eControl For Beauty & Personal Care Brands: Driving Better Commercial

Outcomes Through Category Specific Online Sales Control Solutions

Sep 27, 2021 11:00 AM12:00 PM EST

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Key Discussion Takeaways

Few things can ruin the image of your brand like unauthorized resellers. Your team has worked hard on your product, the marketing, and the pricing — and all three of these things are at risk when unauthorized parties attempt to sell your product. Of course, there are the obvious concerns, but the matter is a lot more complicated than it may seem.

Daren Garcia is a brand protection and eCommerce attorney who works with clients on these matters every day. He has been in the field for almost two decades, working with Vorys eControl to stop unauthorized sellers with custom strategies designed to protect the value of your brand. So, how can you protect your brand and fight against attacks on your business?

In this virtual event, Daren Garcia of Vorys eControl talks about growing your beauty and personal care business through sales control solutions. He goes into detail on the current problems in the industry and what tools you can use to mitigate them. He then dives into topics like brand control, go-to-market strategies, and sales disruption. Plus, he discusses MAP policies and how they may not be the silver bullet they once were.

Here’s a glimpse of what you’ll learn:

 

  • What is the problem with resellers in the beauty and personal care industries?
  • Daren Garcia talks about sales disruption and the need for brand control
  • The right and wrong responses to fraudulent resellers
  • Defining and rethinking your marketplace sales strategy
  • How to maintain control over distribution and online sales
  • Why MAP policies are a tool — not a full strategy
  • Daren shares the two exceptions for stopping authorized sales
  • Using the right tactics for responding to particular reseller problems
  • What’s the best timing for rollout?
  • Brand gating and how it works on Amazon
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Event Partners

Vorys eControl

Vorys eControl is a top 150 law firm that has an expertise in implementing legal strategies to stop unauthorized re-sellers, control MAP pricing, eliminate channel conflict which all ultimately lead to online marketplace sales growth.

Connect with Vorys eControl

Guest Speaker

Aaron Conant LinkedIn

Co-Founder & Managing Director at BWG Connect

Aaron Conant is Co-Founder and Chief Digital Strategist at BWG Connect, a networking and knowledge sharing group of thousands of brands who collectively grow their digital knowledge base and collaborate on partner selection. Speaking 1x1 with over 1200 brands a year and hosting over 250 in-person and virtual events, he has a real time pulse on the newest trends, strategies and partners shaping growth in the digital space.

Daren Garcia

Partner at Vorys eControl

Daren Garcia is a Partner and Member of the Vorys eControl team. Vorys eControl is on a mission to protect and grow brand value by controlling online sales for businesses. In his practice, Daren develops cutting-edge legal solutions for unauthorized seller problems faced by manufacturers and brands. He has helped hundreds of brands around the world mitigate unauthorized sales, MAP violations, channel conflict, and other disruptive issues online. Daren also has extensive lead trial counsel experience and has been recognized as a “Leading Lawyer” in litigation by Chambers and Partners.

Event Moderator

Aaron Conant LinkedIn

Co-Founder & Managing Director at BWG Connect

Aaron Conant is Co-Founder and Chief Digital Strategist at BWG Connect, a networking and knowledge sharing group of thousands of brands who collectively grow their digital knowledge base and collaborate on partner selection. Speaking 1x1 with over 1200 brands a year and hosting over 250 in-person and virtual events, he has a real time pulse on the newest trends, strategies and partners shaping growth in the digital space.

Daren Garcia

Partner at Vorys eControl

Daren Garcia is a Partner and Member of the Vorys eControl team. Vorys eControl is on a mission to protect and grow brand value by controlling online sales for businesses. In his practice, Daren develops cutting-edge legal solutions for unauthorized seller problems faced by manufacturers and brands. He has helped hundreds of brands around the world mitigate unauthorized sales, MAP violations, channel conflict, and other disruptive issues online. Daren also has extensive lead trial counsel experience and has been recognized as a “Leading Lawyer” in litigation by Chambers and Partners.

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Aaron Conant

Co-Founder & Managing Director at BWG Connect


BWG Connect provides executive strategy & networking sessions that help brands from any industry with their overall business planning and execution.

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Discussion Transcription

Aaron Conant 0:18

Happy Wednesday Happy Wednesday. Happy Monday everybody. My name is Aaron Conant I'm the Co-Founder and Managing Director here at BWG Connect where a networking and knowledge sharing group 1000s of brands who do exactly that we network and now it's here together to stay on top of the newest trends strategies pain points, whatever it might be that shaping the digital landscape as a whole will host close to 300 virtual events this year and you know looking towards the back half of this year probably going to do close to 20 in person events. So if you want more information on any of those, it's a lot of tier one cities across the US tackling a lot of the same stuff that we tackle in our virtual events but it's just fun to kind of rub elbows again I you know a couple housekeeping items getting started three to four minutes after the hour and just so you know, we're going to wrap up with three to four minutes to go in the hour as well we're gonna give you plenty of time to get on to your next meeting without being late. And with that, with that I think going to go ahead and just kind of kick it off. So I'm chatting with 30 plus brands a week to stay on top of you know what's going on across the digital landscape. And when the same topics come up over and over again you know, we host an event like this it's how we get the topics for these events so we'd love to have a follow up conversation with anybody on the line today. But you know this is something that really popped up I would say two years ago and just it is still the you know, Top of Mind around you know, basically you know controlling your brand right and in how do we maximize the overall potential of eCommerce and digital commerce and a lot of that is Hey, how do I make this space less margin diluted? How do I control my brand pricing price erosion all this different stuff and you know, we've had some great friends and partners the network for years now over at Vorys eControl. Daren, I'll kind of kick it over to you if you want to do a brief intro on yourself and bories that'd be awesome. And then we can kind of jump into a little bit of this I do want to say people as we get going you have any questions along the way, drop them in the chat, drop them in the question section or email them to me Aaron aaron@bwgconnect.com but Daren, I'll kick it over to you.

