Unauthorized Sellers on Amazon
One of the constant challenges facing many brand owners is the issue of unauthorized sellers on Amazon. Since the early days when resellers ruled the platform, the game has evolved into a complex game of whack-a-mole between brands and resellers fighting to gain control and reap the rewards of Amazon traffic and sales.
A reseller is any seller who has purchased a product from one source and is reselling it at another location or on another channel. While platforms like Amazon grew quickly in its early days with little regard for resellers who could make money on the margins, the growth and prominence of Amazon over the past several years have changed the game when it comes to building and protecting brand equity on the Amazon platform.
Stopping unauthorized sellers on Amazon has evolved from a minor nuisance to a highly sophisticated game of whack-a-mole. Our partners that specialize in the legal, technical, and investigation side of channel control are the best in the business and work alongside our team at Avenue7Media to restore brand owners to their rightful place as the sole seller of the brand’s products on Amazon.
If you’d like to learn more about controlling and defending your brand on Amazon, check out this episode of the Day 2 Podcast from Avenue7Media.
Protecting Your Brand from Resellers on Amazon
There are many reasons it’s important to protect your brand by restricting resellers on Amazon. While many brands have a primary reason for enforcing distribution on Amazon, few realize the holistic impact that unauthorized resellers can have on the long-term equity of their brand. Below are a few of the most important reasons why brands should remove unauthorized sellers from Amazon.
Minimum Advertised Pricing (MAP) is the pricing brands set to create channel viability, dictating the minimum amount that retailers can advertise their products for sale. Enforcing MAP helps brands to maintain a premium value while sellers who undercut that pricing create a diminished sense of quality for the brand. The challenge that resellers pose is the relentless fight for the buy box encourages sellers to create offers that undercut other sellers in order win the buy box and make a sale. Since a lower price is one of the primary factors influencing the buy box, MAP pricing is often destroyed with the presence of unauthorized sellers.
Amazon’s goal is to have every product listed on Amazon only once (as compared to eBay where each seller lists their own items for sale separately). Resellers will often list products under their own UPC codes creating duplicate listings that create a lack of brand continuity across all listings. While the goal is for a brand to have a consistent look and feel for every product listing, the only way to do that effectively is to control every product detail page using brand registry and that means removing resellers and duplicate listings.
Since unauthorized resellers rarely purchase product directly from the manufacturer, it can cause gaps in quality control and vary the quality of products that customers receive when they order from resellers on Amazon. This can range from products not being properly stored, shipped or packaged, resulting in damaged or subpar products reaching customers which in turn results in negative product reviews and unhappy customers. In some cases it can mean customers receive damaged or melted inventory, or close to or even past the expiration date.
Customers have a relationship with the brands of the products they buy. With that relationship comes expectations of not only the quality of the product but also the quality of the service they receive. If a reseller is looking to quickly flip a product they are less likely to be incentivized to go above and beyond in the customer service they provide should a customer reach out for assistance post-purchase. By removing resellers, brands can ensure a consistent customer experience.
One of the most noticeable impacts that resellers have on brands is the way it impacts advertising. When a reseller creates an offer on a listing and lowers their price to win the buy box, two things happen: 1) the brand owner loses sale to the customer and 2) all sponsored product ads stop running. In addition, any sponsored brand ads that continue to run will show skewed data since the ad spend will come out of the brands coffers, but the sale attributed to the ad spend will be recouped by the reseller. This results in lack of quality attribution data.
As a brand owner, having the data is critical. Removing unauthorized resellers means that you’re able to gain all of the customer purchase data, as well as gain feedback from product returns and buyer-seller messages. In addition, being able to accurately track your conversion rate is only possible when you are the sole owner of the buy box. This ensures that the product ratings and reviews left for your products accurately reflect the experience of a customer’s purchasing products directly from you via the Amazon platform.
Product Detail Page Control
While Amazon Brand Registry does give priority to brands when it comes to detail page control, there is often still an issue when multiple sellers contribute conflicting product information to the same ASIN. This can involve conflicts of product images, titles, or copy which means that your contributions don’t always win. In addition, product variation updates can be submitted by any seller which can create mixups and confusion in regard to product parentages.
How to Stop Unauthorized Sellers on Amazon
While it’s not an easy process, there is a way to stop unauthorized sellers on Amazon. The simplest (though not always the easiest) is by controlling distribution. Direct-to-Consumer (DTC) brands have a significant advantage over brands that utilize multiple distributors to give their products a wider reach to end customers. For brands utilizing the latter model, what they gain in revenue opportunities, they often lose in channel control.
One of the best ways a brand owner can prevent unauthorized sellers is by having restrictive distribution agreements that clearly outline where resellers are able and unable to sell their products. If you are selling your products through a distributor, you can request to have pre-authorization retailer agreements in place, meaning that you must manually approve any reseller before the distributor sells them products.
The most effective way to remove unauthorized resellers is to identify who they are and cease selling products to them, thereby cutting off their supply and effectively enforcing your distribution.
It’s important to note that enforcing distribution is done through your distribution channels, not Amazon. Notifications to sellers and potential violators cannot be sent to sellers through Amazon, and Amazon will not enforce or assist in enforcing these agreements in any way.
How to Remove Unauthorized Sellers on Amazon
The best option to remove unauthorized sellers on Amazon is to create a material difference between your product and that of a reseller by combining an exclusive warranty with your trademark.
If as a brand owner, you have a warranty for your products that is only applicable to customers who purchased the products from an authorized seller of the product, the court views this as a material difference, meaning that any customer purchasing the product would assume the warranty applied to them. This would create customer confusion if a reseller was selling the same product on the listing, for which the warranty did not apply.
This material difference on a legal level is trademark infringement, since it creates customer confusion regarding what the customer can expect to receive from your trademarked brand.
To create the legal framework necessary to enforce distribution legally, you must list who the authorized sellers of your products are and on which platforms or regions they are authorized to sell. Second, the information must be public-facing, meaning that any customer looking to see who the authorized sellers are for a brand can find it easily, typically on the brand’s website.
Lastly, the warranty itself must be exclusive to the brand, meaning that they should be the only one capable of fulfilling the warranty to prevent other resellers from simply offering the same warranty benefits themselves, making the warranty applicable. If the warranty states that under warranty, a product can be shipped back to the manufacturer for a replacement, no reseller is capable of fulfilling that warranty. This is what creates the exclusive distribution for the brand owner, and allows a brand to maintain brand equity across all of their distribution channels.
Report Unauthorized Sellers on Amazon
Once a Brand owner has established a clear line of distribution and has distribution agreements in place, they can request that unauthorized resellers remove themselves from their product detail pages on Amazon. While Amazon has portals to report counterfeiters and sellers violating a copyright or trademark on the platform, Amazon will neither intervene nor enforce your distribution agreements for you.
“Exclusive or Selective Distribution: Amazon respects a manufacturer’s right to enter into exclusive distribution agreements for its products. However, violations of such agreements do not constitute intellectual property rights infringement. As the enforcement of these agreements is a matter between the manufacturer and the retailers, it would not be appropriate for Amazon to assist in enforcement activities.”
If you’re a brand owner looking to gain control of your brand and shut down unauthorized resellers on Amazon, Avenue7Media and our qualified channel control partners are here to assist you.