When it comes to marketplace sales, all brands and sellers agree that increasing profitability & overall margins are top priorities. This conversation will focus on the best practices for maintaining or increasing profit margins when selling products across any marketplace.
BWG Connect and mySamm invite you to participate in an interactive discussion with your peers.
As always, there will be no sales pitches and there is no cost to join.
President & CEO at mySamm
Justin Rychak is the President and CEO of mySamm, an online platform designed to help brands manage their MAP policies and unauthorized sellers. Justin launched the company about 10 years ago with one programmer and one client, and now they have just under 300 brands that use their technology.
Before creating mySamm, Justin Rychak launched and scaled eight eCommerce websites in a variety of industries. He also worked for Price Waterhouse as a strategy consultant.
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. 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.
Nobody wins in a race to the bottom. With unauthorized sellers constantly driving your price down, how are you supposed to make a profit? How do you make sure your authorized sellers are on board?
Enforcing your online pricing policy can feel like a big task. Not only do you have to figure out where the unauthorized sellers are coming from, but you also have to get them to stop. There are attorney fees to calculate, time spent test buying, and trying to stay on top of that can feel overwhelming — not to mention that you have the authorized sellers to keep in line. How do you make sure they follow the guidelines without scaring them off?
Justin Rychak, President and CEO of mySamm, joins Aaron Conant in this virtual event to discuss the best practices for enforcing your brand’s MAP. They talk about strategies to identify, how to track and remove unauthorized sellers, how to enforce a pricing policy among authorized sellers, and why communication is essential.
Aaron Conant 00:18
Happy Monday everybody. My name is Aaron Conant. I'm the CO Founder and Managing Director of ew g Connect. We're networking and knowledge sharing group with 1000s of brands who do exactly that we network and now and share together this stay on top of the newest trends, strategies, pain points, partners, whatever it might be, that are shaping digital excellence today. And so I talk with 30 to 40 organizations every week to stay on top of those trends. And that's how we come up with the topics for our calls. So if you look in the chat there, there's a just a link to a website, that's where we are posting all of our events, you can go there for past event content, and also future events, if you'd like to sign up for them at any point in time as well. You know, we'd love to have a conversation with you. We don't sell anything here at PwC Connect, it's just a networking group as a whole. But we'd love to, you know, pick anybody's brain on the strategies. They're seeing work, the partners, they're seeing work and more than happy to share on my site as well what I'm seeing a couple of housekeeping items as we kick this off, wanted to be as educational and informational as possible at any point in time. If you have a question, drop it in the chat the question section or email it to me directly Aaron aaro in it be wg Connect COMM And that includes an hour after the call tomorrow, next week, you have a question in the digital space never hesitate to shoot over to me, we'll get a question we'll get it answered in under an under a day, probably. The last thing is, we're starting in three to four minutes after the hour, just so you know, we're going to wrap up with three to four minutes to go as well. We're going to give you plenty of time to get into your next meeting without being late, maybe grab a cup of coffee along the way. So with that, as we kind of kick it off here. You know, a lot of questions right now around profitability as a whole across e commerce. Everything in the digital space right now how do we make it less margin diluted? How do we make it more profitable. And we've got a great friend, a great partner of the network over at my Sam Justin's on the phone with us today comes highly recommended for from multiple brands and the network and just all around digital expert as a whole. And so to kind of address what's going on in the online pricing as well as unauthorized, you know, resellers as a whole big topics for a lot of brands. And if we can get this thing solved. profitability has been shown to go up significantly as pricing. You know, dilution doesn't happen margin deletion doesn't happen. So anyways, you know, Justin, I'm gonna kick it over to you. If you want to do a brief intro on yourself in my Sam, that would be awesome. And then we can kind of jump into the conversation as a whole.
Justin Rychak 02:55
That sounds great. Aaron, can you hear me? Okay? Just want to make sure we're good. Yeah, loud and clear. Good here. So, everybody, my name is Justin writeback. I'm the founder and CEO of my Sam, we started my Sam about 10 years ago. Prior to that I was an x e comm guy, I used to own sites such as diamond table comm or wall mirrors to go or light fixtures to go, and a bunch of other eCommerce sites that were either closed or sold kind of way back in the day. I'm an ex strategy consultants, you know, from my days with Price Waterhouse. And with my Sam we we really started as a map enforcement tool about 10 years ago. And just kind of kind of pushed further and further into that space, we've got under 300 brands that run our technology have a little bit of a different focus, where we probably tend to be a little bit more custom and try to give our customers challenges. And we also have an open door policy where people can kind of tell us our issues. But that's me kind of at a 10,000 foot version. And we've got an hour here and once you go ahead and let's let's go ahead and get started with some of these questions.
Aaron Conant 03:57
Yeah, awesome. Sounds great. And just a quick reminder, if you have questions in this space, drop in the chat the Questions tab or email it to me Aaron a rnap wg Connect Comm. So I want to kind of tackle this, you know, usually Matt comes up a ton. In so as people are addressing this, where do you see brands getting tripped up with map, or online pricing policies? as a whole? Any any thoughts around that space is I have a lot of people saying, hey, I need to get one in place. Do you agree that they need to have one in place? And if so, where do you see brands being tripped up with them or app or online pricing policies as a whole?