Daren Garcia 2:30

Great. Thanks, Aaron. And thanks everybody, for for jumping on today, we're going to talk about the notion of eControl within the beauty and personal care category. And specifically how to drive better commercial outcomes through online sales control solutions. And I'll touch a little bit more about us in a minute. But let's focus first on on category you know, just in in you know, just some of the data whatnot was was has been just really interesting around beauty and personal care online and particularly its growth on marketplaces you know one of the top performers in terms of Prime Day this year and you know, what you're seeing is as more and more sales blow through the online channel and you could be you know, a mass market brand you could be a professional channel branded direct sales brand. You know, regardless of whatever your essentially go to market strategy is and what we're seeing is just as the eCommerce channels grow in size and significance, you just, they bring with them a lot of threats to revenue really, and to Aaron's point margin dilution and those sorts of things. So when we think about what brands can do in the face of that or what what they should do in the face of that we come to this notion of E control which is really the process through which brands exert control over their online sales to ensure high quality distribution and protect brand equity brand value sales and profit. And so, you know, Vorys eControl is a group within a large, old long standing law firm called boys that works with more branded manufacturers than any other team in the world of which we are aware that helping them to control online sales we work with over 500 brands, combining uniquely law data tech to drive particular commercial solutions and as we as we spoke about, you know, we have these these channels growing and maturing and all of a sudden, you know, just a ton of threats to brands, you know, pop up and they really can be significantly disruptive of your sales and of your brand value. And uniquely in the eCommerce channel, the speed with which these challenges present and with which they change is unlike anything that's that's come before it so you have perhaps with respect to your brand unauthorized, say In this category, there's a lot of counterfeits, you have diversion and parallel imports, meaning stuff being taken out of your authorized distribution channels, stuff coming from overseas markets back into the states, your authorized seller policy violations meeting, you know, some some local independent shops and things perhaps selling on Amazon or doctor's office selling on an Amazon, those sorts of things. Of course, you have map and pricing violations, and then you also have optional pricing issues. Now, in the face of all of that, you know, what's become clear as again, as the channels have matured, is that all of the things that brands do to drive that traffic times conversion times price equation, which speaks to, you know, your eCommerce revenues, your ability to optimize for each of those variables really rests on a foundation of control. So are your ads running is your content, what you want it to be or reviews opportunity in this category are your reviews, you know, up to par and solid and not being damaged by poor quality resellers, your advertised prices, at a level consistent with your pricing policies. And, you know, we're going to dig into today, how control can help to optimize each of these particular variables in the category and really an overview of what a brand seeking to exert greater control and leverage that control to commercial benefits that type of solution that you would want to think about implementing. And I'm going to kind of go through fairly quickly because we have a lot of content today. And you know, relatively short amount of time, but you know, we will email out a slide deck for everybody so that you have this handy, along with a white paper, and things like that. So don't don't worry about if I'm if I'm going kind of quickly, this is just I want you to have the context. And really to think through all of the components of a solution, then you can delve into the details on your on your own time. But, you know, in addition to optimizing sales on online marketplace, in eCommerce, the notion of control is all of a sudden hugely important to protecting your brand from really omni channel disruption. Really the core of your business being hurt by online sales disruption. So if you're a brand out there, and you're selling into National Retail channels over on Amazon down through distribution, you know, what you start to see is product flowing out of your intended channels, whether it's b2b diversion, somebody just selling it in an unauthorized manner on marketplaces, people retail arbitrage and buying stuff out of you know, your retail channels when it goes out promotion, waiting for those to exhaust and then turning around and reselling on Amazon. But in any event, in this scenario, you know, everybody looks back to you. Okay? No, Amazon's not taking price increases are telling, you know, you, you they want margin guarantees your your retail customers are saying hey, you know, I need this this rebate, or your distributor saying I need, you know, additional incentives and all of these sorts of things, everybody's coming back to you looking for their money, when you have this level of of disruption. And so another, I think, key point of this slide is that you cannot you know, if you're faced with these challenges, and how do we control our brand online, you cannot simply focus on an online marketplace like Amazon SEO, we need to do enforcement there, we need to do map there or you know, anything, you know, that that sort of one off or that sort of fragmented, but rather as we walk through this, you'll see that the key to raining all of this in, okay, is your ability to exert control over your entire ecosystem here, particularly in the category we're talking about today, because you're so susceptible to online disruption. I mean, when you think about the brand brand quality and consumer experience or critical competition is spirit you have so many new brands entering market you know, literally seems like every day you have very significant diversion risks, small package sizes, higher price points in many in many instances. And you know, a lot of times major distributors will supply professional eCommerce sellers just as a, you know, as in the normal course of business. And so, when you add all of those things up, you know, the brand itself there I'm sorry, the category itself is among the most highly risk categories in terms of online sales disruption. And so the challenge that brands have is that, you know, these these, these risks to your brand are going to come from all different types of players. You have certainly professional gray market sellers, retailers and distributors. You know, dumping excess inventory, whether it's liquidation or just over buying to take advantage of incentives and laying those off retail arbitrage counterfeiters, you know, protect potentially marketplaces like Amazon sourcing from other locations other than the way you would want them to be one off resellers map whalers, criminals, and so on. And so, you know, all of those players are not going to be created equally either. And this becomes very important as you think about how do I even wade into this and really take control. And it's important to understand this level of impact that various things can help you we have to be able to prioritize and triage those, and some are going to take a lot of sales others very little, some cause a lot of price disruption, others very little, you know, some are, you know, frankly, legitimate businesses, others aren't. And so, you know, you have to begin to think about how do I account for the fact that this stuff is always changing? Okay, there's all different types of players involved, it ripples across my entire ecosystem. And brands are out there saying, you know, how do I fix all of this? Well, you know, it, just Google it, and you're gonna have a million things pop up brand protection companies say, Oh, you just need my magic software. And I'm going to send some secret messages I have on Amazon or map companies saves the might software and math tools, or your traditional law firm saying, Oh, I'm going to write really tight contracts and Sue people for you, or scary letter companies kind of the same thing. And the reality is that none of these things work in and of themselves. I mean, as we saw on that whiteboard slide, it's too complicated. You know, the, the variables are too many, for little one off tools like that, or tactics like that to work. And it's very much you know, if the only tool you have is a hammer, you try to see everything as a nail. And that's just not the case. I'm really quick.

