One of the most pressing issues facing sellers on Amazon is protecting their brand (and the brand’s intellectual property) from unauthorized sellers. When unauthorized sellers present a problem for brands, it is usually in one of the following ways: Devaluation of the brand, unacceptable brand representation, competition with the authorized brand through buy box wars, and counterfeiting or intellectual property issues. By addressing these issues, brands can ensure their brand is represented properly and give customers a good experience when they shop that brand on Amazon.
What is an unauthorized seller?
Many sellers work hard to present a brand and product that is accurate and is their own or through the proper agreements. However, in the e-commerce market, we are all aware of the sheer numbers of sellers on Amazon. Unauthorized sellers have managed to source product while avoiding (either intentionally or unintentionally) a direct relationship with a brand. These sellers have often acquired inventory through a distributor, wholesaler, the grey market, or retail arbitrage.
Brands often complain about unauthorized sellers on Amazon because they hurt sales and have negative effects. Oftentimes, however, brands have not properly protected themselves by putting processes in place to prevent unauthorized selling.
Issues facing brands on Amazon
Devaluation of brand
In order to move product quickly, unauthorized sellers will often lower the price of items below what the brand would do elsewhere. With very few overhead costs and nothing to lose but some margin, these sellers are mainly concerned with winning the buy box. This aggressive strategy makes the items appear worth less or even fake, essentially devaluing the brand in the eyes of customers.
Unacceptable brand representation
Because unauthorized sellers have no direct brand relationship, they obviously will not have access to approved assets, like images, logos and accurate copy. This lackluster or inaccurate content (which may just be copy-pasted from random websites), looks unprofessional and frustrates the buying process.
Competition and buy box wars
Price wars to gain the buy box happen on Amazon constantly and even automatically. Other sellers and Amazon will fight to achieve the lowest price. However, Amazon will not discount products below a certain (undisclosed) margin. If this happens, Amazon will ask the vendor for an improved cost price. If the vendor cannot support this, the item will be classified as “Can’t Realize A Profit” (CRAP), and Amazon will not order more. This is doubly concerning, as Amazon doesn’t want to purchase more and the item and brand has been devalued.
Counterfeiting and intellectual property violation
In an effort to win the buy box, some sellers will create counterfeit version of products, jump on the same listing, and sell the items for very cheap. Customers who purchase from these sellers (which can be often, as price will win), will be disappointed. This results in bad reviews, returns, and hurts the bottom line. If Amazon sees this, the listing may even be removed.
Sellers may also notice that even when there are protections, such as copyrights and trademarks, unauthorized sellers will still take this intellectual property and use it as their own. This is misleading for customers and further devalues the brand.
How to protect your brand
There are a number of ways that brands can protect themselves from unauthorized sellers and the issues they present.
Proactively controlling distribution and exactly who the brand sells to is one of the first ways to combat unauthorized sellers. This is most easily managed by selling direct to retailers. Brands who sell to distributors will find the process diluted and hard to control from the get-go, as brands often will not have insight into who the distributor sells the brand’s product to.
Devising policies that are presented to retailers and distributors can help. Specific details can be signed off in a distribution agreement presented before gaining access to the brand. Brands can specify rules, such as setting a limit on who the product is sold to, ensuring the product is sold in stores but not elsewhere online, content guidelines, and MAP policy (if in the US). Seek legal support to make sure this is done correctly, in both the US and Europe.
Maintaining a selling price as close to MSRP or RRP as possible is a surefire way to avoid being devalued. In the US, implementing a Minimum Advertised Price (MAP) policy means that in order for retailers to continue supplying the brand they must adhere to MAP prices and not jump any lower. MAP is usually 10-20% lower than MSRP. MAP policy is illegal in the EU, and regarded as anti-competitive. Keep this in mind if you are selling in both marketplaces and structure your policies correctly.
If your business is handled by a distributor, you should have them agree that all of their retail customers purchasing this product must adhere to this MAP policy as well. Distributors should also be made to share a list of retailers so you can adequately police the issues.
Note that Amazon will not agree to MAP policy and distributors may be reluctant to as well. Even if you are monitoring pricing, some unauthorized sellers will simply create a new account to disguise themselves and continue to work outside the guidelines.
One way to attain a higher selling price is to avoid giving too much margin to retailers or distributors. Leaving a lot of room to discount products may result in them being devalued once on Amazon. Excessive discounting will result in not being profitable or Amazon discontinuing the listing.
Finally, monitor overstocks. If Amazon does not have return rights, Amazon will drop the price to clear inventory. Proactively offering Amazon promotions and sponsored ads and making sure your product is competitive is helpful. Once the price is dropped, it’s unlikely to climb back up.
Dealing with disguised unauthorized sellers
Sellers will sometimes go to great lengths to avoid following agreements that control pricing or distribution. They may create new selling accounts to disguise themselves and avoid detection from the brand. Brands can attempt to contact a seller if they find one that needs to be policed. This can be done on the brand info page, found by clicking on the seller name.
If this doesn’t work, ordering some product from the seller can help track it. Though, frequently, stock is commingled (especially with FBA), using only an EAN or UPC to identify it in a pool of inventory. If this is an issue for your brand, consider marking each product with a serial number to trace products to their source.
Brands can also consider registering with Amazon Transparency, an item-tracking system for brands and manufacturers. This can help prevent counterfeiting, give brands visibility end-to-end, and provides the customer a way to verify authenticity.
Join the Amazon Brand Registry
Do you own your brand on Amazon? The Amazon Brand Registry gives you greater control over your brand’s influence and product on Amazon. Registered brands receive priority on detail page edits to control their image, are allowed a greater scope of content, and creates a better brand representation for the customer by potentially reducing intellectual property rights violations.
As Casio reports: “Amazon Brand Registry has been a huge leap forward for Casio in protecting our intellectual property. The response time has been lightning fast and the team assigned to this program are incredibly knowledgeable and efficient. Thank you Amazon.”
Registering can make a drastic difference and streamline the protection of your intellectual property and image.
Ensuring your brand is enrolled in the Brand Registry is a great way to head off counterfeiting problems. In this system, you can report violations, counterfeiting, and intellectual property rights issues.
If counterfeiting is a big issue for you, you can collect all the evidence and present it to Amazon with a request to gate your brand. Not all requests will be met, but if you have a strong case that it’s a poor customer experience (with a lot of counterfeiting, for instance), it is more likely to be approved and gated.
You should also make sure all of your product listings are in Vendor Central or Seller Central, even if you don’t plan on selling these or listing them on Amazon. This step ensures that you own and manage the content for all of your items. Listing them allows you to lock the content, or even permanently list them as unavailable. This proactive step ensures other sellers cannot set the products up as their own.
Allowing authorized sellers
Working with a few, choice sellers that you select and authorize to sell your product can be a good way to take the lead in making sure your brand is represented correctly. Especially if you choose not to list your full range. As these sellers respect the pricing rules, optimize content to the brand’s standards, and make sure the customer experience is optimal, it can help neutralize unauthorized sellers. Remember that customers will see the brand, not the seller.
By taking steps to proactively protect your brand, you can create a better customer experience and mitigate the effects of unauthorized sellers on Amazon.