One of the greatest challenges that successful and rising brands face is dealing with increasing numbers of unauthorized sellers wreaking havoc on their brand- especially on Amazon and other online marketplaces. Sound familiar? Unless your brand makes efforts to reign in these grey-market sellers, significant damage to your brand’s reputation and revenue stream can occur.
We’ll discuss here why managing unauthorized sellers is important and how by implementing an authorized seller and online seller enforcement program, your brand can keep them from having a negative impact.
So What’s the Big Deal Anyway?
Because unauthorized sellers have no real relationship or agreement with your brand, their only concern is to profit from sales. Quality control may be the biggest issue and it can show up in many different ways. A grey-market seller may not provide the necessary product handling and care that is needed. They may also provide an undesirable customer experience by providing poor shipping, inadequate customer service, or by not honoring product warranties. In a worse case scenario, some sellers may be counterfeiting your product with an inferior one and profiting at your expense. All of this can significantly damage customer trust and brand reputation, while eroding your brand’s revenue and growth potential.
Unauthorized sellers also contribute to product price erosion. Depending on your brand, this can impact brand prestige and it certainly has a negative impact on your authorized sellers. Unauthorized sellers are not bound by any pricing agreements, so they will often dramatically lower their selling price in order to get sales. This can put pricing pressure on all of your authorized retailers, including brick and mortar vendors who are then tempted to lower retail prices to maintain sales. This typically results in unhappy retail partners bargaining with you for deeper wholesale discounts so they can maintain a worthwhile profit margin. In a worse case scenario, they may decide to stop carrying or promoting your brand altogether. Ouch!
What to Do, What to Do?
If you’re reading this, there’s a good chance you know the problem well. But what can you do about it? The solution can be broken up into three basic parts: developing an authorized reseller program, authorized seller enforcement, and unauthorized seller enforcement.
Developing an Authorized Seller Program
This is the first step of online seller management. Maybe it’s obvious without mentioning, but resellers, both online and brick and mortar, should be vetted to ensure that they will adequately represent your brand and adhere to its policies. Agreements should be drafted that stipulate policies for both distribution and pricing. Distributors should agree to sell to only authorized resellers. Likewise, any authorized sellers need to agree to sell your products on only authorized channels. For example, one seller may be bound to only sell in their brick and mortar store, while a different seller may be bound to sell on their own web site but not marketplaces such as Amazon, with yet another seller being granted permission to sell your products on Amazon. All of this should be stipulated. Quality control and expectations should be agreed to for how customer service should be performed, how products should be represented, and how warranties should be honored. Finally, all sellers should agree to adhere to MAP (Minimum Advertised Price) pricing.
Authorized Seller Enforcement
In order to simplify online seller enforcement, authorized sellers should be transparent about the names they use to represent themselves online. This not only helps in identifying unauthorized sellers, but also in monitoring all sellers for potential MAP violations. MAP monitoring software can be put in place that will help to monitor seller pricing across various online channels including the major online US and international marketplaces as well as price comparison sites.
If you are having major issues with distribution and unauthorized sellers, it may be necessary to put unique identifiers on your products upon initial distribution so that their point of origin can be determined. This can be a highly effective strategy. With all authorized sellers and distributors, they should be put on notice that policy violations can result in sanctions such as loss of discounts or account suspension, with account termination occurring after repeated warnings.
Unauthorized Seller Enforcement
After a viable authorized seller program is put into place, it’s time to focus on dealing with those pesky unauthorized sellers. It’s important to ensure that proper quality controls and material differences are built into an authorized seller program so that your brand’s unauthorized seller enforcement program is legally enforceable. For this reason, we highly recommend working with a qualified legal team so that you can be sure your agreements have teeth.
Monitoring software can be used to identify unauthorized or unknown sellers across various online retail channels. Cease and desist letters can be sent to offending online sellers via email or marketplaces such as Amazon, and they typically yield positive results, especially if the letters are sent from a legal team. If a seller is not responsive, a more in depth investigation can be started that may include ordering products directly from sellers in an attempt to reveal the seller’s true identity. From there, formal cease and desist letters can be sent to a physical address. If there is still no response and resolution, formal legal action may be taken that may include the issuance of subpoenas, filing lawsuits, seeking injunctions to suspend accounts, or other means to stop the offenders. However, this is typically unnecessary.
While all of this sounds potentially messy and like a lot of work, the greatest challenge is in setting up the initial framework and the initial enforcement process. Over time, the issues become far fewer as unauthorized sellers realize that your brand’s products and policies are strongly monitored and enforced. The initial effort and expense you incur will pay off as your brand’s good reputation continues to grow and you have happier vendors, enthusiastic customers, and increased sales.
About Brand Brite
Brand Brite is a brand advisor, digital marketing agency, and e-retailer that specializes in working with motivated brands to minimize the frustrations and maximize the opportunities of the Amazon marketplace. For more information, please visit our website at www.gobrandbrite.com or contact us at partners@gobrandbrite.com.
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