Aaron Conant 11:53

There just a question that comes in is, where does Brand Registry and transparency program come into play?

Daren Garcia 12:01

Yeah. And I will address all of that in great detail here in the enforcement. Awesome. Okay, cool. Yeah. Awesome. And so you know, there's a limited amount of time and budget that you can spend addressing these violations. And so when you think about the, the tools and the platform that you need to be able to bring this to bear to bring this under control, and leverage that control to drive greater sales and increased profitability. You need all of the data monitoring and insights, we'll talk about that. Okay, but having all of those tools is important, but you also need the ability to think strategically, okay, and so, you know, if you control for example, we have industry professionals, category, leaders that sit atop each category that know the diversion sources that understand the KPIs that know what levers to pull, and how to leverage various teams from legal foundation, channel management, investigation, enforcement, all of those things, to essentially drive this type of solution. Okay, and then we'll walk through each of these components. So first and foremost, we have to define our KPIs and our go to market then work our way around the wheel, dealing with the world in two camps, your authorized customers and unauthorized sellers. We need to get the authorized reseller program in place, you next need to have your own authorized seller legal foundation. And again, I'll go through all of these in detail here in a minute, then you can start to think about things like map policies promotional programs, and begin then to get to the left hand side of the slide here in terms of your enforcement mechanism mechanisms, both with respect to enforcement directly against the resellers themselves, and that would encompass things like marketplace policy violations, you can address PCB Brand Registry, you have counterfeit problem transparency, and things like that, and I'll touch on all of that. And then sort of as a last piece here, understanding where your stuff is coming from in terms of diversion diagnostics, and being able to mitigate that so as we dig in here defining KPIs and go to market strategy, okay. I mean, what you'll find is a lot of players in this space vendors in the space will say all take down X amount of sellers or I will send this many notices per week or that sort of thing and that doesn't really matter. Okay. Because when you think about where you want to get to, can when you look at your marketplace, for example, you know a lot of brands look like the phone on the left, no brand control, a lot of unauthorized sellers very difficult to do map you have upset channels, you're losing sales reviews or negative reviews are increasing stacking up on you. Where you want to get into the phone on the right where your authorized seller whether that's something like an Amazon itself or Walmart itself one p okay if you're running a three p model through your own storefront or through an exclusive third party seller or something like that. Regardless, you want your authorized seller to be out there. Getting 98 99% of your sales on a volume basis. And you want to be able to hold that volume in a manner consistent with your with your desired advertised price your mat policy or MSRP policy that's controlled today. And that can be leveraged both to success, certainly in the marketplace platform. But also when you're able to take that phone to your retailers to distributors and show them your stability online in the fact that they're not going to be disrupted by your lack of control over over your online sales. And so, you know, the first step along that wheel is really what is your marketplace sales strategy, because this drives so much of the moves that you have to make to protect it. So you know, if for example, this is a chart showing the the intersection of common Amazon or marketplace selling approaches, relative to the amount of control that you have against the amount of involvement that you have to have and so, you know, a lot of brands are still down here in this wild west where they've sort of delegated the channel to distributors and those sorts of things. And you're selling out there without brand guidance, a bunch of intra brand competition setting in and that's just a recipe for sub optimized sales and erosion now, great many brands will sell particularly mass market brands will sell wholesale to Amazon first party now you're going to do okay in terms of sales volumes on a percentage basis, but you will often pay for that in terms of brand erosion, if you have a number of three p resellers. A or B and or I guess I should say B you're also in a number of other you know target Walmart Kroger, you know, where you're constantly scraping, we're Amazon's constantly scraping those channels to see where it should price your products. Now, as you move towards the top and to the right. It's not saying these are necessarily better in and of themselves. But from a control perspective, they do afford you, you know, on the three piece side, whether you're selling on your own storefront or through an exclusive third party seller, you're going to have more control over your things like your pricing, your inventories and things like that. But you will have to fight harder for sales to clear out the other three P's so that you can own that buy box, you don't have Amazon's natural preference of itself for buybox. But getting clear on this. And I think the big takeaway is, you know, our strong view and most people's strong view is that you should have as close to one seller on a marketplace platform like Amazon as possible, whether that's Amazon, you another third party, whatever that is, you want to be as close to one as you can. So once you have your strategy in place, it's really critical to get alignment from these three functions around the other pieces of the of the pie that we're going to talk about here, sales eecom legal so many times, I'll start working with a brand and you know, eCommerce is often the first teams to reach out, and they don't bring along the right stakeholders. And all of a sudden, traditional sales teams are like, whoa, whoa, I'm not gonna send those policies to my customers, or the legal people are saying, whoa, what are you talking about? Isn't this, you know, is this really legal, and all of these sorts of things. And so we have to be able to educate and bring these these folks along from the outset. Now. To kind of level set, we know what our intended go to market strategy is in terms of eecom marketplaces. Now we need to go about putting in place the other aspects of control that are going to be needed to execute that strategy effectively, and to protect your omni channel business. So that's sort of the opening table stakes ante here. In this world, we have to start off with the authorized reseller program. And so this is going to provide a means to identify and manage your authorized sellers, those who are buying from you from an authorized distributor authorized reseller and these documents will establish the channel controls around where, how and to whom your products may be sold, and also serve in this very important serve as a vehicle for conveying quality controls and customer service expectations. That becomes a big deal in the next step. Okay, the nice thing about reseller programs today is you can do these largely by a policy. You don't have to necessarily have these big formal signed agreements with your customers, most brands do not. But fundamentally you need to move away from anything resembling the dynamic on the left, where you have not really stepped in and defined channels and define who's allowed to sell on marketplaces and held your