Justin Rychak 04:36
No, great question. Um, you know, I would say there's probably four ways that people generally or brands generally get tripped up when it comes to Mac or online pricing policies. The first is just lack of organization. Right. A brand's matte policy should be considered as one important component of a company's larger brand protection strategy. On the other components include having an online dealer agreement, which kind of addresses things outside of price breaks, but really focus on the expectations that you want an online reseller to maintain, and then what you're going to do on your side. So that online dealer agreement, in addition to warranty projections, and then a do not sell list anda proactive unauthorized seller strategy, so that first I'd say first is lack of organization, and making sure that you're that map policy is one of those other components as well. The second I would say, is lack of commitment, from the president down to sales, people not associated with e commerce, the map policy needs to be understood and enforced. And if there's a break in the chain, you're just not going to be as effective. Right? If Susie or Sally can turn around and call the president of your company and say, Hey, can you just take me off map restriction or whatever, and they are able to do that. And then over time, the the value of your policy just won't be as effective. And right under that lack of commitment, your brand needs to unilaterally enforce this map policy, and be consistent across all retailers. So that means a brand needs to enforce its map policy based on its own decisions, right, and you got to treat everybody the same as you comes to enforce it. So I'd say number one is lack of organization two is lack of commitment. Three is a little bit of a different thing. But you know, a brand's matte policy can sometimes not be marketed properly. That might sound a little a little confusing in the middle here. So I'll explain this to you. But your mat policy is actually part of your sales strategy. It's actually one of many arrows in your serial sales, quiver. It's a carrot, not a stick, and you should communicate your policy to your partners in this manner. Alright, so let's think this through right? What a manufacturer or supplier is doing or brand is doing or saying, Hey, listen, we want to prevent a race to the bottom. We want to ensure and work within the case law in the country to allow us to try to keep the playing field as level as we can. Right? So in other words, you're telling your your partner, hey, we're trying to help you make more money, can you help me help you make more money. And you know, those brands that we see communicating their math policy in this way, have a lot more friends, right, if there's a situation where they're, they're perceived as someone who is doing their their best to actually help their partners be successful. So that third one again, is like basically enforcing an unfortunate but marketing your math policy effectively. And then the four of the in terms of people getting tripped up with math, I would say as consequences. So if we flashed backwards 10 years ago, I think every client of ours started with this, the 10 years ago, clients started with the three strikes in your out situation, right? So hey, if you get the third strike, we're gonna shut you down. And then what happened was a really large account, who was maybe doing millions of dollars of sales got their third strike. And the brand or supplier said we'll shoot this isn't gonna work right. So they had to make changes. And I think one of the most effective consequences we see with our my same clients is to put an account on hold. So basically, the the reseller will receive a notice of a violation and maybe have 48 hours to comply with the policy. If a reseller does not comply within that time frame, their healing will be placed on hold until the reseller complies. And it's amazing how quickly a reseller will come into compliance when you put that account on hold. And then there's other variations to like. So putting a hat on hold another way is to actually enforce your pricing policy at an account skew level. So if you're a brand or a supplier that has 200 products, and you find an account breaking map or having a price break on 50 products, well, the consequence would be to withhold ship and adjust those 50 products, not the whole account. So there's that there's also maybe restriction timelines, right. So if an account is found a breaking map, again, once they fix the subsequent map break, maybe a restriction period kicks in. So for example, if you have an account who's in violation on a product, and you send them a violation notification, and they fix it, and then two weeks later, they fix the they have the exact same product below map, well, maybe this time after they fix it, you withhold shipment for 14 days or something like that. And then the last I would say from a consequence perspective is there's other lots of different things. So some clients of ours will no longer allow a particular account to sell an item or a collection. And then there's also things about how you can deal with distributors as well, and how that goes. But I would say big picture, what trips up brands, it's lack of organization, lack of commitment to the process, marketing your your map policy in the book, not not a marketing is an effective way. And then also the types of consequences that you levy when brands are found or when accounts are found in violation.
Aaron Conant 09:50
So awesome. I love it. You know, I think I want to get into kind of the enforcement side of it a little bit. Because I think that's where a lot Brands I think even you were kind of explaining a little bit was you can't just shut off some of the largest sellers that are out there. I mean, technically you can, I guess but there's a lot of apprehension. So is a brand you know, embarks down this path what is what does a brand need to think about when it wants to start enforcing its Matt policy is a whole we kind of outline you know, some of those things there but
Justin Rychak 10:21
um, so one thing to think about when it wants to start enforcing spam, I'd say the first is the brand brand needs to have a communication game plan before it starts enforcing its policy. For example, you know, my saying we're going to give our new Mac clients sample talking points, math enforcement, messaging, sample, Matt break emails, they can edit, approve and make their own. So you got to kind of have a game plan first, and then to the anatomy of your brand's communication game plan should include the following, right? The first is alert your sales reps, have your brand's map enforcement timeline. and have your reps proactively communicate these expectations to your customers. again, also, your map policy is part of your overall marketing policy. So explain how it's good for all parties. A race to the bottom, no one wins. So you know, or maybe only a few guys win lands, right. And there's that, I guess that Kenmore Sears Harvard Business Case while back right where all of a sudden, you know, a company like Kenmore became beholden to Sears because Sears was the largest account as a brand or supplier, you want to have many partners and have and have a healthy online marketplace, right. And this map policy is part of that strategy, it helps you keep the playing field level for everyone. And I would also just encourage my same clients to explain their map policy and what the concepts of consequences are, if they're found in violation. So you want to you want to get out in front of it and tell everyone how it works. And just on the side, you know, we teach our best practices for when folks get started. And well just kind of walk you guys through this. But if you are first launching a mat policy, this is our best practice. And you really want to just extend the olive branch. So when you get your policies in order, and you feel good about them, you you next want to pick a date into the future, maybe 30 days. And what you're going to do is get on the phone and call your biggest accounts and explain the why and personally email them their violations, your map policy and let them know when it starts, you want to get out in front say, Hey, guys, you know, here's here's your map violations that comes to our products, here's the date, we're gonna start and have a phone call with them and tell them why they were trying to protect everyone's margins. And we want to do this to help our overall online marketplace be healthy. And if you're an accountant who has 10 big accounts, well, hey, you get on the phone and call 10. If you have 50 online accounts, maybe the smaller ones, you do the same thing, but you just do it through an email form, right, where you going to email those accounts. And then what you're going to do is once per week, for the four weeks leading up to the start of your enforcement date, you want to send out an email to each account and include their map breaks your map policy, and what will happen if they don't fix it. And the date the enforcement starts. And my Sam just a quick aside,you know, we we automate the process. So you can send a custom email to every single one of your accounts and attach an Excel file that has their violations that says, hey, this is this is where you're, you're in violation. So there's no lack of clarity regarding what the accountants do. And what's going to happen is if you do that, if you send that email off for four weeks in a row, the majority of your accounts are good actors. They're going to get in line, right? And if if the guys who don't forget, once you start enforcing, and maybe you love you a consequence, and you put someone on hold, that account will most likely be a little sheepish and be like in order if you're reaching out to them, you're like, hey, account x, do you remember when I called you and I emailed you four times when we're doing this right? I unfortunately, I need to put your out on hold. The good news is once you fix your violations that I emailed you, hey, what will take you off restriction, but I need to go ahead and do that. Right. We're trying to create this this level playing field, can you help me help you make more money? So there's that type of just best practice? I would say that it comes to when you're rolling out that policy.
