Online marketplaces, particularly Amazon, are becoming third-party sellers' primary retail sales mode. The retail industry has experienced significant growth in this sector, as marketplaces are projected to represent 60% of overall sales, with 70% emerging from third-party sellers.
This rapid expansion elicits channel disruption as unauthorized vendors monopolize the Amazon Buy Box. Consequently, merchants must analyze market dynamics to develop a brand protection and control strategy. So what tools can you leverage to optimize channel performance and minimize disruptions?
With multiple unauthorized sellers entering Amazon’s landscape, brands' platforms can become overburdened and difficult to regulate. Channel control generates growth opportunities for new investments, products, and innovation. You can implement this solution to optimize three main business areas: pricing, authorized sales, and marketing.
Price disruptions can occur within a marketplace, your seller network, or across multiple channels. Apart from unauthorized sellers impacting optimal pricing, these disruptions may arise from inconsistent customer experiences or low-quality products. Pricing is contingent upon market fluctuations and competition across various channels, so developing a dynamic control strategy is imperative to reduce erosion.
According to Precision eControl’s CEO Blake Burrus, “On average, a brand experiences over 60 unauthorized seller listings on their products. But not all sellers are created equal. There’s a very high degree of concentration in that…three or four [unauthorized] sellers account for almost 70% of revenue destruction.” Addressing and mitigating these resellers requires acute precision and control to determine the vendor's identity and location — and to estimate lost revenue by product. A marketplace control approach helps you focus on the sellers contributing to the majority of the destruction.
Unauthorized seller interference also impacts brands’ opportunities to secure the Buy Box, limiting advertising efforts and decreasing ROAS on Amazon and other platforms. With brand protection, you can create compelling and consistent content across collective channels to enhance the customer experience.
Data science techniques are crucial in quantifying profit loss and resolving channel disruption. These strategies address the inquiries that Jay Radley, Precision eControl’s Head of Sales, proposes, “How do we create actionable, targeted plans…that can drive towards business outcomes? How do we measure that? How can we have the systems in place and the tools to know that when you take an action, you can see the corresponding benefit to your business and your overall trends across online marketplaces.”
Since disturbances and the corresponding outcomes are multifaceted and vary across channels, you must prioritize approaches and decisions to suit your business goals. This involves examining marketplace revenue trends to view both micro and macro business impacts. For instance, you can utilize data analytics to view various sales on different storefronts or obtain a more detailed perspective of product sales. From there, you can determine the appropriate action for addressing specific unauthorized activities.
Although platform control and monitoring are often used interchangeably, these methods differ in their granularity. Typical channel monitoring tools detect superficial disruptions and categorize them together. Conversely, control methods address the interruptions’ sources and possible execution methods to manage them effectively. Case in point, when complying with MAP (minimum advertised price) policies during seller disputes, it’s mandatory to employ a brand-led approach to manage workflows, communication, and data. In contrast, addressing unauthorized resellers necessitates a market-focused process to measure KPIs and outline data.
Brand disruption is a prevailing issue with nuanced protection methods entailing data analytics and market awareness. Brands should employ available tools and develop a brand protection and control strategy to minimize these disturbances and maximize profitability.
Whitney Gibson is a Partner, Chair, and eControl Attorney at Vorys eControl, an online seller enforcement team. In his role, Whitney integrates technology, data, and services to confront online sales control challenges. He also provides manufacturers with innovative approaches to protect and grow brands online. Whitney received his JD from the University of Cincinnati College of Law.
Blake Burrus is the CEO of Precision eControl, a technology and SaaS company that enables brands to thrive in the eCommerce age. As an experienced tech executive, analytics leader, investor, and advisor, he has held leading roles at companies such as Numerator, Quotient Technology Inc., and Nielsen. For the past two decades, Blake has cultivated a passion for innovation and building product platforms for marketing analytics.
With Q4 concluding, brands are looking to maximize growth in the coming year. But unauthorized resellers and various control regulations are hampering these efforts. So, how can you protect your brand and boost ROI?
Brand control experts Whitney Gibson and Blake Burrus advise partnering with brand protection analysts and data analytics technology teams to develop channel control strategies. These entail identifying an ideal go-to-market approach, establishing policies for unauthorized resellers, and measuring key data to optimize growth. By leveraging KPIs and advertising, marketing, and sales data, you can identify growth opportunities and target audiences through multiple channels to increase ROI.
Join Aaron Conant in today’s episode of The Digital Deep Dive as he chats with Whitney Gibson of Vorys eControl and Blake Burrus of Precision eControl about brand control strategies to drive growth. Together, they discuss data analytics strategies for channel control, addressing channel disruptors to drive brand growth, and the ideal KPIs to maximize revenue.
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