customers to that. You want to get away from that and over to something akin to the right where you have a much more delineated channel strategy and have communicated those expectations to your customer. numbers now, just to sort of walk through that, if you're you know, for example selling direct to retail, so brand sells to target brand sells to Walmart, Kroger, you know, whatever it is. So for Ulta they would get your Authorized Retailer policy. Okay. And so in terms of the retailers go out to all of your retailers, no signatures required saying hey, sell only to end users in your stores or on your comms, but no sales on marketplaces without my permission, pretty easy. Okay? When you have to step distribution, okay, this is where brands that have significant challenges in this space typically have a two step distribution channel either in the States, you know, and or internationally where stuff is leaving the wholesale distributor tier of trade and moving into an authorized eCommerce type sales. And so you want to make sure that you have a mechanism to cover each tier of this channel, both at the distributor level and at the reseller level, okay. So with your distributors, you want to have your authorized distributor policies you and you want to make clear look distributor, you can sell to authorized resellers, that is somebody that's received a copy of my reseller policy, got a copy of my map policy, if that's applicable. And thirdly is not on your do not sell list. Okay? And typically, if those three things are checked off, then your distributors can continue on business as usual. When you get to the reseller level, okay, these are people buying out of distributors, okay? So they're not buying direct from you, and you often don't have direct relationships at all with them. You know, this is a very important tear of trade to assert the appropriate level of control over it. So you want to say, hey, reseller, you know, thank you for the interest in the brand you can sell on your own stores. Um, but no online sales without my permission, I need to know who you are and where you're planning on selling both with respect to comms and marketplace sales, and I'm going to tell you, yes or no, because I have to be able to look out essentially across the internet and understand who is everybody that's selling my product. And when you don't have that level of visibility, it becomes very hard to maintain any level of control either from an unauthorized sales perspective, or a map compliance perspective. If you don't have that, that level of visibility, so anybody that's going to be selling on a marketplace, for example, you want to make sure to get them under the appropriate marketplace sales agreement that they tell you specifically their storefront where they're selling, they agree that if they step out of line that you can, you can revoke their authorized status and things like that. So, you know, that's just a fairly common policies type structure. You know, when you when you get into, you know, if you're selling DTC, or if you're a direct sales brand or a professional brand, meaning you want to sell through professional channels, and really even mass market brands, you know, on your DTC site, you want to make sure that you have your strong anti diversion provisions. You want to have careful oversight of quarter volumes the ability to impose quality limits on new accounts. You know, oftentimes you want to consider conditioning rebates or incentives on receiving sell through data from distributors having that ability to carefully bet new accounts and when we have a million resellers in our database for example, it can inform brands Okay, this is a known eCommerce seller linked to many Amazon and Walmart storefronts, for example. So maybe you don't want to sell there you know, you want to prohibit marketplace sales for anybody buying directly from you, prohibits sales to known resellers again and have potentially inventory buybacks for terminated consultants again that that's obviously more than a direct sale and professional brand but there's so many buried go to market strategies in this categories wanting to make sure to to offer those upper people selling in those in those manners. Now, you know, you want to and again, we're just talking about authorized sales controls here you want to make sure you're paying very close attention to what you're giving the club channels. Again, what's going on in your DTC site as we just talked about, and also with international distributors, we see so often is, you know, European distributors, Canadian distributors, you know distributors and in, in Asia, just getting product and turning around and reselling it back into the US or putting it back into like Amazon in the US so we have to be able to ideally, if permissible prohibit any international distributors from selling, you know, trans shipping etc. effectively and then have a mechanism to snip that out and enforce against that when when you find it but but these are going to, for for many brands be a source of pain until you get it under control. Now, again, we're sort of working our way around the wheel. And we're going to now consider the notion of a map policy or program. And when we have it placed here, because map only applies to your authorized sellers, okay? And I'm not gonna, you know, we could talk for an hour about map, but understand fundamentally, that map policy is a tool, it is definitely not a strategy, okay? And you want to make sure that if you're going to do map, that you enforce it consistently, and that you implement it at the right time, so many brands go out and say, Oh, I'm a mess on Amazon, my advertised pricing is degrading, somebody's telling me, I need a map policy, and you find out they sell first party to Amazon, they also sell to Walmart or other major competitors of Amazon there and other major retailers as well. And they have at marketplace resellers, like got news for you like there's you're not doing math like it's not going to work. So you have to have that table stakes level of control first, because it's very important takeaway here. Somebody mentioned Brand Registry at the beginning. Okay, map does not apply to unauthorized sales. Okay, so simply unauthorized sales, does it map or kind of apples and oranges map applies to your authorized customers, and your only recourse is essentially to stop shipping that customer if they don't adhere to your map policy. You know, things like Brand Registry are not to be used for map enforcement or unauthorized seller enforcement. And we'll get to that in a minute. But I just want to be very clear, that map does not apply to unauthorized sales. This is only with respect to your retailers. Now, you want to make sure that you're making all of your decisions around map enforcement unilaterally, that you have one designated maps are internally that you're not calling your customers and saying, hey, you're breaking my map, can you raise your price, you don't want to have any bilateral communications around your map program, you want to enforce it unilaterally based on your own independent business decisions. Okay? If somebody does not follow your map policy buying through distribution, you can put them on your do not sell list, and insist that your distributors not supply them any longer. And, you know, again, the nuances of mapper are a bit much for something like this happy to talk about pros, cons, potential term structures, etc. If anybody wants to follow up, always happy to have those kind of introductory conversations, you know, on a complimentary basis. But, you know, you want to think about implementing map after you have control, okay, you're clear on your go to market, you've brought your channel controls in place, and you have a way to stop unauthorized sellers.