Awesome, all of it.
Aaron Conant 14:06
So when we talk about it, so we got a question comes in here. How do you how do you deal with people that don't buy from you but buy from wholesalers and are violating marketplaces?
Justin Rychak 14:20
Good question. Um, it depends on your relationship. So if you're someone who is selling to a distribution center, and that distribution center is turning around and selling to someone else, I think that's probably what the question is. Right? So in those cases, there's, there's a couple different things. If this becomes kind of part of there's two things kind of going on, there's math enforcement, and then there's also dealing with maybe on authorized sellers, right. And I think we're going to get even deeper into this, Aaron, but when you have someone who's an unauthorized seller or someone that you're not sure about or you have no direct relationship with, and they're in violation of the first year. to do is find out who they are, right. And if they're on a particular account, you can usually you can usually do that. And then what we do is we send them if our agency services team, we'll send them kind of a nice inquiry letter and say, Hey, where did you get your products from? And where are you? Where we're getting your product from? And are you authorized to sell our products? The answer is yes, then it's like, Okay, great, well, here's our math policy. And you have to this is the requirements we have for it. And then if it becomes an issue where the account gets in line, and they are a good partner, fun, if it becomes a situation where they don't acknowledge where they're getting your product from, well, then you typically have to do a Secret Shop and find out where it's coming from. And there's different methods that our team use to get that. And then if you're able to find out who they are, benefit, if they get in line, great. If they don't get in line, then it kind of becomes a almost like a two step problem. You've got your distribution center, who you have to communicate your policy to and tell them hey, listen, this is what our plan is. And sometimes distribution centers will be part of the solution. Sometimes Sometimes distribution centers will not be part of the solution. And if they're not part of the solution, you have to make certain decisions. For example, we've had brands where they just say, hey, the internet's off the table for distribution centers, right? So if there's someone who's turning around and selling to lots and lots of different sellers, and those sellers are creating channel conflict, and they're creating a race to the bottom, and they're, they're creating all these problems for you as a brand, well, then you can you have to
Justin Rychak 16:30
sit down with this distribution center and say, Look, we can't we can't operate like this, this isn't this isn't working for us, or it's a situation where you can put different consequences in there. So it comes back to identifying the seller, and then having a relationship with that distribution center and saying, okay, here's kind of what we're going to do. And if the distribution center doesn't get aligned, we there's different things you can do for the distribution center, they maybe if they're creating channel conflict, then the costs that they're purchasing the product from you goes up a little bit. Or, you know, maybe if you have a conversation between your executives and that distribution center and say, hey, look, we've got problems, right. But usually, it's got to be a it's got to be handled, depending on your relationship with a distribution center.
Aaron Conant 17:14
Awesome. So a couple more questions that come in, in. I think it's around unauthorized reo. I know it's at around an authorized reseller. So one is we don't know who's actually selling them. So how do you deal with third party unauthorized sellers on Amazon? You know, our agency says there's nothing we can do to stop this. But I mean, there is, right? I mean,
Justin Rychak 17:34
absolutely, yeah. Um, so I guess let's first Okay, let's first talk about, so if we run down this path, Aaron.Yeah, I think there's some people on this call who aren't sure about, like unauthorized sellers. Let me start there, and maybe help us to kind of define what an unauthorized sellers first, can we at first, I just Ithink, because I'm not sure where everyone is. Perfect. So maybe we can set we level set the playing field. But yeah, so an unauthorized seller, just for those of you you're not sure if you're like much of what this guy's talking about? Right? an unauthorized seller is simply an unknown actor selling your products online. Okay. And those on on on known actors tend to fall into these three companies, coupleof buckets, right. We call them one bucket is a matched account. So they're either an existing account, who is selling under a new name. So if you guys are familiar with wayfarer, hey, wayfarer has Burke's lane, all modern paragould. You know, those different types of websites that are still it's still wayfair. But They've got other names. So you might see a situation like that for your account. This stuffing could be a hybrid account. And this is really common, especially now with COVID. Right? So a hybrid account is an offline account, like a showroom, who's now selling them online. So you as an organization are treating them as one, but they're actually something different. And then the other group is the road seller, we call it. And we're not talking about counterfeiters, here. We're talking about rogue sellers who have your genuine products through the gray market. And a rogue seller can be one of four types. There are third party sellers, obtaining your product through your authorized dealers, right so third party seller, it could be a liquidation company, often selling your returns to marketplace sellers. It could be an arbitrage seller, right? Someone's selling your products on Amazon Marketplace, then they're sourcing it by finding it through Home Depot pros or overstocks, you know, commercial account or something like that, right. And they're kind of changing the ship to address on a side note, that's kind of crazy cuz there's people that teach this as like a hobby business or something like that. And then there's also these affiliate sellers. So a company like Better Homes and Gardens comes to mind where they will have a listings on their site, you'll click to kind of purchase the product but then you're gonna be redirected to an account such as Amazon, Walmart, Macy's, etc. Check out so when we're talking about an authorized seller that kind of fits under the big umbrella of one of those types of guys existing accounts. hybrids. Robie, guys, liquidation companies, etc. So that's kind of what we're talking about when we say an authorized seller. And with low barriers to entry, unauthorized sellers have grown exponentially, especially with COVID. Right? So whether you're brand new to technology, like my Sam or another method, a brand needs to have a systematic way to identify, track and remove unauthorized sellers. And you can. So you just got to first kind of start with that plan. And I think your question, then Aaron was, hey, how do you deal with them? How do you get them removed? Is that correct? Yes. Okay. So really, there's, there's three types of ways that you can deal with an unauthorized seller. The first is you send them a cease and desist letter. The second is you send copyright infringement takedowns and occasionally trademark and, you know, infringement takedowns. So cease and desist and sending infringement takedowns. And the third is then cutting off the road rogue actor supply. And that's typically done through secret shops, at my saying, we have an unauthorized seller team devoted to removing rogue sellers with these methods, or we can support your team if you want to handle it in house. But those are the three I guess, maybe arrows in your quiver or levers that you pull to get these guys to remove, and you can certainly do it on Amazon or other places. But if you're not sure about who they are, it's a little it's a little it's a little tricky. So I guess those are the big three things sending cease and desist. So sending copyright infringement takedowns and trademark infringement takedown and then cutting off the rogue actor supply. Do you want me so? Yeah, a couple questions
Aaron Conant 21:36
that come in along with that Secret Shop, you know, is that place in a test order? ordering online? Is the question that comes in. So I'll address that one. And then the next one, is this cease and desist letters work? Or do they not work? Or do they work for the right individuals? So let's tackle you know, The Secret Shop is that test by multiple?
