, along with the issues they experience:

1) We have unauthorized sellers on our listing(s).

a. Counterfeit items – The more popular a product becomes, the higher probability a knockoff makes it way to market. It’s easier and easier to purchase generic products from foreign countries, or marketplaces like Alibaba, and sell them under existing product listings.

b. Loss of quality control – You spend a fortune ensuring that your product(s) meet the highest of standards and establishing a verified distribution channel. However, consumers are purchasing products locally and selling them online to turn a quick profit (also known as Retail Arbitrage). They have no regard for you, your brand, or your product(s).

c. Voids warranty – Warranties are typically only honored if the product is purchased from an authorized retailer. When a consumer purchases your product on Amazon, they’re under the assumption the product is genuine and that any warranty included will be honored. Yet, when a warranty claim is denied due to a purchase from an unauthorized seller, the only one that loses is your customer.

2) We have too many 3P sellers.

a. Minimum Advertised Price (MAP) violations – Requiring resellers to sign a MAP agreement protects your brand against devaluation. Implementing a MAP is relatively easy, but monitoring and enforcing the policy is a task within itself.

b. Price erosion – Most 3P sellers are only concerned with making a sale and in order to edge out other sellers, they continually lower their price (generally with the use of an automated repricer) until the sale is made. This race to the bottom devalues the brand in the eyes of the consumer, as the saying goes, “you get what you pay for”.

3) We have lost control of our content (e.g., pictures, key product features, and product description).

a. Intellectual property violations – Protecting your copyright, patent, and trademark rights is the highest priority for every brand. However, if you haven’t properly established your brand on Amazon, you’re susceptible to having any 3P seller edit your listings without your consent.

b. Negative reviews – The constantly changing content and misrepresented information presented by 3P sellers can lead to dissatisfied customers and an increase in negative reviews.

c. Decline in sales – The more confusing or vague a product listing is, the less the product will sell. Couple that with an increase in negative reviews and your product is doomed for failure on Amazon.

Many brands face a combination of these issues, if not all three. This leads to many days, weeks, or even months of lost time that’s dedicated to getting these under control, only for these issues to pop right back up. The bottom line is that it can be a vicious, never-ending cycle that consumes a brand, leading some to give up the Amazon headache altogether.

Don’t let that be you, we’re here to help! As an authorized reseller, we do more than simply sell your products, we help to protect your brand and price to strengthen your e-commerce presence. Investing our time and resources gives us a vested interest in your success.

Contact us today to learn more about how we can help!