Aaron Conant 27:52

Daren just really quick, which comes in so do you evaluate map programs? Oh, yeah. Right, because I think there's a lot of people that have maybe some older map policies that are out there, or they've recently had internal you know, people I've had these conversations where they've had internal people draft the map policy, and it's not quite suited for the digital world, or it's not all buttoned up so?

Daren Garcia 28:17

Where you get it wrong, I mean, so the short answer is yes, we do. Again, I don't have any hard data on this but my guess would be that we write more map policies and probably anybody in the world and so you know, there's there's a structural issue there's the terms there's what type of advertisement you know, do you want to reach in the car do you want to exclude in store? How do you set your map holidays so that your retailers have promotional periods that don't violate your map policy and those sorts of things? So absolutely, we dig into those you know, don't have people sign your map policy, don't weave them into other agreements, let them stand independently and happy to talk through any of those issues you know, at any time anybody wants to reach out but you know, either we've talked about here so far applies to your authorized customers reseller policies, map policies, your go to market strategy on on an Amazon, for example. But you're still going to have to deal with unauthorized sellers people that and, you know, certainly this could be counterfeiters, and that's an issue in this category. So that's just fraud, that's illegal. Right? And, and there's relatively easy ways to deal with that. And, you know, happy to talk about pure counterfeit at any time, but but it's less complicated. Conceptually, then this notion simply of unauthorized sale, so an unauthorized sellers, somebody that sourced your product, let's assume it is your product, and is selling it in a way that you don't want, okay, either in a place you don't want in violation of your policies, whatever it is. Now, the challenge that brands have is that those types of sales are protected by the First sale doctrine, okay, which says it's legal to buy and resell products without repercussion. That's really the reason why the whole like Amazon and Walmart marketplace can exist. And so to stop unauthorized sales, you as a brand have to put in a particular legal foundation. There are really only two that apply the material differences exception and the quality control exception, okay, so these exceptions give you a basis on which you can stop on authorized sales. Without these two exceptions, you do not have that basis, I want to be very clear about that. So for example, somebody asked about Brand Registry again, just a we have a few things in here, there is no box to check in Brand Registry for somebody that's just selling your product in an unauthorized manner. Okay, and I'll give a couple more caveats about that transparency, somebody asked about that, as well as more of an anti counterfeiting program and it works fine in that context, it's expensive, you have to really reach out across all of your sales channels to make it effective. But in an anti counterfeiting perspective, you can make some hay there, but again, we're just talking about unauthorized sales here. So the classic example of a material difference in this category would be a difference around a satisfaction guarantee, for example. So brands and category looking to stop on authorized sales might extend a satisfaction guarantee to products purchased from their authorized sellers, or exclude the applicability of their satisfaction guarantee to products purchased from unauthorized sellers. But essentially, conceptually, you have to think about what is some type of benefit, non physical benefit that I can limit to products purchased from my authorized seller, so we defined our authorized sales channels in the previous step. Now we need to limit some type of benefit. Because just to carry it forward, you know, when you have an unauthorized seller now showing up let's just say it's on Amazon, and they offer a new your asen saying I'm selling the same exact thing. Okay, now legally speaking, if they're not able to extend your guarantee, because they're not in your authorized sales channels, they can no longer trade on your trademark without being exposed to potential liability. So that gives you a hook where you otherwise would not have one. FThe other exception and it works really well in this particular category is the quality control exception. Essentially, what this says is a brand has the ability to dictate the quality controls associated with its genuine product. And if something is sold outside of your quality control program, it can be deemed to be non genuine. Now when you think about eCommerce, it really calls out for heightened quality controls. And this isn't you know, are people in your manufacturing facilities wearing you know, pp or hair nets or gloves or things like that. This is I'm talking about channel quality controls. Because in marketplace sales, you don't have really any betting of sellers, you have a ton of poor quality and counterfeit product being traded online. sellers are free to sell largely anonymously, etc, etc. all of the challenges around marketplace are eCommerce sales. And so as a brand, you want to put your basic quality control policies in place in your reseller policies I taught that said that I would mention that as we got further in so having some quality standards in your reseller policies in your brick and mortar traditional channels becomes very important. And as you get into comm sales, and in particular marketplace sales, you want to bring forward q C's that are specific to those channels. So for example, in a marketplace context, no commingling of inventory opting out or return or, you know, those types of programs, listing only on approved acent maintaining certain feedback scores, making sure you as a brand have access to data, you know, vendor central Seller Central data on Amazon relevant to your products and the ability to inspect your resellers, facilities and their shipment capabilities and how they're sourcing your product and all of these sorts of things. Because when you have that level of control, you're able to ensure a higher quality product in a quality champ challenged environment. And when that becomes inherent to your brand, then now when people step up and start selling stuff outside of your quality controls, you don't even know who they are much less how they're caring for your product, you have another way to enforce against them. And so we now with our policies, okay, that we had with respect to our authorized sellers, and reseller policies, retailer policies, distributor policies, and our map or other pricing policy can live over here. That gives you an appropriate level of control over your authorized sellers. And then you have your legal foundation that we just talked about around material differences quality controls, that gives you a basis to enforce against honor authorized sales. And with those two things in place, you now have both sides of the house covered, and can now think about doing your enforcement. Okay? So importantly, when we think about enforcement, okay, this notion of precision has become such a big deal, because the channels are too big time and budgets aren't enough to go chasing everything. So brands have to be very good at understanding what is actually disrupting their sales and their profits and focusing only there. So you want to start with your business KPIs, you want to understand who is out there, disrupting them, and you want to understand what is the best tactic to use based upon relevant insights and the actual violation. Okay, and so, you know, when we are out doing this, we're aggregating tons of data, you know, a million seller IDs, we've done 10s of 1000s of enforcement actions, we monitor, just, you know, a huge, huge number of products across various platforms. But what this allows us to do is really zero in on relevant KPIs. Because if you're not moving these numbers, and this is just set up for Amazon, but if you're not moving on authorized sales revenue way down, and your authorized seller revenue way up, okay, and understanding where you are, in terms of your pricing compliance, if you're not really moving those metrics, you're not doing anything commercially, you can play whack them all day, you can want to high five, because you got some takedowns. But until you're moving these numbers, okay, this could be Walmart, could be Amazon could be eBay could be anything, really, if you're not moving those numbers, you're not really making a commercial difference. And so when we're doing this, this is really solely and