Aaron Conant 22:04
How does how does that work? And then, yep, so let's do it. So
Justin Rychak 22:08
so secret shops and test buys are kind of the same thing. We've got an our agency services team, we have a network, think of 175 different people across the US that purchase on our behalf, to help us identify, you know, where the products are kind of, you know, where the cops are coming from now, on a side and a side note, right? It just depends, right? So you got to kind of know your situation, some clients of ours have RFID coating on their boxes, right? Some clients of ours sell through different mechanisms. So you're kind of able to track it back that way. So it's a little bit of a give and take between our team and our clients, organizational structure in terms of how they sell to help identify those type things. Now, on a side note, you know, if you're buying your own test products, the one thing you got to remember, is a lot of these knuckleheads are really getting, they're getting pretty sophisticated, the guy's creating channel conflict. So they're gonna, they're gonna LinkedIn, you got Google you or LinkedIn or try to see. So if you have someone purchasing a test, buy from the same hometown or your organization is known in or the same zip code, they're probably gonna cancel the orders that won't go through, right. So typically, what you want to do is have someone who has a different last name, who has has no association with your company whatsoever in a different locale and make those test purchases. So you can ensure that the person who is the rogue guy creating channel conflict does not make the association that you are in fact, a, a, you know, the company in question. We also have a list of I want to say, I don't know, I think it's like 30 20,000, unauthorized sellers now that we've done and help people take things down on Amazon, or eBay, or through Google, etc. So we have a huge list that our team has. So a lot of times our clients, if they're not, they haven't hire agency services can just email our team and say, Hey, have you heard of so and so? And what we will do is, we will tell you yes or no. And if we have, we'll also give you the process by which we were successful to get them to remove some of these guys will they'll they'll claim the Fair Use doctrine, or they'll you know, they'll say something like, Oh, well, you know, you need you can't go after me because of the DMCA act, because your images aren't copy written and things like that. So there's a couple little things that you need to do one, send your images or your digital catalog to the Patent and Trademark Office and get a copy written, because then you can actually enforce your copyright, copyright infringement. So there's a couple things that you do, but that's generally kind of the idea of Secret Shop. Now, your second question was on authorized sellers, like the cease and desist letters work is that we said,
Aaron Conant 24:42
Yeah, that's it. And yeah, then we've got a couple more coming in. I love it. This is fantastic. Thanks, everybody, for sending the questions.
Justin Rychak 24:49
Great. So, you know, the cease and desist letters work? The answer is yes. Right. But it's on a case by case basis, but they do work and you got to be consistent. I'm going to tell you how our honor authorized seller team, our approach. First we research the rogue sellers right to get them contact information, their email and their address, etc, then what we do is we start with a nice inquiry letter to determine if that unknown seller is actually an account, right. And they're selling under a different name variation. Because if you go after these guys like gangbusters, and then they're actually an authorized seller, you're, you're kind of hurting you're, you're kind of, you know, you're sawing off the branch you're sitting on, right? You don't want to annoy a guy who's unknown, especially if they're not in violation of your pricing policy. Or they didn't know they weren't allowed to do what they weren't allowed to do, right. So it depends on how decentralized you are as an organization. But the first thing you want to do is send a nice inquiry letter and ask and say, Hey, are you authorized to sell and if you do, send me your account number. And then what we do is we kind of match them up in the system. And we we do this on behalf of our clients. And then if if, if not, you know, the part of the letter, you say, if you're not authorized, please remove the product listings, you know, infringing on their copyright and work, you know, or images, right, you got to make sure that your images are without, you know, the images are copyrighted. But and then so you do the nice and nice letter first. The second letter you do then is, if there's no response, we send out the starting query letter. And we inform the unauthorized actor that at the infringing content is not removed, you're gonna have to pursue copyright takedowns, right. Legal Action, you also have the DMCA act, section 512. c basically says, Hey, I want to I want the images removed from your server, and also the hosting provider server as well. So that's a little little bit unique thing. But the takeaway is many sellers are going to remove infringing content after receiving a brand cease and desist letter. But it's kind of there's really like three things to this game. And I want to I want to go through, I'm going to just kind of give you the big picture. So I would approach it in this way, right, you kind of have a big bucket, a big basket of these unknown sellers, okay. And this is our approach, you first are going to send out these, you know, these cease and desist letters, right, and you're going to reach out to them. And I would say if you do that about 50% of your unauthorized sellers, are going to remove their product listings after receiving your brand's cease and desist letters, about 50% of them, okay. But you've got to be super proactive, and you got to continue to monitor. And if you do cease and desist letters, then you also file copyright takedowns and do secret shops, etc. The percentage of wrote so this is a big bucket of just the rogue seller. So 50% of the rogue sellers, or unauthorized guys are gonna remove their product listings via cease and desist letters. Another 25 to 30% will remove their will remove their your listings and stuff, if you're able to file copyright takedowns, do secret shops, etc. So then your pictures are gonna go up to 75 to 80%. And then if you start matching up unknown sellers who are really your accounts, oftentimes you can take care of another 85 to 90% or 95%, excuse me. So you're going to so if you're seeing the letters, I'm doing secret shops, filing copyright takedowns, right, and then matching up on authorized, you're gonna get between usually 80 to 95% 85 or 95%. And then you have probably that five to 15% that are really just bad actors, where your brand has to make a judgment call the cost benefit analysis for initiating a lawsuit. So the good news is that here, you can generally reduce your unauthorized sellers with proactive management. However, it's important to keep in mind that you have to, you need to systematically monitor and remove those resolvers unauthorized sellers, because oftentimes, those sellers remove their listings for a couple of months, after you reach out, then they'll kind of pop back up. So you have to keep monitoring. It's not I'm a parent of an 11 year old and a 14 year old, soon to be 15 year old. Andit's you know, managing unauthorized sellers is the same as parenting where you kind of have to stay on top of it, you have to be consistent. And it's a marathon not a sprint. It's not there's no magic bullet. You've just got it, you've got to manage it and stay on top of it.
