For years, brands have struggled to strengthen security against unauthorized third-party sellers. Marketplaces are becoming more complex, making it challenging to stay one step ahead of these disruptors.
How can you take control of your channels, swiftly remove unauthorized sellers, and optimize marketplace revenue?
The experts at Vorys eControl have a few strategies up their sleeves.
No matter what platform you use, unauthorized sellers can wreak havoc on your entire brand. The problem is more than just the unwarranted resale of products — it’s also the negative impact across multiple channels and departments within your organization.
With these distractions, you can no longer focus all of your attention on stopping unauthorized Amazon sellers. Instead, it’s crucial to control your entire omnichannel ecosystem, from Amazon to Walmart to brick-and-mortar distribution.
What exactly can happen to your brand when unauthorized sellers enter the mix?
It tends to surface on one marketplace like Amazon. An unauthorized seller lowers a price, and from there, it’s a race to the bottom. That one unauthorized price drop causes disturbances in average selling price, inventory, and forecasting. Retailers can’t compete with unauthorized pricing, so profitability begins to erode across all channels.
This challenge isn’t specific to one brand, marketplace, or industry — it’s happening to all kinds of brands across the globe. So what can you do about it?
Inspired by other experts in the space, Daren Garcia says, “I wish brands would understand there is no magic bullet to this. You have to put in the foundation. And once you get that foundation in place, now [you] have to go out and use [your] monitoring and [your] data insights to say, ‘where is our strategy being disrupted?’ Meaning where are [you] actually losing sales [and] having [your] brand value disrupted?”
To create a strong foundation, you must put a plan in place. Determine what’s necessary to achieve optimal channel performance and obtain key stakeholder alignment. It’s also paramount to assess where channel disruption is taking place to stop the issue at its root.
Especially when it comes to unauthorized seller issues, you need a legal component to strengthen your foundation. It’s critical to develop reseller, MAP, and advertising policies to ensure you can take legal action if necessary. Although Daren says lawsuits are less common, preparing for any scenario is vital. Daren and his team have orchestrated tens of thousands of enforcement actions over the years, but they seldom have to file a lawsuit. “We’ve had to do it in certain instances,” he explains, “and when you do that, it sends a very clear message.” When you have legal policies in place, unauthorized sellers are less likely to disrupt your business.
Another key aspect of your foundation is data-tech. To fortify your defenses, you'll need to gain insight into your sales, market, and any price disruptions taking place. This requires monitoring your marketplace, search, social media, and retailers and gathering data on violations to implement your enforcement tactics. As Daren points out, taking action in these areas is key to avoiding the negative impacts of unauthorized resellers. “Nobody is coming to save you in this spot — not Amazon, not Walmart, not any marketplace…the only path lies in self-help, and you have to position yourself in a certain way, put certain things in place, and take control.”
When building your strategy, it’s inadvisable to take a fragmented approach. Aligning all the various segments — from strategy to legal to data-tech — is crucial for counteracting the spider web of unauthorized third-party sellers.
Without a foundational strategy, there will be no organization among your legal and tech components. Without your legal policies, your strategy and tech won’t have a solid basis to stand on. Without data-tech, it will be difficult to gain insight and discover where your business is being impacted most. Taking a holistic 360-degree approach and using each component to strengthen the others is critical to protect your brand.