exclusively on what we're focused on is how do you leverage your control to drive commercial outcomes? So you have your KPIs, now, you need to know, who is actually disrupting those things? And it's not about are they just listing your product? are they showing some inventory, they breaking your map? Okay, it's about what are the volumes and revenues that they're driving in the relevant channel, okay, and then who is most disruptive around key products, whether that's simply their ability to sell it, they're selling it in a manner inconsistent with your brand value, whatever it is, you have to be able to zero in understanding everybody that's selling, what are the volumes and revenues that they're driving, and who is most disruptive across key products that you really care about that are going to be commercially most impactful? And, again, if you're not doing those things, you're not optimized for driving, you know, real ROI on your control efforts. So once you understand who it is, that's actually disruptive, now we can begin to understand, okay, where are they? Can we begin to tie them off to any authorized accounts? How have they responded to enforcement in the past? Okay? Are they a real hardcore reseller that you're going to have to be aggressive with or find some other way to cut off their source? Or are they likely to go away in response to a letter you know, those become very important again, in getting the most out of your budget? What do we know about their sources, what are their sales trends all of those things enable you know counterfeit flagging enable you to take the precise tactic that's going to be most likely to translate to commercial return with your enforcement efforts. So this notion of you know and we'll talk about it here in a minute traditional brand protection tactics you know, sort of all I have the software I go and use it against everybody those are just very passe today because again, the channels are so big you have to make you have to optimize your sales and you have to make them profitable and the only way to do that is to understand precisely who's disrupting you and have the foundation necessary to apply the right tactic based on what the data is telling you. You should focus on and so once you're clear on what that is, you can follow essentially an escalating enforcement process again because you have both sides of the house covered you have your authorized sales controls and your unauthorized sales controls in place and so you find your sellers identify their sources cut those off wherever you can and even if you can't be able to leverage your foundations to deal directly with the resellers themselves starting with letter certainly and then moving up to more escalated legal enforcement absolutely only where we're necessary now. This falls in the in the beware category here. Okay, you have to be where multiple things in this space. baseless enforcement actions Brand Registry abuse baseless cease at assists. So many times brands go out and they want to do things like they're trying to enforce map policies against unauthorized sellers or they're working with a vendor that is going out I'm sending messages through marketplace platform saying hey, I don't know you if you don't tell me who you are. We are getting the product from I'm going to report you as counterfeit. And doing that on things like Brand Registry breaks out. So the Brand Registry abuse notion they're sending baseless, cease and desist. And in each of these instances, brands can actually, you know, turn around and be sued for taking baseless actions against resellers. Again, there's nothing in Brand Registry that speaks to map or unauthorized sales. So if you're trying to use Brand Registry, in any type of manner, that's really at a macro level to control your distribution, you need to stop, okay, because there's a whole cottage industry of lawyers out suing brands for doing things like that. So it becomes very imperative. There's no trick. Okay, no vendor has any magic software, you know, I've heard Oh, I have some magic API, they have it, it just doesn't, it doesn't exist. Okay. All they're doing if you don't have the right legal foundation is trying to scare people and it's beginning to backfire very significantly. We've defended multiple lawsuits where brands have gotten out over their skis taken baseless actions and they've got sued and so you don't want to do that. So you know, again, if you have counterfeit issues, transparency programs, Project Zero, those sorts of things, marketplace driven things can be useful and absolutely use Brand Registry if somebody you know, setup real caissons or, you know, is is is engaged in listing abuse, or actually is violating an Amazon policy, okay, and there's a box to check both and then absolutely use it, but make sure that you're using it in the right in the right way. Um, there's just, you're up against two legal realities. Number one, it's fine to buy and resell your product. And number two, nobody has to follow your price. And so that's why we have to go through the steps that we've gone through, in order to have a solution that's going to help you commercially and be on the right side of the law. And that's going to allow you to get away from those traditional brand protection tactics where they're just reactive, they translate to whack a mole, I've got one trick I go out, Sometimes it works, sometimes it doesn't sometimes you might get sued, versus what we're talking about here, this notion of precision control, setting up your go to market understanding the foundation that you need, understanding who's disrupting your KPIs and how on a relative basis and then applying only the right tactic against the right people that suggests that it will have the capability to move a commercial metric and is the right thing to be applied given the violation at issue. Okay, so that's just a very different approach, then a traditional brand protection approach and really is is in today's market, what's going to allow you to get away from that very much reactive tactics not tailored to anything in particular, to to one where you are actually again, leveraging your control strategies and foundations to drive commercial improvements. And so you know, when you think about this notion of precision, ie controlling your space, you want to reduce your legal risk by eliminating supported actions. You want to only target the most relevant violations with the most effective tactics that's going to save you time and improve your success and certainly your commercial return and so you know, whether you're a brand that works with us or or you know, are going to kind of go it alone on this or so you want to make sure that you're going through the following steps and getting this in place your strategy, understanding what is the go to market strategy you're trying to protect, what are the relevant KPIs, getting alignment, internally rolling that out appropriately, getting your foundation in place, both with respect to your authorized customers and unauthorized sellers and getting that rolled out. And then being able to do your enforcement in a way that will drive those commercial improvements rather than just wanting to you know, look at takedowns in and of themselves which just don't mean anything really today. And so that's that's the process that you want to follow and when you when you look at the types of results that are possible that brands have experienced, you know, this is a skincare company running its own three p business on on Amazon through its own storefront. You can see in six months their share of sales up 30% on the platform personal care brand. In terms of authorized seller revenue, Casey, you're unauthorized in the dark blue, authorized in the light in the light blue and those are the types of again, things you want to be driving with your enforcement efforts math compliance, same thing. Beauty brand here, you know, significant increase in map over the time period of their control program. Personal Care brand authorized sales by box captured by authorized sellers up massively. When you focus on the right thing, who is actually taking away my sales? And not are they listing my product? Not are they breaking my map, but who is actually taking away sales and focusing your efforts, your efforts there. So again, we will certainly open up to any questions here. And again, I just did want to flag this because when we circulate this deck to you, you can grab a white paper here on E controlling your category. You know, it's it's very robust and pretty deep into all of these things. Just hit the hit the QR there, and you'll be able to get that get that easily. So yeah, I'm happy to take any questions, Aaron, that may have come across or if you have any.