Aaron Conant 28:59
Awesome. Love it. So question comes in what are the test order does not have a valid address info or leads to a Bo box or UPS location? I'll give you a perfect example. When I would. I took you know, do test buys that actually shipped, but I do it from 10 different sellers. And it all shipped from the same location in the Bronx. And, you know, it's I sit back and scratch my head, like, how do I track this down?So how do you handle those situations?
Justin Rychak 29:32
Good question. So I would say it's so just to make sure I'm understanding the question is, hey, you've got someone who's you're buying test products from account x, and they're in the Bronx, and you're not sure about like where they're coming from? Correct. So like,
Aaron Conant 29:47
yeah, your shipping address leads to a peel box or a UPS you know, drop ship location, it doesn't actually give you an address.
Justin Rychak 29:55
Great question. Um, one of the techniques that we use is we start to analyze the product offering of that particular seller, you know, if they have 50 listings on Amazon or whatever that might be. And you look at the actual skews, so we will, we will collectively understand like, which skews they're selling? And usually not always, but usually the case is there's someone who's going to be around that that seller who's an Authorized Retailer, right? And what you do is you then go back to your sales data, and you look and say, Okay, well, which account which known account of mine is selling the exact same skews, right? So you start to look for overlap, because typically, what happens is there's there is some chink in your armor, or in your supply chain, where that where that product is leaking out of, right? It's coming from somebody. And we've seen it, all right, there's guys who, you know, these arbitrage players or whatnot, and they approach and accountants say, hey, like, you know, they make the account feel like they're, they're being a good samaritan, hey, listen, you know, we're too small to sell this brands products online. But they told us, we can just go ahead through a third party. So they're reaching out to your known accounts, your matched accounts and saying, Hey, can we can we just put our orders through you. So what you got to do is you've got to, you got to get back to get back to the organization, you got to have your, you got to have your policies in order your map policy, your authorized dealer agreements, and I'll talk about that in a second, your warranty and your do not sell list. So if an account is selling online, and their listing is new, but they're not authorized, then you're not you shouldn't be warranting your products, you need to be one promoting that, hey, I only warranty products with my known authorized sellers, one, two, with your authorized dealer agreements, you say, Hey, listen, I am for Authorized User Agreement, you can only sell online. With consent. Some people limit if you're talking about Amazon, a lot of our clients now say hey, listen, there's only a certain number of guys who are allowed to sell on Amazon. So they restrict the amount of sellers that allowed and they make they make a, you know, it's got it's a carrot, it's like, Hey, if you're doing x millions of dollars with me on a yearly basis, then you are authorized to do it. But you know, or to sell on Amazon, you have to do a, b and c. So it's not a it's not it's not a rights, it is something that is a reward. So It usually starts back with your policy. And then what you got to do is you have to communicate your Mac policy, your authorized dealer policy and say, Hey, like, you can't resell to people without consent. And then you got to take that guy and put that whoever selling it on a do not sell list, and then go back. And I would start with all of your authorized accounts who are in the Bronx or around there within an hour radius and say, Hey, listen, we have got a problem. We have some guy who's operating from a p o box in the Bronx. And they are creating channel conflicts. And they're creating a race to the bottom. And we don't want to do it. We're not we're done with it. So we need to make sure that all of our partners know that this is not authorized. This is not reasonable. And we're not going to take it. And we're going to we're going out there. So if you mr accounts, all the guys in the area, you know who this guy is you got to fess up right now, you got to get 10 days, and we got to shut this down and run out, it's you and you're still doing it, hey, we're gonna have a big problem. And so we've seen some people do things where they all of a sudden take their areas in that location, or they find a couple of a couple of bad actors, and they they start to experiment. So what you're going to do is you first get so let me wrap up, you get your policies in order map, authorized dealer, warranty, do not sell list. communicate that to all of the people around the guy in the Bronx, you get on the phone, you'll send him an email, you pick a good phone and say, okay, who's authorized around me? Who's authorized around this guy? So start with the same zip code. And then you also go back to your sales, and you look at who is selling those products? And usually, you're able to find some kind of match and go, okay, where are we at, and from there, then, you know, you got to your reps have to communicate it, you got to kind of get to that point where like, Look, we're just not going to take it. We're trying to help everyone keep the playing field level. And we've got a bad actor right now, who's out there doing it. And then you obviously can send them a cease and desist letter, or you can basically, you know, turn around and file suit or whatever. But that's,you know, that's usually the method that you take, you want to flush out this guy first. Awesome, love it.So, you know,
Aaron Conant 34:26
want to jump into Is there a way to do this without technology? Or is it just at the standpoint now? Where you need something to to monitor it? I know you're in this space, but kind of you take a step back? At what point in time is it when you've got 10 skews when you got 100 skews? When do you have to have some kind of tack on the back end?