Aaron Conant 45:51

Yeah, just a quick reminder as a whole, if you have questions drop into the question section, or you can check them into me. You know, a question that comes in is around the timing. So you had you know, it said month one to month six, is that typical timing for rollout?

Daren Garcia 46:06

Yeah, so let me let me come back to this just to have something here. So, you know, strategy, foundation enforcement, these first two pieces here, the strategy and foundation phase, we have an internal KPI to get brands through that, within 60 days, that usually leaves 30 days to get aligned, get things prepared, and then another 30 days to roll them out to customer bases and things like that. With respect to enforcement, now, you know, you're going to see brands that have a huge commercial lift within just a few months of enforcement, you know, quote, unquote, how long that takes is really going to be dependent, you know, on the brand, in many instances, how aggressive do they want to be? Are they going to take the learnings in enforcement, meaning, all of this is being caused by this particular promotional practice, or by this distributor, this trend, shipping international distributor, whatever it is, and taking steps to mitigate any of that on the front end, or they just accept the fact that they're always gonna have to be really good at enforcement on the back end, and so, you know, quote, unquote, timing on enforcement varies, but what you want to get to is an intersection, whatever it is, for your company, it's different for every company, where you say, I am comfortable with the level of control that I have, and the commercial benefit that I've experienced. And I really don't want to be more aggressive or devote more time or resources to this, I just kind of want to hold here. For some brands that might be going from, you know, let me just use an Amazon example Amazon, you know, getting 80% of buybox to 92, they may think that that's phenomenal, others may look at that 92 and say, Ah, it's got to be 99. And so you know, where you fall on that is is going to speak a lot to quote unquote, how long things take but hopefully that gives you some general general guidance.

Aaron Conant 47:58

Awesome, it does. Next question that comes in Do you see any material differences with packaged food products?

Daren Garcia 48:03

Oh, yeah. Yeah, for sure. You know, I've seen brands do kind of eCommerce specific packaging, because it's, it's better suited to protecting product or, you know, preserving its viability in the eCommerce channel, given all the multiple touch points involved there. Um, you know, if you have products that are coming from international markets, you know, maybe they have different ingredients down to maybe they have different customer service, telephone numbers on the packaging, or different language or things like that all of those types of things can be material differences in a packaging context.

Aaron Conant 48:43

Yeah. Awesome. So yeah. Also, you know, anybody on the line today, you want a follow up conversation 100% worth your time, we can do that and kind of pick their brain like there, and I'm sure you probably walkthrough a list with them on all the different ones that I think a lot of people are concerned about updating packaging lines is, is never optimal.

Daren Garcia 49:03

Well, no, and I want to be clear that I'm not suggesting that I mean, many times, like brands will go that satisfaction guarantee route. And that does not need to be on your pack. It could be on your website, you know, on a on a marketplace listing. But it's not something necessarily you have to go through do packaging runs and the QC stuff that we talked about is you know, the great thing about that is it's really not customer facing aside from the basic stuff that's in your policies, but rather it's you know, how are you looking at embedding these things internally, so it's, um, you know, works really well.

Aaron Conant 49:37

Awesome. Are there other things that pop up regularly that you think there may be questions that didn't come up here today? I know it was pretty comprehensive. We got about a minute left a couple things.

Daren Garcia 49:47

I mean, people will still come to me and say, Well, what about brand gating? I'd like to get that and in this category, you know, I think it's, you would know better and I used to be called luxury beauties at Lux beauty now our premium beauty. Oh yeah, I think I'll I'm on Amazon. And so if you qualify for those things, in many instances, you know, Amazon will step in and potentially gate or partially gate your products meaning prevent others from listing, unless they can show proof of authorization from the brand that's like the great unicorn in this space. And it just, this just happens to be a category where certain brands qualified now, for your mass market brand and whatnot, chances are, you may not qualify for that. And even if you do, okay, you can still get clipped by people selling on Walmart and interfering with your Amazon business or other marketplaces. And so it's not a panacea, but it is something that can be at least effective in the Amazon space, if you qualify, but you just have to accept the fact that most brands just fundamentally will not. And so, you know, if you're looking to a marketplace, you know, we have Amazon, Walmart, whatever, to solve all of this for you, just not going to happen, okay, this is just something very much the brands need to step in, do the work, it's kind of one of those things, the only way out is through and the forces at play will all you know, turn out to they're very strong and will push the brand down, you know, unless and until the brand steps up and takes greater control, I'll be in a very commercially friendly way. that's meant to support your good customer support existing sales and, and really enhance your ability to do better business, both marketplace, eCommerce and traditional channels.

Aaron Conant 51:29

Yeah, I know, we stick on Amazon a ton. You know, an Amazon standpoint is a branded chore issue, not ours. Right. And so I know they push it to the brand that way, but, you know, I just think, you know, the reality is, you know, as Walmart they will figure it out. I think a lot of people are scratching their head with why they haven't figured it out yet. But, I mean, this is a marketplace solution for marketplaces as a whole. Right? There's, I have a lot of brands that are shifting their focus, you know, away from Amazon for growth, I think.

Daren Garcia 51:59

Yeah, fundamental. Yes, absolutely. I mean, we did just you know, out of force of size and and what's on people's minds gonna talk a lot about Amazon today. But the, the foundation that we talked about the strategies that we talked about hold true across whether you're talking about Amazon, Walmart and Target Market, and really any place your stuff is sold in an unauthorized manner in a manner that's disruptive to your intended go to market strategy.

Aaron Conant 52:26

Awesome. Well, I see we're pretty much right here at time we promise everybody we get them out a few minutes before the end of the hour. And you know, Daren, thanks for being such great friends, partners, supporters, the network for a while now and to so many brands that are in it. You know, from a brand's perspective, you have more questions, you need any help in this area. They're in the team for Vorys eControl. You know, there are leaders in the space and all around great friends and partners to a lot of brands in it. So worth a follow up conversation for sure. If you have more questions, you want to do a deep dive, I'm sure it'll be more than happy to answer them. Also, you know, if you're in you know, tier one cities coming up, we're doing a bunch of in person events and some with boys as well, you might be able to meet in person. And with that, I think we're gonna go ahead and wrap it up. Again, look for a follow up email from us. We'll connect you all with the team at Vorys eControl. Also, I'd love to have a conversation with you around what's happened in the digital space more than happy to kind of network knowledge share across the board, what we see happening here at the BWG Connect. And with that, I think we're going to wrap it up for a Monday, Daren, thanks again. hope everybody has a fantastic week. Everybody stay safe. Take care of the board. You haven't you had a future event. Awesome. Thanks again. There.

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BWG Connect provides executive strategy & networking sessions that help brands from any industry with their overall business planning and execution. BWG has built an exclusive network of 125,000+ senior professionals and hosts over 2,000 virtual and in-person networking events on an annual basis.
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