Justin Rychak 34:49
Break? Um, I think when the pain becomes so great, that it's taking away from you. Doing your normal job, that you got to deal with it, right. So if you're sitting there and you're scratching your head going, this is very painful. And you're doing the same thing over and over again expecting a different result, hey, it's probably time to look into some form of technology, it's hard for me to put a number on it, Aaron, because I've got guys who are super who got 5000 products, and they're locked up, meaning they got a map policy, a do not sell list, an authorized dealer agreement, and a warranty. And everybody in their brother knows that if you break map once with this guy there, they don't care, they're shutting you down. And you have some brands like that. They're just super locked tight. They don't theydon't need the business from one or two accounts. So they can they can choose to operate that way. Now, there's other guys who have only a handful of products and have a problem with it. So it's hard to quantify a number. I would say it's based on the pain, right? And if you're, if you're trying to, it's really hard, you know? So it's kind of a loaded question, right? I'm a technology guy, I got a technology company, we got hundreds of friends that run our stuff. So you're gonna get the same answer to me every day of the week and twice on Sunday. But it's hard to do it if you are someone who has a few 100 products, and you've got five or 10,000 listings, right? So the average human can do I think he said, we came up with it, we can probably look at like 400 listings in a day, at one particular day. Most of our clients have 10s of 1000s of listings every day where it's humanly impossible, you can't do it without technology, whether using my name or something else, it's hard to keep up with it. Right? So there's this balance between what am I? Is it a? Is it a cost effective for me to do it or not. And that's, I think one area where we tend to excel, which is we try to be as transparent as possible when it comes to costs, right? So real quick, whether you use my Sam or anybody else, what you're going to pay for the technology is going to be a function of three things. Gonna be how many products you track? And for? How many? How frequently do you want to search? And how many sites do you want to scan? Right? How many products frequently have search? How many sites do you want to scan? So and you're in control of that, right? I mean, some people will, I guess, probably try to not give you control over that. But you know, you can do, you can do the expensive way or you can do the more cost effective way. And to depends on your pain, right. And that that's kind of where that's kind of where it boils down to and we try to help people understand really what's going on. That's why for us, we always, we always try to do a an analysis, before they look for prospects. Now we want to run your stuff through and actually look at it, run it through maybe Google or Amazon or Ebay or Walmart and say, okay, like, what type of pain are we seeing? And then go Okay, like, well, how many sellers are there out there? How many people how big is it? Right? And I think if you've got a lot of unauthorized sellers, it doesn't take much to to create that pain where you start to feel overwhelmed. And when you over feel overwhelmed.If you're shooting one at a time, that's not gonna work, you have to step back and say, okay, what's my plan? What's my process? Right? Let me execute the plan. And then let me measure my let me measure now my success and measure how effective we're being against our plan. The guys want to call us or the prospects of calls that are just, they're so frustrated, and they're overwhelmed have kind of got to that point where they don't if their plan is probably more of a default plan. So we got to help them first go Okay, like, what am I document saying? Am I doing the right thing? So I have the right map policy in place, right on authorized authorized dealer agreement, place, etc. and getting those plans first? You know,
Aaron Conant 38:35
are you able to do do an audit, then? Like people as a follow up? Do they really connected with you, you can run a quick like if you're not going to probably scan the entire globe. But you can run it quick through and say, Hey, yes, you need it. No, you don't?
Justin Rychak 38:50
Absolutely right. I think what we do is we will, we'll do it for free. Like we'll take you know, you would give us your product file like your skew, UPC code, product name, map, pricing, MRP, price, some attributes and say, Hey, then we'll scan and say, Okay, this is what we're seeing. Does this make sense to you? Right, is what we're showing you like, is that kind of jive with where you guys are? And from there, you can start talking about pricing. And I'll link back up to right. If you think about, you know, we kind of gotten a little ahead of ourselves here, but there's two, there's two issues going on. Okay, when you think about channel conflict, and that was the term we kind of use, there's really two issues going on the channel conflict. Issue number one, is there's known online dealers with price breaks. Issue number two, is there's unauthorized or unknown or uncategorized as unauthorized sellers, creating channel conflict by selling below your mat price for selling on marketplaces and taking sales from authorized sellers. So there are these two groups right. But both of these issues need to be handled simultaneously. Can't do one without the other, we really encourage brands to have a proactive strategy to address its unauthorized sellers breaking map. Because if you don't, your authorized dealers are going to start breaking map too, right? So you need to address both map violations and unauthorized sellers at the same time. And a few years ago, well, you know, four or five years ago now,like we started offering agency services, we kind of take over both at the enforcing of our clients pricing policy, and the management of the unauthorized sellers. And this allows our clients to focus on growing their business. So you kind of just have good cop, where we take the position of bad cop, but even if you're hire our agency services, we can teach you kind of what we're doing and how it works. But it's also important to keep in mind, there is no magic bullet, right? So you have to, you kind of have to just manage it on an ongoing basis. And it's, it can be very time consuming. So good question. Awesome.
Aaron Conant 40:57
Are there other things that are popping up so besides map on authorized, resellers, other other areas that, that you see popping up that you know, your clients are, are trying to change or adapt?
Justin Rychak 41:14
Kinda with your technology as a whole, I'm definitely I'm pricing important is enforced is pricing enforcement is really important, but it's a cost center, right. And without it, you're gonna have price or margin erosion. For us with my Sam, we've also taken our technology into additional directions that help our clients grow their econ business. So one thing we do, we started about seven years ago was doing digital shelf analytics, right? So we're gonna analyze what's winning online, that the algorithms are rewarding, let me back up and explain that. So if you're someone, and if you go to Amazon, or if you sell to Amazon, target Depot, Lowe's, any of these big sites, if you go and do a search for your product, and you see 50 people selling your products, it's good for you. That's amazing, right? There's not a lot of people, but there's a limited market. And there's not a lot of competition. If you search for your product, and you see 1000 2000 10,000 or 30,000 products appearing in that same digital shelf, well, you've got a little bit of a problem. Because Yeah, the top 1000 products in there are doing amazing, and maybe those those products are selling 1000 units per month per skew, or 5000 views per month per scale, which is great. But then there's 1000s of products that are not in the top of that shelf. And then we joke, there's a go rhythm Mr. algorithm, this guy, there were them. And what he does is he controls on every site, like how many people get to see their products. And what we found is Man, these algorithms, and we look at pricing averages and bullet points or keywords or shipping times or attributes, images, videos, etc. And we say okay, well, what does the winning products have? And what's the commonality. And it's amazing, because what we try to do is reverse engineer these algorithms, okay, this is really what the winning products have. Right? Because, because unfortunately,our brands and our customers, right, and if you guys, if you're a brand or manufacturer, typically what you guys do is you think about getting your products to that website, you're like, just, you know, all I want to do is I want to I want to get on a syndicate, or I'll get my product to the website, and then you kind of you like your browns, and good we did it, right. But the reality of it is, is once you get your products to appear on a website, that's when the competition starts, that's when the game actually starts. It's not it's not Once there, once they're there is when the game starts, that's where you actually have to start playing the game. So getting your product to the site is not the end, it's the start of the race. So we do digital shelf analytics. And we, you know, we compare different sites to each other to help clients kind of save time, but you really want to do your content, you never get a second chance to make a first impression. So you want to make sure your content is good before you give it to the sites, you want to understand what winning products have. That's digital shelf analytics. And we also get into market share, show you how much market share you have or things like that. And then the second thing we do we build is these auditing tools for top sites. So another problem that we noticed with our clients is they got hundreds or 1000s of products. And it's hard to keep track of on these big sites, but they see sales nosedive or they see things happen like what what happened. So what we do is we perform a daily audit or a daily scan of every client's product on particular websites and will track availability, stock status, pricing, shipping imagery, attributes, bullet points, romance, copy, etc. And then we'll also find the digital shelves on that website where the clients products appear. And then we'll compare both the product contents of a client's product to the product contents of the winning products on the shelf where their product is found. So we compare their product to the winning products on the shelf. And then we'll actually tell them where they're off or tell them whether they're good. And what we do then is we basically give them a a quantitative way to measure content improvement, right? People get caught up in like, Oh, it's a plus content, I'm like, well, let's not do that. That's a way to say it. But the reality of it is, is your content is a function of competition, the greater the competition for your product, the more you have to do content alignment, right, you have to give the algorithms what it wants to help get more product exposure. So we do those two things, digital shelf analytics, and they'll do Content Manager product auditing to help our clients understand just how to get more sugar shelf.
Aaron Conant 45:43
Awesome. So I got a longer question that comes in here. I'll kind of rattle it off quick. We've had success with eBay through submitting zero requests. However, trying to do something similar with Amazon is difficult since they only take down the seller listings if we can prove they're selling counterfeit products. We send emails to these three p on authorized accounts regarding becoming an authorized seller and our math policy. But I've got no responses. Is there a next step, besides sending legal letters, the cost of getting these legal letters written up and sending them is not worth it for these small accounts who have less than five items? So you
Justin Rychak 46:17
nd of running into this? Yeah, but great question. Um, is it cost worth it? You got it. No, I totally get it. And so So a couple things, right. One is let's, let's glad we're getting back to Amazon one. If we think about Amazon, just in general, right. And you probably you guys probably already know this. And if you guys are if you guys aren't there where this question came from, I just want to set our stage here. Dealing with unauthorized sellers on Amazon is not easy. Amazon does not care about unauthorized sellers of genuine products and understand why you gotta follow the money. Right? Amazon's marketplace, profit margin is significantly higher than its own online sales. Say it again. Amazon's marketplace, profit margin is significantly higher than its own online sales. Amazon takes a percentage of each marketplace sale approximately 30%, I think, right. Plus, they charge additional fees for Fulfillment by Amazon, etc. And in 2020, Amazon Marketplace had been valued at $300 billion, versus Amazon's own retail operations that were valued at 190 billion. So Amazon Marketplace was another 100 and $10 billion greater than their regular sales. In 2021. In the first quarter, Amazon's marketplace grew 60%, the fastest in the last five years. So Amazon, right third party fulfillment services, right for Amazon is huge for Amazon, and they do not have any financial incentive to help your brand remove its unauthorized sellers and reduce channel conflict at all, from Amazon's perspective, right. What they frankly told your brand is your distribution problem is your problem. Right? So that's kind of where everyone is playing right now. So what do you do? Well, like for us, and I understand where the nature where your questions coming from, you're, I'm assuming you're in the situation where your attorneys have kind of said, Hey, like, here's the plan, you have to use our letter to go do it. And we're going to go and send that out. And that's fine, right. But that is a pretty expensive proposition. Because attorneys bill by every seven minute increments, I say that because I'm married to an attorney. By the way, she actually works on our team and runs our UAS division. But attorneys tend to charge a lot, they tend to think about things a lot, and they tend to charge people to write letters, um, what we have found. And I can tell you what we do, like our unauthorized seller team employs a number of techniques, but you would hire us to act on your behalf. And we're cheaper than hiring an attorney. And you can also do it on your own right. So what you can do option one is you talk to your attorneys and say, Hey, listen, I can't chart you can't charge me every time you send a letter out. Just give me the boilerplate template, right, and let me send that out. And if they won't do it, then maybe find another attorney. Right. It's a cease and desist cease and desist letter, it is not something that needs to be rewritten for every account you send it to. That's not that's not really fair. So hey, do that. And then send that out to the guys who maybe have less than five images or less than five products, just you get your boilerplate, because that'd be like, Hey, guys, take this down, right. And then you also have to work with you got to tighten up your return policies with big box stores. So here's what we do. So let me just back up with Amazon. So we do five things, our agency services team will send cease and desist letters to Amazon storefront, the three p sellers contact info, we're going to secretly shop to try to identify how the three p seller is sourcing your product or work to shut down the source. Then we work with our brands to tighten up their return policies with big box stores and reduce the amount of liquidated product on sites like liquidation calm, which is oftentimes where three p sellers get product. So oftentimes you have that or you see things where you know you've got guys who are contractors or commercial guys who have commercial accounts with Home Depot's pro or wayfair or wherever the case may be coming and they're buying them that way. So you got to you got to work that do not sell list and you got to circulate that do not sell list and to their you know authorized accounts and distributors asking them to please not sell them the bad actors Then there's one other thing too and I'm not sure if you're in this spot or not, I want to kind of avoid some of the legal weeds here. But if a brand has not uploaded, it's copyrighted material and Amazon's by Detail page, right? So if you if you upload your images or your copyright copyrighted material up to Amazon, right, you give Amazon and its affiliates that irrevocable right of publicity to use your copyrighted materials forever, right? So there's that crazy kind of deal. If you signed Amazon's base agreements that you give him, you know, in perpetuity you Amazon and their affiliates or their marketplace, sellers, he voted to use your images. So you can't really file a copyright infringement takedown on Amazon, if you've uploaded those products. So what do you do? Well, one is you get a strategy for moving forward with new products. So if you're someone who's selling products, exclusive products to Lowe's, or Home Depot or whatever, Hey, you got to make sure that you don't upload them to Amazon, period. And then you also control your own Brand Registry, right. And then if you do that, and you can file infringement takedowns to remove images for Amazon Brand Registry for those infringing product images, you can take them down. But this technique is only going to work if you've not uploaded those existing scuse copyrighted material up to Amazon's you know, through amazon seller central vendor central so that you haven't done it. So that's another thing that you can do, just depends on what's going on. So you got that, and then you got to limit the amount of authorized, you know, marketplace sellers as well. So, you know, that's the other thing you got to do, because it's getting the documents in order, getting the strategy in order, communicating with all of your partners and saying, here's the plan, here's what we're doing together, here's our plan to do it, and then making sure that everyone kind of gets in line and then you got to work it. It's a it's a, it's an ongoing process. It's not something that has a magic bullet where it goes away.
Aaron Conant 51:53
Awesome. No, I love it. It's, it's almost like we could have this call for another two hours. I mean, it's a complicated space to play in, I think, you know, the unauthorized, you know, sellers out there have made that way, intentionally and found every, you know, looking cranny to crawl through, which just makes it, you know, more difficult to kind of track them down. But you know, you know, thanks so much, Justin, for your time today. You know, thanks to everybody who sent in the awesome questions. You know, I'd encourage anybody have a follow up conversation with Justin, this team, they come highly recommended from a ton of different brands and organizations throughout the network as a whole, they're doing some really cool amazing things in this space to help you, you know, optimize your sales, eliminate unauthorized resellers as a whole 100% worth of follow up connection, I would take him up for sure, on a free audit of what's going on in the marketplace as a whole. But, you know, the other thing is, we'd love to have a conversation with you as well. And if you're looking for help in any other areas, don't ever hesitate to shoot me an email, I'll put some time on the calendar, doing a ton of help right now with partner selection. And that's everything from Amazon, to direct consumer to performance marketing, to third party logistics, whatever it might be more than happy to connect to kind of walk through the top newest things that are popping up. But with that, you know, Justin, key takeaways in the last minute here, as we wrap up,
Justin Rychak 53:11
you know, I would say, get a plan first, right? I know, when we talk to people who are kind of in the weeds, there's a great source of frustration and almost like panic or just uneasiness. And I will tell you that you can figure it out, right, you just got to get organized. And there oftentimes is a fear that if I enforce I'm going to hurt my business. And the opposite is true. You know, if you enforce your pricing policy, and you get strict about your online dealer agreement, you are not going to hurt your business. I never seen that happen, right. But there's a an undercurrent of, especially from executives away if I go and I'm like tough to deal with, or I'm enforcing something, I'm going to hurt my business. And the reality is it's the opposite. But you have to market it the right way. And you have to just be transparent and kind of come from a position of you know, of being transparent of transparencies, and Hey guys, look, I care about your business. And I'm I'm intentionally trying to keep my channel clean to help you make more money. But we're all in this together. And we've got a we've got to work within the case law.But I've got to I've got to kind of be a parent and be be a little bit strict. But my intentions are to help you and communicating that message. It's It's funny, like people get into these big plans, and they forget the importance of connecting with their accounts and telling them the why. Right? The only people in the eyes with all this technology, we're still dealing with people in a lot. And having an effective communication strategy is paramount. You can't You can't be successful with that. So if we can help you guys out, shoot us an email, we'll be more than willing to hear all of your problems big and small. And if we can help you out, we'll do our best to appreciate the time Yes,
Aaron Conant 54:44
yeah, absolutely. And thanks Justin. That's I think what was really cool the feedback that we have is what makes you different is you listen you know it's not a it's not a square peg round hole and beat it till it fits. You guys are doing some awesome things. So just you know really thankful for you And you know the support you give the network as a whole. With that we're going to wrap it up. hope everybody has a fantastic Monday. Have a great rest of the week. Everybody take care. I look forward to having you on a future event. Take care now everybody. Thanks again, Justin. Already. We'll see you guys. Take care